Legalize / United Kingdom / Public General Act

Health and Social Care Act 2012

Type Public General Act

Publication 2012-03-27

Last updated 2025-07-07

State In force

Department Statute Law Database

Source legislation.gov.uk

articles Not indexed

Reform history JSON API

(1) The objective of a health special administration is to secure—

(a) the continued provision of such of the health care services provided for the purposes of the NHS by the company subject to the health special administration order, at such level, as the commissioners of those services determine by applying criteria specified in health special administration regulations (see section 130), and

(b) that it becomes unnecessary, by one or both of the means set out in subsection (2), for the health special administration order to remain in force for that purpose.

(2) Those means are—

(a) the rescue as a going concern of the company subject to the health special administration order, and

(b) one or more transfers falling within subsection (3).

(3) A transfer falls within this subsection if it is a transfer as a going concern—

(a) to another person, or

(b) as respects different parts of the undertaking of the company subject to the health special administration order, to two or more other persons,

of so much of that undertaking as it is appropriate to transfer for the purpose of achieving the objective of the health special administration.

(4) The means by which a transfer falling within subsection (3) may be effected include in particular—

(a) a transfer of the undertaking of the company subject to the health special administration order, or of part of its undertaking, to a wholly-owned subsidiary of that company, and

(b) a transfer to a company of securities of a wholly-owned subsidiary to which there has been a transfer falling within paragraph (a).

(5) The objective of a health special administration may be achieved by transfers to the extent only that—

(a) the rescue as a going concern of the company subject to the health special administration order is not reasonably practicable or is not reasonably practicable without such transfers,

(b) the rescue of the company as a going concern will not achieve that objective or will not do so without such transfers,

(c) such transfers would produce a result for the company's creditors as a whole that is better than the result that would be produced without them, or

(d) such transfers would, without prejudicing the interests of its creditors as a whole, produce a result for the company's members as a whole that is better than the result that would be produced without them.

Health special administration regulations

130

(1) Regulations (referred to in this Chapter as “health special administration regulations”) must make further provision about health special administration orders.

(2) Health special administration regulations may apply with or without modifications—

(a) any provision of Part 2 of the Insolvency Act 1986 (administration) or any related provision of that Act, and

(b) any other enactment which relates to insolvency or administration or makes provision by reference to anything that is or may be done under that Act.

(3) Health special administration regulations may, in particular, provide that the court may make a health special administration order in relation to a relevant provider if it is satisfied, on a petition by the Secretary of State under section 124A of the Insolvency Act 1986 (petition for winding up on grounds of public interest), that it would be just and equitable (disregarding the objective of the health special administration) to wind up the provider in the public interest.

(4) Health special administration regulations may make provision about—

(a) the application of procedures under the Insolvency Act 1986 in relation to relevant providers, and

(b) the enforcement of security over property of relevant providers.

(5) Health special administration regulations may, in particular, make provision about the publication and maintenance by NHS England of a list of relevant providers.

(6) Health special administration regulations may in particular—

(a) require NHS England to publish guidance for commissioners about the application of the criteria referred to in section 129(1)(a);

(b) confer power on NHS England to revise guidance published by virtue of paragraph (a) and require it to publish guidance so revised;

(c) require NHS England, before publishing guidance by virtue of paragraph (a) or (b), to obtain the approval of the Secretary of State ...;

(d) require commissioners, when applying the criteria referred to in section 129(1)(a), to have regard to such matters as NHS England may specify in guidance published by virtue of paragraph (a) or (b);

(e) require NHS England to make arrangements for facilitating agreement between commissioners in their exercise of their function under section 129(1)(a);

(f) confer power on NHS England, where commissioners fail to reach agreement in pursuance of arrangements made by virtue of paragraph (e), to exercise their function under section 129(1)(a);

(g) provide that, in consequence of the exercise of the power conferred by virtue of paragraph (f), the function under section 129(1)(a), so far as applying to the commissioners concerned, is to be regarded as discharged;

(h) require a health special administrator to carry out in accordance with the regulations consultation on the action which the administrator recommends should be taken in relation to the provider concerned.

