Emotions have been running high over the implications of the new Health and Social Care Bill which was published on 19 January 2011. If you believe the rhetoric, the reforms will strengthen the commissioning of NHS services, liberate the healthcare market, improve patient choice, increase democratic accountability and strengthen public health services. The mechanics of achieving those aims are not straightforward – a major re-structuring of an already complex system will be challenging to implement, not least because of the political sensitivity surrounding many of the key proposals.


There is no doubt the Bill is vast and contains radical reforms. It is longer than the Act that originally established the NHS and is far reaching in its intended aims. Many of the core elements of the Bill will not surprise those who have been following the debate on NHS reform since the publication of the White Paper last year. While there are mixed views on the implications of the Bill, one thing is for sure – many people believe the reforms are being rushed and are being introduced at a time when the NHS should be concentrating on delivering savings and improving standards rather than dealing with institutional upheaval. But the Government insists that change is necessary now to empower patients and improve care. Some of the more controversial proposals may or may not be softened as the Bill is debated over the next few months but, either way, it is clear that the NHS is about to embark on a fundamental change in direction.

So for those without the time or appetite to wade through the 367 pages of the Bill, here is a snapshot of the highlights and a few thoughts on the issues we think are most likely to feature in health sector chat rooms over the next few months.


  • At its core, the Bill introduces a new NHS in which the purchasing of services is managed by groups of GP consortia; there is an open but regulated market for the delivery of NHS services; and the day-to-day scope of central Government’s role in the NHS is reduced.
  • While commissioning responsibility will rest with a new Commissioning Board, purchasing decisions will be taken by GP consortia at a local level. Integrated working between GP consortia and local authorities in respect of the provision of services is also expected, although given the limited powers of local authority health and well being boards, integration per se may be some way off.  
  • For those who have been sceptical about whether GPs have the skills and experience to undertake the commissioning role, the inclusion of a duty on consortia to “obtain appropriate advice” in order for them to discharge their functions will come as no surprise. This opens the door for consultants and other parties to provide support services to consortia (a step some have already taken).
  • Foundation Trusts are given greater financial freedom – the private patient income cap is removed, as are constraints on borrowing limits and they can dispose of and charge their land. However, these new freedoms are balanced against the controls which Monitor will have under the new licensing regime that will apply to both Foundation Trusts and any other providers of NHS services. Licence conditions will give Monitor the power to impose restrictions and obligations on operators where they are necessary, e.g. to promote competition or protect certain designated services. They may also impose controls over the use and disposal of assets.
  • There is to be a new special administration scheme, controlled by Monitor, which will apply to distressed Foundation Trusts as well as companies providing certain designated services. The scheme’s objective will be to ensure continuity of service by rescuing these Foundation Trusts or companies on a going concern basis and transferring their assets and liabilities to another licence holder. Support will be provided in the form of financial assistance, arranged by Monitor, for the benefit of those subject to a special administration order.
  • There are powers to introduce property and staff transfer schemes but still no answer to the long standing question – “what will happen to the NHS estate?”. While the Bill sets up a framework for the transfer of property from PCTs and SHAs to various types of organisations, including “qualifying companies” and others providing services within the health service, the Government’s plans for re-organising property holdings following the abolition of PCTs and SHAs remain unclear.

Click here to see a diagram of the Highlights of the Bill.

Overview of Key Themes

1. Duty to improve healthcare

A defined legal duty to protect and improve public health and the quality of patient care has been introduced. In particular, the Secretary of State has a duty to continuously improve the quality of services (measured in terms of the effectiveness and safety of services and, importantly, patient experience). To fulfil this duty, the Bill empowers the Secretary of State to take a range of actions such as sanctioning the carrying out of research, providing financial incentives to encourage people to lead healthier lifestyles and providing vaccination and screening services.

To monitor improvement and performance, the Secretary of State must have regard to quality statements produced by NICE in relation to NHS, public health and social care services. In addition, the Secretary of State must publish annual reports regarding the performance of the NHS.

