2001 Chapter 15

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Health And Social Care Act 2001

EXPLANATORY NOTES

1.     These explanatory notes relate to the Health and Social Care Act 2001 which received Royal Assent on 11 May 2001. They have been prepared by the Department of Health, with assistance from the Wales Office, in order to assist the reader of the Act. They do not form part of the Act and have not been endorsed by Parliament.

2.     These notes need to be read in conjunction with the Act. They are not, and are not meant to be, a comprehensive description of the Act, so where a section or part of a section does not seem to require any explanation or comment, none is given.

SUMMARY

3.     In July 2000 the Government published The NHS Plan, A plan for investment, A plan for reform (Cm 4818-1) and The NHS Plan, The Government's response to the Royal Commission on Long Term Care (Cm 4818 - II). In September 2000 the Government published Pharmacy in the Future - Implementing the NHS Plan. Action has been taken to implement many of the proposals set out in these documents. In October 2000 the Scottish Executive published the Response to the Royal Commission on Long Term Care and provision is made in the Act for one aspect of this as mentioned below.

4.     This Act is intended to deliver many of the aspects of the NHS Plan and the Government's response to the Royal Commission on Long Term Care that require changes to primary legislation. Its purpose is to improve the performance of the NHS, provide better protection for patients through a faster, more effective and fair system for regulating practitioners, provide better protection around the use of patient information, strengthen the way the public and patients are involved in the way the NHS works, modernise pharmacy and prescribing services, extend direct payments for social services users and provide a fairer system of funding for long term care including measures to reduce the need to sell one's home on entering residential care.

THE ACT

5.     The Act is in five parts :

Part 1 makes changes to the way the NHS, including family health services, is run and funded in England and Wales.

Part 2 deals with pharmaceutical services in England and Wales and some aspects of such services in Scotland.

Part 3 provides for the establishment of Care Trusts and for the transfer of staff in connection with partnership arrangements.

Part 4 makes changes to the way long term care is funded and provided in England and Wales. Provision is also made for Scotland in relation to the ending of preserved rights.

Part 5 deals with the control of patient information and the extension of prescribing rights as well as various miscellaneous and supplementary provisions.

6.     Part 1 of the Act is mainly concerned with implementing those of the proposals set out in the NHS Plan which require primary legislation. This part of the Act therefore makes a number of changes to the framework of the NHS in England and Wales. Sections 1 to 5 concern the funding of the NHS. Section 1 enables the Secretary of State and the National Assembly for Wales to take into account the level of a Health Authority's non-cash limited allocation in determining its total allocation. Section 2 deals with payments to Health Authorities in respect of past performance. Section 3 enables the Secretary of State and the National Assembly for Wales to make additional supplementary payments to support new initiatives and to attach conditions to such payments. Sections 4 and 5 allow for the extension of public private partnerships in the NHS.

7.     Section 6 deals with the powers of the Secretary of State to direct certain NHS bodies about the terms and conditions of employment of their staff.

8.     Sections 7 to 12 are intended to strengthen arrangements for public and patient involvement in the NHS. Sections 7 to 10 provide for local authority overview and scrutiny committees to scrutinise the NHS and represent local views on the development of local health services. Section 11 places a duty on NHS organisations to have arrangements for involving patients and the public in decision making about the operation of the NHS. Section 12 requires independent advocacy services to be established to assist patients in making complaints about the NHS.

9.     Section 13 allows the Secretary of State to intervene in poorly performing NHS organisations.

10.     Sections 14 and 15 provide for new arrangements for Health Authorities to manage the distribution of General Practitioners. Section 17 removes the requirement that remuneration paid to a General Practitioner must not, except in special circumstances, consist wholly or mainly of a salary which has no reference to the number of patients to whom the General Practitioner has undertaken to provide general medical services. Section 18 provides for regulations as to the approval by Health Authorities of providers of out of hours cover for medical practitioners.