(7) Health special administration regulations may modify this Chapter or any enactment mentioned in subsection (8) in relation to any provision made by virtue of this Chapter.

(8) The enactments are—

(a) the Insolvency Act 1986, and

(b) any other enactment which relates to insolvency or administration or makes provision by reference to anything that is or may be done under that Act.

(9) The power to make rules under section 411 of the Insolvency Act 1986 (company insolvency rules) applies for the purpose of giving effect to provision made by virtue of this Chapter as it applies for the purpose of giving effect to Parts 1 to 7 of that Act.

(10) For that purpose—

(a) the power to make rules in relation to England and Wales is exercisable by the Lord Chancellor with the concurrence of the Secretary of State and, in the case of rules that affect court procedure, with the concurrence of the Lord Chief Justice;

(b) the power to make rules in relation to Scotland is exercisable by the Secretary of State;

(11) Before making health special administration regulations the Secretary of State must consult such persons as the Secretary of State considers appropriate.

Transfer schemes

131

(1) Health special administration regulations may make provision about transfer schemes to achieve the objective of a health special administration (see section 129).

(2) Health special administration regulations may, in particular, include provision—

(a) for the making of a transfer scheme to be subject to the consent of NHS England and the person to whom the transfer is being made,

(b) for NHS England to have power to modify a transfer scheme with the consent of parties to the transfers effected by the scheme, and

(c) for modifications made to a transfer scheme by virtue of paragraph (b) to have effect from such time as NHS England may specify (which may be a time before the modifications were made).

(3) Health special administration regulations may, in particular, provide that a transfer scheme may include provision—

(a) for the transfer of rights and liabilities under or in connection with a contract of employment from a company subject to a health special administration order to another person,

(b) for the transfer of property, or rights and liabilities other than those mentioned in paragraph (a), from a company subject to a health special administration order to another person,

(c) for the transfer of property, rights and liabilities which would not otherwise be capable of being transferred or assigned,

(d) for the transfer of property acquired, and rights and liabilities arising, after the making of the scheme,

(e) for the creation of interests or rights, or the imposition of liabilities, and

(f) for the transfer, or concurrent exercise, of functions under enactments.

Indemnities

132

Health special administration regulations may make provision about the giving by NHS England of indemnities in respect of—

(a) liabilities incurred in connection with the discharge by health special administrators of their functions, and

(b) loss or damage sustained in that connection.

Modification of this Chapter under Enterprise Act 2002

133

(1) The power to modify or apply enactments conferred on the Secretary of State by each of the sections of the Enterprise Act 2002 mentioned in subsection (2) includes power to make such consequential modifications of provision made by virtue of this Chapter as the Secretary of State considers appropriate in connection with any other provision made under that section.

(2) Those sections are—

(a) sections 248 and 277 (amendments consequential on that Act), and

(b) section 254 (power to apply insolvency law to foreign companies).

CHAPTER 6 — Financial assistance in special administration cases

Establishment of mechanisms

Duty to establish mechanisms for providing financial assistance

134

(1) NHS England must establish, and secure the effective operation of, one or more mechanisms for providing financial assistance in cases where a provider of health care services for the purposes of the NHS (referred to in this Chapter as a “provider”) is subject to—

(a) a health special administration order (within the meaning of Chapter 5), or

(b) an order under section 65D(2) of the National Health Service Act 2006 (trust special administration for NHS foundation trusts).

(2) Mechanisms that NHS England may establish under this section include, in particular—

(a) mechanisms for raising money to make grants or loans or to make payments in consequence of indemnities given by NHS England by virtue of section 132 or under section 65D(12) of the National Health Service Act 2006;

(b) mechanisms for securing that providers arrange, or are provided with, insurance facilities.

(3) NHS England may secure that a mechanism established under this section operates so as to enable it to recover the costs it incurs in establishing and operating the mechanism.

