Revised Section 75 regs mire CCGs in a legal minefield

Minefield (n) /ˈmīnˌfēld/: an area laid with explosive devices, intended to prevent incursion or protect a valuable target

I’ve spent a pleasant couple of hours reading through the government’s hurriedly-drafted amendments to its ‘Section 75′ (S75) regulations. These new rules, which the government tried to slip through Parliament without debate or vote, were designed to force the new Clinical Commissioning Groups (CCGs) to invite private providers to bid on any NHS contract, were blocked by Labour with the assistance of a brave LibDem MP (I know, there aren’t many these days).

The government ‘paused’ its legislation with a promise to rewrite it to calm the fears of LibDem objectors, with health minister Norman Lamb claiming that the government took the objections extremely seriously and was committed to honouring its 2012 promises that CCGs would not be forced to include private providers unless they felt it best for the population they served.

In spite of this statement, many expected that the government would simply look for ‘better’ wording that would allow the LibDems to acquiesce while retaining its core aims.

They were right – and wrong.

The government has amended a few of the technical terms in its ‘secondary legislation’ – but it has also turned the regulations into self-contradictory mess that is designed to achieve its ends through fear of challenge and litigation rather than by plain fiat.

ImageThe new S75 regulations – a legal minefield designed to steer CCGs toward privatisation

The main change to the wording on competition looks ok on the face of it, albeit that the distinction is subtle. Instead of saying that CCGs must not engage in ‘anti-competitive behaviour’ that is

not necessary for the attainment of intended outcomes which are beneficial for people who use such services

section 10 of the regulations says that CCGS

must not engage in anti-competitive behaviour unless to do so is in the interests of people who use health care services for the purposes of the NHS

So, you would think that, instead of having to show that they’re declining a competitive process because there’s no other way to meet the needs of patients, CCGs now only need to demonstrate that it’s in their best interests. But a sub-paragraph of the same section still says:

(2) An arrangement for the provision of health care services for the purposes of the NHSmust not include any term or condition restricting competition which is not necessary for the attainment of-
(a) intended outcomes which are beneficial for people who use such services

So the rules are contradictory. CCGs will still be extremely wary of limiting competition because the self-contradictory nature of the regulations results in a minefield of potential legal challenges.

A well-known NHS campaigner once told me that

the only thing the NHS is more afraid of than lawsuits is the risk of lawsuits

and the new regulations are designed (or turn out through sheer shoddiness and incompetence, or both) to be so self-contradictory that the only ‘safe’ decision a CCG can take is to include private bidders by default.

There are several ‘mines’ of this type in the minefield.

With regard to the inclusion of private bidders, the regulations still include the most critical provision:

(2) The relevant body must—..(b) 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.

In other words, excluding private providers because they are privately-owned is strictly forbidden.

Section 3 of the regulations says that, in procuring services, CCGs must

provide best value for money in doing so.

‘Best value’, by any genuine and rational definition, is not merely a question of ‘lowest price’. Best value for an NHS service should take into account such factors as the benefits of retaining expertise and infrastructure in public ownership, avoiding the risk to services and skills if a private provider goes out of business or simply decides that it’s no longer profitable to continue providing services, and preventing the fragmentation that must inevitably be a consequence of NHS services consisting of a series of private companies rather than a national, integrated body, and many other factors.

But by insisting that decisions ‘in particular’ cannot take account of ownership, the new regulations effectively strip all of these considerations out of the decision-making process – and turn ‘best value’ into ‘lowest price’. Any attempt to do otherwise will be subject to overturning by Monitor or legal challenge by would-be private providers.

There are other provisions of the regulations which reinforce the right of private providers to be included in any bids, whatever other parts of the new rules might say:

Award of a new contract without a competition

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, the softening of one part of the regulations is completely offset by point 5, which says that the only reason a CCG can award services without either issuing a tender or going to the ‘any qualified provider’ (AQP) marketplace is if there is only one provider capable of providing the service in the first place. Since this would be true of almost no conceivable health services, in effect the regulations mean that all services must be competitively sourced – just without actually saying so in as many words.

Point 7 states:

a relevant body may not refuse to select a provider that meets the criteria established by the relevant body for the purposes of that decision, except where to do so would mean exceeding a limit set by the relevant body on the number of selected providers.

So, CCGs cannot impose a selection criterion to exclude privately-owned companies – and cannot exclude any companies that meet its selection criteria. This is a long-winded way of saying ‘private providers must be included’.

The regulations, in one stroke, still rip the NHS wide open to private providers andload the dice in their favour by making cost the only factor. As private providers will not be bound by the fair, national wage structures that NHS providers must adhere to, they will be free to cut wages and numbers to enhance profits while still undercutting NHS providers.

Once again, the government is creating a ‘race to the bottom’ whose only beneficiaries will be private shareholders.

As a sop to the LibDems and an attempt to deflect criticism and resistance, the new rules contain a new provision that completely contradicts the above regulations. Section 15 states that

(2) Monitor may not direct a relevant body under paragraph (1) to hold a competitive tender for a contract for the provision of health care services for the purposes of the NHS.

But this is completely contradicted by the earlier points already mentioned and by section 14, which says

Monitor may declare that an arrangement for the provision of health care services for the purposes of the NHS is ineffective

if a contract does not meet the conditions outlined above. It goes on to specifically and separately state that contravening item 10.2 is a reason for Monitor to declare a contract award ‘ineffective’. Item 10.2 is the section that says that:

(2) An arrangement for the provision of health care services for the purposes of the NHSmust not include any term or condition restricting competition which is not necessary for the attainment of—

(a) intended outcomes which are beneficial for people who use such services

So, Monitor – the regulatory body – cannot insist that a CCG invites competition for a contract – but it can cancel any contract that is non-competitive (unless the CCG can demonstrate the strict ‘necessity’ of non-competition for the delivery of a service, which is basically impossible).

The government’s original secondary legislation under S75 was criticised for being vague, shoddily written and for forcing CCGs to advance the privatisation of the NHS.

The only substantive change in the amended regulations is that the government uses shoddiness and vagueness to create a minefield that is designed to scare CCGs away from any course of action that does not include private providers – and to tip the scales in favour of those private providers.

Private providers will have deeper pockets than CCGs and will have far less fear of legal expenses. CCGs are intended to feel that their only course is to play safe and include private providers in every tender, because the various contradictions in the revised regulations make it impossible to be sure that any other decision won’t be overturned either by Monitor, or in court at significant expense.

True to form, the government is resorting to weasel words, subterfuge and superficial changes to try to defuse opposition enough to get its way.

The intent and the threat of the original legislation has not changed one jot – and all those who love the NHS need to make their voice heard to make sure that the amended version is blocked even more emphatically than the first one.

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