Myths and Legends about NHS tendering

Recent claims about the impact of Section 75 of the Health & Social Care Act and the implication that this implies £billions more will be spent on tendering and procurement should be examined sensibly.

Section 75 got a lot of attention when the Bill was comprehensively examined (especially in the House of Lords), but only in the context of the implications of Part 3 of the Bill which was about competition and the economic regulator.  S75 gives the power (to the Secretary of  State) to make regulations which impose requirements on commissioners in relation to procurement; S76 gives Monitor the power to investigate complaints or initiate its own investigations in order to ensure regulations are complied with.

This is not new, the same powers already exist.  There is a comprehensive Procurement Guide. There are Principles and Rules for Cooperation and Competition and there is a power for the (laughably named) Cooperation and Competition Panel to investigate possible departures from the principles.

In general so far as commissioners use objective decision making processes (which would include consultation and use of relevant information) then they can decide whether or not to use tendering.

In its consultation document about the regulations to be made under S75 the Department of Health has made clear there are to be very few changes to the current framework.  There is no suggestion that tendering and Any Qualified Provider will have to cover every service, and clear statements that arrangements can be made by other means if the situation requires it (specialist services for example).

The legal position as regards requirements under competition law within the NHS has not changed since 2003 when Foundation Trusts were allowed to sign legally enforceable contracts with commissioners.  Previously NHS Contracts were not legally enforceable, so not contracts in the legal sense, and so in general outside the scope of competition law. Commissioners have always had the option of using tendering for services but only so far as regulations and guidance permitted.

The threat comes from ideology not the law.

If the Secretary of State was so inclined then there could be regulations highly favourable to competition and forcing the tendering of services and we have seen some signs of this with the recent drive to open many more services up to Any Qualified Provider.  There may also be some commissioners (Clinical Commissioning Groups) that choose to make extensive use of tendering but they can only do so within the scope of the regulations and (arguably) within an overall strategy that has been agreed with the local Health and Wellbeing Board.  And it will adds to their costs which are capped.

Given the weak public accountability throughout the new structures almost everything comes down to the position taken by a few key individuals – Ministers, those in the National Commissioning Board, those in Monitor and those in leadership roles within Clinical Commissioning Groups.  Equally it is open to activists and local stakeholders to challenge any inappropriate proposals to use competition when it is not necessary.

The suggestion that Clinical Commissioning Groups can be limited companies is simply not true; they are public bodies with constitutions which have to comply with standards set by the NHS Commissioning Board.

The often made claim that the internal market adds £10bn to the running costs of the NHS has been extensively considered and is simply wrong.  Recent work by the SHA suggests that the additional cost of the internal market (the commissioner/provider split) is somewhere between £500m and £1bn.  Much of the cost of needs analysis, strategy development, pathway design, service specification, collecting and analysing cost, activity and quality data and managing quality would be incurred in any modern system with or without a formal Commissioner/Purchaser split.