11.     Sections 19 to 26 introduce new arrangements covering the regulation of family health service practitioners and those performing personal medical services or personal dental services. All practitioners undertaking to provide family health services (general medical services, general dental services, general ophthalmic services and pharmaceutical services) must currently have their names included in a list maintained by a Health Authority. In future, Health Authorities will be required to maintain lists covering all practitioners, including deputies and locums for their area. Only practitioners included in such lists will be able to deliver family health services. It is intended that the criteria to be admitted to (and to remain on) a list will include probity and positive evidence of good professional behaviour and practice. It is intended that this will be done through a system of declarations, annual appraisal and participation in clinical audit. Section 20 provides a power for Health Authorities to refuse to include a practitioner on the relevant medical, dental, ophthalmic or pharmaceutical list on the grounds of unsuitability. Section 21 provides powers to make regulations providing for a person's inclusion in a Health Authority list to be subject to conditions. Section 22 deals with dental corporations and lists. Section 23 requires practitioners to declare financial interests and the acceptance of gifts or other benefits. Section 24 provides for Health Authorities to keep supplementary lists of deputies and assistants who provide the various family health services (including GPs, dentists and people who provide pharmaceutical and optical services). Section 25 provides for new arrangements for Health Authorities to suspend and remove practitioners from the relevant lists on the grounds of inefficiency, fraud or unsuitability. Section 26 introduces new arrangements to further the Health Authority list system to include those practitioners who may perform personal medical services and personal dental services. Section 27 creates the Family Health Services Appeal Authority as an independent body whose functions will include dealing with appeals by these practitioners against Health Authority decisions. Consequently section 16 provides for the abolition of the NHS Tribunal.

12.      Part 2 of the Act concerns pharmaceutical services. Chapter 1 provides for new arrangements under which community pharmacy and related services may be provided on a pilot basis. The services provided under these arrangements will be known as local pharmaceutical services. Section 28 contains introductory provisions about pilot schemes for the provision of local pharmaceutical services. Section 29 and Schedule 2 set out how proposals for a pilot scheme are to be made by a Health Authority and submitted to the relevant authority (the Secretary of State or National Assembly for Wales). Section 30 provides for the designation of neighbourhoods or premises in connection with pilot schemes. Section 31 requires the relevant authority to conduct at least one review of each pilot scheme and to comply with certain conditions in doing so. Section 32 gives the relevant authority power to vary or terminate pilot schemes. Health Authorities may vary schemes without referring the matter to the relevant authority only to the extent that they are permitted to do so in directions. Section 33 allows potential providers of local pharmaceutical services to apply to the relevant authority to become health service bodies. One result will be that certain arrangements they make with other health service bodies will be NHS contracts. This section also allows the courts to enforce a direction for payment given by the relevant authority in respect of obligations under such contracts.

13.     Section 34 permits regulations to be made to allow Health Authorities to make payments for preparatory work for pilot schemes, subject to certain conditions. Section 35 enables charges corresponding to those for pharmaceutical services under Part 2 of the National Health Service Act 1977 to be levied for local pharmaceutical services, subject to exemptions. Section 36 specifies that the provisions of the 1977 Act, including the relevant authority's direction-making powers, apply to functions under Part 2 of this Act as though they were functions under Part 1 of the 1977 Act. Section 37 permits regulations to be made preventing the provision of pilot scheme services from the same premises as pharmaceutical services under Part 2 of the 1977 Act, except as provided in the regulations. It also permits regulations to make provision about the inclusion, re-inclusion, removal and modification of entries in pharmaceutical lists held under Part 2 of that Act. Section 38 permits regulations to prescribe the extent to which pilot schemes are to be taken into account when considering applications for inclusion in those lists. Section 39 provides that the relevant authority may only bring the permanent regime for local pharmaceutical services into effect where, having regard to reviews of pilot schemes which have been conducted, they are satisfied that it is in the interests of any part of the health service. Section 40 inserts new provisions into the 1977 Act to enable Health Authorities to make schemes for the provision of local pharmaceutical services in accordance with regulations. Section 41 provides a power to make further regulations about both the permanent regime and pilot schemes, which correspond to measures in force in relation to personal medical or personal dental services.