(4) NHS England may establish different mechanisms for different providers or providers of different descriptions.

(5) NHS England does not require permission under any provision of the Financial Services and Markets Act 2000 as respects activities carried out under this Chapter.

(6) An order under section 306 providing for the commencement of this Chapter may require NHS England to comply with the duty to establish under subsection (1) before such date as the order specifies.

Power to establish fund

135

(1) NHS England may, for the purposes of section 134, establish and maintain a fund.

(2) In order to raise money for investment in a fund it establishes under this section, NHS England may impose requirements on providers or integrated care boards.

(3) NHS England must appoint at least two managers for a fund it establishes under this section.

(4) A manager of a fund may be an individual, a firm or a body corporate.

(5) NHS England must not appoint an individual as manager of a fund unless it is satisfied that the individual has the appropriate knowledge and experience for managing investments.

(6) NHS England must not appoint a firm or body corporate as manager of a fund unless it is satisfied that arrangements are in place to secure that any individual who will exercise functions of the firm or body corporate as manager will, at the time of doing so, have the appropriate knowledge and experience for managing investments.

(7) NHS England must not appoint an individual, firm or body corporate as manager of a fund unless the individual, firm or body is an authorised or exempt person within the meaning of the Financial Services and Markets Act 2000.

(8) NHS England must secure the prudent management of any fund it establishes under this section.

Applications for financial assistance

Applications

136

(1) NHS England may, on an application by a special administrator, provide financial assistance to the special administrator by using a mechanism established under section 134.

(2) An application under this section must be in such form, and must be supported by such evidence or other information, as NHS England may require (and a requirement under this subsection may be imposed after the receipt, but before the determination, of the application).

(3) If NHS England grants an application under this section, it must notify the applicant of—

(a) the purpose for which the financial assistance is being provided, and

(b) the other conditions to which its provision is subject.

(4) The special administrator must secure that the financial assistance is used only—

(a) for the purpose notified under subsection (3)(a), and

(b) in accordance with the conditions notified under subsection (3)(b).

(5) Financial assistance under this section may be provided only in the period during which the provider in question is in special administration.

(6) If NHS England refuses an application under this section, it must notify the applicant of the reasons for the refusal.

(7) NHS England must, on a request by an applicant whose application under this section has been refused, reconsider the application; but no individual involved in the decision to refuse the application may be involved in the decision on the reconsideration of the application.

(8) For the purposes of reconsidering an application, NHS England may request information from the applicant.

(9) NHS England must notify the applicant of its decision on reconsidering the application; and—

(a) if NHS England grants the application, it must notify the applicant of the matters specified in subsection (3), and

(b) if NHS England refuses the application, it must notify the applicant of the reasons for the refusal.

(10) In this Chapter—

(a) “special administrator” means—

(i) a person appointed as a health special administrator under Chapter 5, or

(ii) a person appointed as a trust special administrator under section 65D(2) of the National Health Service Act 2006, and

(b) references to being in special administration are to be construed accordingly.

Grants and loans

137

(1) NHS England may not provide financial assistance under section 136 in the form of a grant or loan unless it is satisfied that—

(a) it is necessary for the provider—

(i) to be able to continue to provide one or more of the health care services that it provides for the purposes of the NHS, or

(ii) to be able to secure a viable business in the long term, and

(b) no other source of funding which would enable it do so and on which it would be reasonable for it to rely is likely to become available to it.

(2) The terms of a grant or loan must include a term that the whole or a specified part of the grant or loan becomes repayable in the event of a breach by the provider or special administrator of the terms of the grant or loan.

(3) Subject to that, where NHS England makes a grant or loan under section 136, it may do so in such manner and on such terms as it may determine.

(4) NHS England may take such steps as it considers appropriate (including steps to adjust the amount of future payments towards the mechanism established under section 134 to raise funds for grants or loans under section 136) to recover overpayments in the provision of a grant or loan under that section.