2. Establishment of the NHS Commissioning Board and Commissioning Consortia

SHAs and PCTs are to be abolished and the NHS Commissioning Board and Commissioning Consortia are to be established by some of the most radical reforms introduced by the Bill. The Board (a non-departmental public body which takes on a number of NHS functions), will grant applications for the establishment of consortia (corporate statutory bodies), taking into account matters such as a consortium’s proposed constitution and the appropriateness of the area specified.

Every GP practice must become a member of a commissioning consortium with the overall aim of bringing commissioning closer to patients. Consortia will commission the healthcare they deem appropriate for their patients and their purchasing decisions will account for over 80 per cent of the NHS budget.

The Secretary of State has the power to decide that certain services will be commissioned by the NHS Commissioning Board rather than by commissioning consortia, including services to the armed forces, the prison population and prescribed dentistry. The Board will also be responsible for commissioning “such other services or facilities as may be prescribed” by reference to criteria including the number of people who require the service and the cost of providing it.

Although consortia are given day-to-day decision making power, the Board retains substantial controls over their performance, including sanctions where consortia are failing (e.g. replacing the accountable officer, transferring functions to another consortium or dissolving the consortium). Where performance is good, the Board may award “bonuses” to consortia who are free to distribute the payments among their members as they think appropriate.

3. Monitor as an independent regulator

Monitor will take on the role of an independent economic regulator for all health and adult social care in England. It strongly supports the Bill, and believes that increased competition in healthcare will lead to a more innovative and responsive service. Much of the Bill’s content is dedicated to setting out its duties and functions.  

Monitor will exist primarily to protect and promote the interests of patients by promoting competition where appropriate and through regulation where necessary. It will aim to ensure the promotion of fair competition in the provision of health care; to this end, the Bill grants it many of the investigative and regulatory powers that are available to the Office of Fair Trading under current UK competition law. In addition, it has the role of making sure that the NHS Commissioning Board and GP consortia adhere to good practice in relation to procurement and that they protect and promote patient choice.  

4. National tariff

Monitor must publish the “national tariff” which specifies the price, or maximum price, of certain NHS health services. The specified services must be charged on the basis of the national tariff prices, and rules for determining the price payable for services which are not specified in the national tariff must also be published. There is a requirement to consult (including with consortia and licence holders) on the level and scope of the tariff and a requirement to refer serious objections to the Competition Commission for determination.  

5. Licensing

Any person who provides an NHS health care service must hold a licence (although exemptions may apply). The licence will be the mechanism by which Monitor can carry out the majority of its regulatory functions, giving it the ability to collect information, set prices, promote competition and support the continuity of designated services. Monitor administers the licence scheme, and will draw up and publish the criteria which applicants must fulfill to obtain a licence. Further, it has enforcement powers to ensure that licensed providers comply with the requirements of their permits, including the imposition of financial penalties and the power to revoke the licence.  

6. All trusts to be Foundation Trusts

All trusts are compelled to become Foundation Trusts. Foundation Trust hospitals will be semi-independent of Whitehall control with, for example, the freedom to generate income from private patients (with no cap) and the freedom to borrow and grant security. The governance and management of Foundation Trusts will continue be overseen by Monitor but this will be less “hands on” than under the existing regime.

7. Insolvency provisions

Insolvency law is amended in relation to Foundation Trusts. A special administration regime is introduced to ensure the continuous provision of services provided by a distressed Foundation Trust or company providing designated services. Monitor must establish and maintain mechanisms for providing financial assistance in cases where a provider is subject to a special administration order. It may establish a fund for this purpose and will have the power to impose levies on providers and charges on commissioners as a means of funding this contingency arrangement.

8. Patient accountability

The Healthwatch England Committee is established as a consumer representative body to increase accountability to the public and patients. This new independent body will be able to look into complaints and scrutinize the performance of local health providers. Local Healthwatch organisations in each local authority area will also be set up.  

A new body called Public Health England will also be created and will take over the work of the Health Protection Agency and the National Treatment Agency for Substance Abuse, which are closing. This aims to improve public health and reduce health inequalities (for example between the wealthy and poor).