14.     Chapter 2 of Part 2 introduces changes to the existing arrangements for the provision of pharmaceutical services. Section 42 substitutes the existing section 41 of the 1977 Act. The new section 41 will require Health Authorities to make arrangements for the supply to persons in their area of those drugs, medicines and listed appliances prescribed for them by medical and other practitioners under the National Health Service. In particular it provides powers for the relevant authority to specify in regulations the categories of person whose prescriptions will be dispensed and any conditions in accordance with which they must prescribe. This section also provides for the arrangements made by Health Authorities to include arrangements for the provision of these pharmaceutical services by remote means.

15.     Section 43 authorises arrangements for the provision of additional pharmaceutical services by remote means. The intention is to facilitate, and provide a means to control, the development of internet, mail order, home delivery and other arrangements which may involve dispensing across Health Authority boundaries. This will provide patients with greater flexibility in the way they can present their prescriptions and obtain the drugs or appliances that have been ordered for them. Section 44 makes provision for items prescribed by certain categories of prescriber to be dispensed as part of NHS community pharmaceutical services in Scotland.

16.     Part 3 of the Act creates new powers to establish Care Trusts by building on existing health and local authority powers to forge partnerships and provide integrated care. Section 45 provides for Care Trusts to be established voluntarily. Where services are failing section 46 provides for the Secretary of State or the National Assembly for Wales to direct the local partners to enter into partnership arrangements. Section 48 concerns the transfer of staff in connection with partnership arrangements.

17.     Part 4 of the Act changes the way long term care is funded and provided in England and Wales. Section 49 excludes nursing care from community care services. Sections 50 to 52 make local authorities responsible for arranging and meeting the care needs of people who have until now had their long term care funded through preserved rights to income support and jobseeker's allowance. Sections 53 to 55 extend the powers of local authorities to place a charge on an interest in land as an alternative method of a person financing their long term care. They also provide for regulations to specify when a local authority is required to provide residential accommodation and when additional payments may be made for more expensive accommodation. Section 56 deals with new arrangements for cross border placements. Regulations will give local authorities in England and Wales powers to place people in residential care homes and nursing homes in Scotland, Northern Ireland, the Isle of Man and the Channel Islands. Sections 57 and 58 give regulation-making powers to the Secretary of State concerning direct payments.

18.     Part 5 deals with the control of patient information and the extension of prescribing rights as well as various miscellaneous and supplementary provisions. Section 60 concerns the control of patient information. It enables the Secretary of State to require or permit patient information to be shared for medical purposes where he considers that this is in the interests of improving patient care or in the public interest. Section 61 provides for the establishment of a statutory committee that is to be consulted about regulations to be made under section 60. Section 62 requires the Secretary of State to produce separate annual reports on the development of services for people with mental illness and people with learning disability. Section 63 makes provision for the extension of prescribing rights to health professionals other than doctors, dentists and certain specified nurses, health visitors and midwives who already have prescribing rights. This part also includes a number of supplementary provisions.

19.     Annex A contains an outline of the existing legislation relating to the NHS. Annex B contains an outline of the existing legislation relating to social care. Annex C deals with miscellaneous relevant legislation. In general, functions of the Secretary of State under the existing legislation are exercisable by the National Assembly for Wales in relation to Wales by virtue of a Transfer of Functions Order made in 1999. The Act reflects this when amending existing legislation, i.e. functions are conferred just on the Secretary of State. Section 68 will ensure that such functions will be exercisable for Wales by the National Assembly for Wales. Many of the functions under this Act are conferred on "the relevant authority", which is defined by section 66 to mean the Secretary of State in relation to England, the National Assembly for Wales in relation to Wales and the Scottish Ministers in relation to Scotland.

COMMENTARY ON SECTIONS

PART 1: NATIONAL HEALTH SERVICE

HEALTH SERVICE FUNDING

Section 1: Determination of allotments to and resource limits for Health Authorities and Primary Care Trusts

20.     Section 1 changes the way in which resources are allocated between Health Authorities ("HAs") by the Secretary of State and between Primary Care Trusts ("PCTs") by HAs.