(5) The power to recover an overpayment under subsection (4) includes a power to recover interest, at such rate as NHS England may determine, on the amount of the overpayment for the period beginning with the making of the overpayment and ending with its recovery.

Charges on commissioners

Power to impose charges on commissioners

138

(1) The Secretary of State may by regulations confer power on NHS England to require integrated care boards to pay charges relating to such of NHS England’s regulatory functions as relate to securing the continued provision of health care services for the purposes of the NHS.

(1A) In subsection (1) “regulatory functions”, in relation to NHS England, has the meaning given by section 13SB (2) of the National Health Service Act 2006.

(2) The regulations must provide that the amount of a charge imposed by virtue of this section is to be such amount—

(a) as may be prescribed, or

(b) as is determined by reference to such criteria, and by using such method, as may be prescribed.

(3) The regulations must—

(a) prescribe to whom the charge is to be paid;

(b) prescribe when the charge becomes payable;

(c) where the amount of the charge is to be determined in accordance with subsection (2)(b), require NHS England to carry out consultation in accordance with the regulations before imposing the charge;

(d) provide for any amount that is not paid by the time prescribed for the purposes of paragraph (b) to carry interest at the rate for the time being specified in section 18 of the Judgments Act 1838;

(e) provide for any unpaid balance and accrued interest to be recoverable summarily as a civil debt (but for this not to affect any other method of recovery).

(4) Where the person that the regulations prescribe for the purposes of subsection (3)(a) is a provider, the regulations may confer power on NHS England to require the provider to pay NHS England the amount of the charge in question in accordance with the regulations.

(5) Before making regulations under this section, the Secretary of State must consult NHS England.

(6) Regulations under this section may apply with modifications provision made by sections 141 to 143 in relation to charges imposed by virtue of this section.

Levy on providers

Imposition of levy

139

(1) The power under section 135(2) includes, in particular, power to impose a levy on providers for each financial year.

(2) Before deciding whether to impose a levy under this section for the coming financial year, NHS England must estimate—

(a) the amount that will be required for the purpose of providing financial assistance in accordance with this Chapter,

(b) the amount that will be collected from integrated care boards by way of charges imposed by virtue of section 138 during that year, and

(3) Before the start of a financial year in which NHS England proposes to impose a levy under this section, it must determine—

(a) the factors by reference to which the rate of the levy is to be assessed,

(b) the time or times by reference to which those factors are to be assessed, and

(4) Where the determinations under subsection (3) reflect changes made to the factors by reference to which the rate of the levy is to be assessed, the notice under section 143(1)(b) must include an explanation of those changes.

(5) A levy under this section may be imposed at different rates for different providers.

Power of Secretary of State to set limit on levy and charges

140

(1) Before the beginning of each financial year, the Secretary of State may, with the approval of the Treasury, specify by order—

(a) the maximum amount that NHS England may raise from levies it imposes under section 139 for that year, and

(b) the maximum amount that it may raise from charges it imposes by virtue of section 138 for that year.

(2) Where the Secretary of State makes an order under this section, NHS England must secure that the levies and charges for that year are at a level that NHS England estimates will, in each case, raise an amount not exceeding the amount specified for that case in the order.

Consultation

141

(1) This section applies where NHS England is proposing to impose a levy under section 139 for the coming financial year and—

(a) has not imposed a levy under that section for the current financial year or any previous year,

(b) has been imposing the levy for the current financial year but proposes to make relevant changes to it for the coming financial year, or

(c) has been imposing the levy for the current financial year and the financial year preceding it, but has not been required to serve a notice under this section in respect of the levy for either of those years.

(2) A change to a levy is relevant for the purposes of subsection (1)(b) if it is a change to the factors by reference to which the rate of the levy is to be assessed.

(3) Before making the determinations under section 139(3) in respect of the levy, NHS England must send a notice to—

(a) the Secretary of State,

(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(d) each potentially liable provider, and

(e) such other persons as it considers appropriate.

(4) NHS England must publish a notice that it sends under subsection (3).

