HCSA Patron Lord Philip Hunt gave a speech in the House of Lords yesterday as the draft regulations on the provider selection regime (PSR) laid before the House on 19 October were approved.
Lord Hunt's speech in full:
"My Lords, like the noble Lord, Lord Stevens, I very much welcome these regulations. As he put it—in a very kind way—in essence they withdraw the wretched health Act 2012, which enforced competitive tendering on clinical services and, as the noble Lord said, was not only bureaucratic and costly but got in the way of integration and collaboration. Of course, the Explanatory Notes that go with this SI are very explicit in saying so. I noticed, though, that the Minister failed to mention the 2012 Act. In fact, the Explanatory Memorandum was just the thing my noble friend Lady Thornton used at the Dispatch Box as we sought to scrutinise the wretched 2012 Bill, which cost so much money and staff time and achieved so little.
I want to pick up one or two points that the noble Lord, Lord Stevens, raised. The first is to acknowledge that there is a huge challenge for the procurement profession. I remind the House that I am patron of the Health Care Supply Association. I understand that the provider selection regime regulations come into effect in January, but these are ahead of the procurement regulations which come into effect in October next year. It is important that the Minister mentioned the guidance and I am very glad he mentioned the work that will be done by NHS England in supporting the service implement these regulations. However, I say to him that if you are trying to work out the relationship between the 2022 health Act, the 2023 Procurement Act, these regulations and the forthcoming procurement regulations, to a procurement manager sitting in an NHS trust this can be rather complex. The more help and guidance that can be given to those professionals, the better.
The Minister may well be aware that at the same time as procurement teams have been asked to implement this big change, they are having to generate short-term savings to meet the financial pressures in-year at the moment and actually cut their department operating costs. It is a short-term saving that may have long-term consequences, particularly as investing in procurement for the long-term value we wish to see enhanced in the health service makes economic sense. I point out to the Minister the recent announcement by NHS England that it is investing £600,000 in new commercial roles to unlock £1.5 billion of savings. That is very welcome, but we should be investing similarly in local and regional procurement teams as well. It is also important that the analysis behind the £1.5 billion savings is made available in order to guide the procurement function in the areas they need to be focusing on.
What is being done to support the skills, training and development of the NHS procurement and supply chain people? Will we invest in learning and development through organisations such as the HCSA and the NHS Skills Development Network to support upskilling and developing their functions? I commend the strategic framework for NHS Commercial, published only in September, and support the establishment of academies of commercial excellence—these are good initiatives—but you also need to support the people on the ground to do the job most effectively.
The noble Lord, Lord Stevens, said that there is a good balance in the regulations, because, while we want to get rid of the bureaucracy of automatic competitive tendering, as there is clearly no point doing it, we do not want to lose the opportunity of inviting innovative companies to play a part in the health service in the future. There is an issue around conflict of interest in the new structures. He will be aware that, around the table at integrated care boards, the chief executives of the local trust will often be in membership. In these regulations, and more generally, there are rules about how you mitigate that in a competitive process, but the decisions that ICBs make will sometimes be not to go down a competitive process at all—decisions, as I understand it, that those trust CEOs can be part of. I have had a briefing from Specsavers, which says that there surely needs to be some kind of requirement for ICBs, particularly for community services, to consider proposals from non-commercial providers who can demonstrate that they can improve value, quality of care and clinical outcomes. It is there that the conflict of interest issue arises.
How will value-based procurement be driven forward? In the draft PSR statutory guidance, “value” and “social value” are two of the national criteria for procuring health services. As I understand it, value-based procurement is about looking at which product is not only cheapest per item but best for patient outcomes, quality of life and avoiding relapses or unintended side-effects. I have been championing value-based procurement because in the long term it provides better value for money and better quality of what is being procured. The Minister has kindly agreed to meet me—I am grateful for that—but a statement from the Government on the importance of value-based procurement would be helpful.
Finally, I will ask the Minister about health technology. How far does he think these regulations support our vital health technology sector? I have been in discussions with ABHI about the potential that health tech offers the UK—it is fast—but there are worries that, in the new world, there are issues limiting the ability of many of these companies to be competitive, some of which are clearly to do with regulatory uncertainty. He will know of the issues with the MHRA’s performance. I pay tribute to the MHRA, but there is no doubt that it has resource issues—both money and staff—when getting things approved where they need to be approved. Coming back to Brexit, surely one of the advantages of having an independent regulator is that we can be seen as a place that, for medicines or medical devices technology, has a first-rate regulator that takes these processes through as quickly as possible. The problem, as he will know, is that there has been a blockage inhibiting innovative companies, so we really need to do something about it.
Overall, I warmly welcome the regulations. I thought that the Minister could have acknowledged a little more the failings of the 2012 Act, but we will pass on that. I certainly very much support the general thrust, but the procurement function in the health service needs every support it can get in understanding the new architecture and implementing it fully."
In response, the Parliamentary Under-Secretary of State, Department of Health and Social Care, Lord Markham said: "In summary, I welcome the points made and that noble Lords believe that this is the right direction, although it needs work along the way to make sure it stays going in the right direction and does what we hope it does."
Date: 28 November