21.     When distributing the resource and cash limited elements the Secretary of State and the National Assembly for Wales (for HAs) and HAs (for PCTs) may take into account how much is being spent on the non-resource and non-cash limited family practitioner services. Those who are spending more than their fair share on these services may get a smaller increase for their other services. Conversely if they are spending less than their fair share they can be given a larger increase. This monetary device will have the effect of supporting action taken to increase the number of GPs in under-doctored areas.

22.     Section 1 provides for changes to the way in which unified allocations - which are cash limited - are made to HAs and PCTs. This provision will allow the Secretary of State and the National Assembly for Wales and HAs to take account of general Part 2 expenditure (non cash limited expenditure on family health services) when making decisions about unified allocations. In the first instance the intention is to take into account only the general Part 2 expenditure on general medical services (GMSNCL). It is envisaged that the power will be exercised so as to make larger increases in the unified allocations of areas which are " under- doctored" than if GMSNCL was not taken into account; and to make smaller increases in the unified allocations of areas which are "over-doctored" than if GMSNCL was not taken into account. It will also provide a financial mechanism for regulating the number of doctors in a Health Authority area (the abolition of the Medical Practices Committee - see sections 14 and 15 - will mean that HAs will become responsible for declaring GP vacancies).

23.     The Department has asked the Advisory Committee on Resource Allocation to devise a new funding formula for GMSNCL expenditure. Using this new formula in conjunction with the existing formula for HA and PCT unified allocations will allow the Department to determine targets, or "fair shares" of available resources for an area covering both unified allocations and GMSNCL. But changes to funding will only be made to unified allocations. Health Authority and Primary Care Trust unified allocations will move towards this overall target level over time (e.g. if the Health Authority is over target it will receive lower funding growth than if it was under target). While these changes will see resources for under doctored areas grow more quickly than the resources for over doctored areas, they will not lead to the cash limiting of Part 2 general expenditure or change the entitlement of primary care practitioners.

24.     The statutory provision dealing with the public funding of Health Authorities is section 97 of the National Health Service Act 1977 (the "1977 Act"). Health Authorities are paid money in each year by the Secretary of State under section 97(1) and (3). Section 97(1) concerns the remuneration of persons providing services under Part 2 of the 1977 Act (for example, General Medical Practitioners). Unless such remuneration is excepted from section 97(1), it is not cash limited. The Secretary of State is under a duty to pay each Health Authority the cost of such remuneration, and cannot impose a ceiling on such expenditure (defined as "general Part 2 expenditure" in paragraph 1 of Schedule 12A to the 1977 Act). Section 97(3) provides that the Secretary of State must pay to each Health Authority money not exceeding the amount allotted to it by the Secretary of State. This amount is allotted towards meeting an Authority's "main expenditure" (defined in paragraph 2 of Schedule 12A to the 1977 Act). In the case of a Health Authority this includes all expenditure attributable to the performance of their functions in relation to the provision of hospital-based and community health services, all their administrative costs, the costs of drugs attributed to them by the Secretary of State and certain other expenditure. The amount allotted constitutes a limit on the cash which may be spent by the Authority.

25.     Health Authorities are under similar obligations to provide funds to Primary Care Trusts. Each Primary Care Trust is established for an area contained within the area of a Health Authority. Under section 97C, each year the Health Authority must pay each of its Primary Care Trusts (a) the cost of general Part 2 expenditure incurred by the trust and (b) money not exceeding the amount allotted by the Authority for that year towards meeting main expenditure. As with the allotments to Health Authorities, the amount allotted to each Primary Care Trust covers all expenditure attributable to the performance of their functions in relation to the provision of hospital-based and community health services, all their administrative costs and the costs of drugs attributed to them by the Secretary of State. The amount allotted constitutes a limit on the cash which may be spent by the Authority.