(5) In a case within subsection (1)(a) or (c), the notice must state—

(a) the factors by reference to which NHS England proposes to assess the rate of the levy,

(b) the time or times by reference to which it proposes to assess those factors, and

(c) the time or times during the coming financial year when it proposes that the levy, or an instalment of it, will become payable.

(6) In a case within subsection (1)(b), the notice must specify the relevant changes NHS England proposes to make.

(7) A notice under this section must specify when the consultation period in relation to the proposals ends; and for that purpose, the consultation period is the period of 28 days beginning with the day on which the notice is published under subsection (4).

(8) In this section ... a “potentially liable provider” means a provider on whom NHS England is proposing to impose the levy for the coming financial year (regardless of the amount (if any) that the provider would be liable to pay as a result of the proposal).

Responses to consultation

142

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Amount payable

143

(1) NHS England must—

(a) calculate the amount which each provider who is to be subject to a levy under section 139 for a financial year is to be liable to pay in respect of that year, and

(b) notify the provider of that amount and the date or dates on which it, or instalments of it, will become payable.

(2) If the provider is to be subject to the levy for only part of the financial year, it is to be liable to pay only the amount which bears to the amount payable for the whole financial year the same proportion as the part of the financial year for which the provider is to be subject to the levy bears to the whole financial year.

(3) The amount which a provider is liable to pay may be zero.

(4) Subsection (5) applies if, during a financial year in which NHS England is imposing a levy under section 139, it becomes satisfied that the risk of a provider who is subject to the levy going into special administration has changed by reference to what it was—

(a) at the start of the year, or

(b) if NHS England has already exercised the power under subsection (5) in relation to the levy in the case of that provider, at the time it did so.

(5) NHS England may notify the provider that NHS England proposes to adjust the amount that the provider is liable to pay so as to reflect the change; and the notice must specify the amount of the proposed adjustment.

(6) Following the expiry of the period of 28 days beginning with the day after that on which NHS England sends the notice, it may make the adjustment.

(7) In a case within subsection (2), subsection (4) has effect as if references to the financial year were references to the part of the financial year for which the provider is to be subject to the levy.

(8) Where a provider who reasonably believes that NHS England has miscalculated the amount notified to the provider under subsection (1) or (5) requests NHS England to recalculate the amount, NHS England must—

(a) comply with the request, and

(b) send the provider written notice of its recalculation.

(9) Subsection (8) does not apply to a request to recalculate an amount in respect of a financial year preceding the one in which the request is made.

(10) If the whole or part of the amount which a person is liable to pay is not paid by the date by which it is required to be paid, the unpaid balance carries interest at the rate for the time being specified in section 17 of the Judgments Act 1838; and the unpaid balance and accrued interest are recoverable summarily as a civil debt (but this does not affect any other method of recovery).

Supplementary

Investment principles and reviews

144

(1) NHS England must prepare and publish a statement of the principles that govern its decisions, or decisions made on its behalf, about making investments for the purposes of this Chapter.

(2) NHS England must—

(a) in each financial year, review the statement,

(b) if it considers necessary in light of the review, revise the statement, and

(3) As soon as reasonably practicable after the end of each financial year, NHS England must undertake and publish a review of the operation during that year of—

(a) the procedure for health special administration under Chapter 5,

(b) the procedure for trust special administration for NHS foundation trusts under Chapter 5A of Part 2 of the National Health Service Act 2006, and

(4) The purposes of the review under subsection (3)(c) are—

(a) to assess the operation of the mechanisms concerned,

(b) to assess the accuracy of the estimates given by NHS England in relation to the operation of the mechanisms,

(c) to assess what improvements can be made to the process for making estimates in relation to the operation of the mechanisms, and

(d) to review the extent of the protection which the mechanisms are required to provide.

(5) Where a fund established under section 135 has been in operation for the whole or part of the year concerned, the review published under this section must specify—

(a) the income of the fund during that year, and

(b) the expenditure from the fund during that year.