26.     Subsection (2) inserts a new subsection (3AA) into section 97 of the 1977 Act. This allows the Secretary of State to take account of expenditure attributable to the remuneration paid to Part 2 practitioners in the Health Authority area in determining the amount to be allotted to the Health Authority. Subsection (4) inserts a new subsection (1A) into section 97C of the 1977 Act. This allows a Health Authority to take account of the distribution within their area of expenditure attributable to the remuneration paid to Part 2 practitioners in determining the amount to be allotted to each of its Primary Care Trusts.

27.     The Government Resources and Accounts Act 2000 inserts two new sections into the 1977 Act (sections 97AA and 97E). These new sections provide for the setting of resource limits for every Health Authority and Primary Care Trust in addition to cash limits. Section 97AA concerns resource limits for Health Authorities; section 97E concerns resource limits for Primary Care Trusts. Section 97AA(2) provides for general Part 2 expenditure to be excluded from the resource limit.

28.     Subsection (3) inserts a new subsection (2A) into section 97AA of the 1977 Act. This allows the Secretary of State to take account of general Part 2 expenditure in setting the resource limits for Health Authorities, mirroring the new subsection (3AA) of section 97 which allows the Secretary of State to take account of general Part 2 expenditure in determining the amount to be allotted to a Health Authority.

29.     Subsection (5) inserts a new subsection (2A) of section 97E into the 1977 Act. This allows a Health Authority to take account of the distribution within their area of general Part II expenditure in setting the resource limits for its Primary Care Trusts, mirroring the new subsection (1A) of section 97C which allows the Health Authority to take account of the distribution within their area of general Part 2 expenditure in determining the amount to be allotted to each of its Primary Care Trusts.

Section 2: Payments relating to past performance

30.      Section 2 amends the existing provisions of section 97 of the 1977 Act which enable the Secretary of State and the National Assembly for Wales to increase the initial allocation each of them makes to a Health Authority, where that Authority has satisfied certain conditions. This enables the Secretary of State to make payments to Health Authorities based on their past performance. The existing section 97(3C) provides that the Secretary of State may make such increases where a Health Authority has in any preceding year satisfied objectives which have been notified to Health Authorities in advance.

31.     The new subsection (3C) enables the Secretary of State and the National Assembly for Wales to increase an Authority's allocation not only where it has satisfied objectives, but also where it has performed well against performance criteria. The Secretary of State must notify the Authority of such criteria in advance, although he might not notify them in advance of the exact method by which performance will be measured. This would enable the Secretary of State to make additional payments to Health Authorities on the basis of their performance relative to other Authorities (against criteria notified to them in advance) in addition to them meeting particular objectives. For example, he may need to wait until he knows how well NHS bodies have performed against specific measures in the previous year before he is able to finalise the best method of measuring their performance in the coming year. However, the Secretary of State would need to inform Authorities in advance of the criteria against which their performance would be measured if he intended to make additional payments to Authorities on this basis.

32.     Under the existing section 97(3C), the Secretary of State and the National Assembly for Wales can only make increases to Health Authority allocations based on performance in preceding financial years. The new subsection (3C) enables the Secretary of State to make such increases on the basis of performance over a period which has been notified to the Authority in advance, whether it consists of, or any part of, a preceding year or any part of the current financial year.

33.     Section 2(3) amends section 97(3D), which provides that a Health Authority is notified of an objective, if the objective is specified or referred to in a notice given to Health Authorities by the Secretary of State. The amendment means that the Secretary of State may specify or refer to objectives, criteria or periods in a notice given to an individual Health Authority, rather than a notice to all Authorities.

34.     It is intended that the NHS Performance Fund will be allocated according to a traffic light system to underpin a system of earned autonomy. "Green" organisations will have access to their share of the National Performance Fund as of right. "Yellow" Health Authorities, NHS trusts and Primary Care Groups/Trusts will be required to agree plans, signed off by the regional office, setting out how they will use their share of the fund. "Red" organisations will have their share of the fund held by the new Modernisation Agency. They will get their fair share of extra funds but the Agency will oversee spending.