(6) NHS England must exclude from a review published under this section information which it is satisfied is—

(a) commercial information the disclosure of which would, or might, significantly harm the legitimate business interests of an undertaking to which it relates;

(b) information relating to the private affairs of an individual the disclosure of which would, or might, significantly harm that person's interests.

Borrowing

145

(1) NHS England may—

(a) borrow from a deposit-taker such sums as it may from time to time require for exercising its functions under this Chapter;

(b) give security for sums that it borrows.

(2) But NHS England may not borrow if the effect would be—

(a) to take the aggregate amount outstanding in respect of the principal of sums borrowed by it over such limit as the Secretary of State may by order specify, or

(b) to increase the amount by which the aggregate amount so outstanding exceeds that limit.

(3) In this section, “deposit-taker” means—

(a) a person who has permission under Part 4A of the Financial Services and Markets Act 2000, ...

(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(4) The definition of “deposit-taker” in subsection (3) must be read with—

(a) section 22 of the Financial Services and Markets Act 2000,

(b) any relevant order under that section, and

Shortfall or excess of available funds, etc.

146

(1) The Secretary of State may provide financial assistance to NHS England if the Secretary of State is satisfied that—

(a) there are insufficient funds available from a mechanism established under section 134, or

(b) the mechanism is otherwise unable to operate effectively.

(2) If the Secretary of State is satisfied that the level of funds available from a mechanism established under section 134 exceeds the level that is necessary, the Secretary of State may direct NHS England to transfer the excess to the Secretary of State.

(3) If the Secretary of State is satisfied that a mechanism established under section 134 has become dormant, or if a mechanism so established is being wound up, the Secretary of State may direct NHS England to transfer to the Secretary of State such funds as are available from the mechanism.

CHAPTER 7 — Miscellaneous and general

Secretary of State’s duty as respects variation in provision of health services

147

After section 12D of the National Health Service Act 2006 insert—

(12E) (1) The Secretary of State must not exercise the functions mentioned in subsection (2) for the purpose of causing a variation in the proportion of services provided as part of the health service that is provided by persons of a particular description if that description is by reference to— (a) whether the persons in question are in the public or (as the case may be) private sector, or (b) some other aspect of their status. (2) The functions mentioned in this subsection are the functions of the Secretary of State under— (a) sections 6E and 13A, and (b) section 75 of the Health and Social Care Act 2012 (requirements as to procurement, patient choice and competition).

Service of documents

148

(1) A notice required under this Part to be given or sent to or served on a person (“R”) may be given or sent to or served on R—

(a) by being delivered personally to R,

(b) by being sent to R—

(i) by a registered post service, as defined by section 125(1) of the Postal Services Act 2000, or

(ii) by a postal service which provides for the delivery of the document to be recorded, or

(2) Where a notice is sent as mentioned in subsection (1)(b), it is, unless the contrary is proved, to be taken to have been received on the third day after the day on which it is sent.

(3) Where a notice is sent as mentioned in subsection (1)(c) in accordance with section 149, it is, unless the contrary is proved, to be taken to have been received on the next working day after the day on which it is transmitted.

(4) In subsection (3) “working day” means a day other than—

(a) a Saturday or a Sunday;

(b) Christmas Day or Good Friday; or

(5) A notice required under this Part to be given or sent to or served on a body corporate or a firm is duly given, sent or served if it is given or sent to or served on the secretary or clerk of that body or a partner of that firm.

(6) For the purposes of section 7 of the Interpretation Act 1978 in its application to this section, the proper address of a person is—

(a) in the case of a person who holds a licence under Chapter 3 who has notified NHS England of an address for service, that address, and

(b) in any other case, the address determined in accordance with subsection (7).

(7) That address is—

(a) in the case of a secretary or clerk of a body corporate, the address of the registered or principal office of the body,

(b) in the case of a partner of a firm, the address of the principal office of the firm, and

(8) In this section and in section 149—

“electronic communication” has the same meaning as in the Electronic Communications Act 2000;

“notice” includes any other document.

(9) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Electronic communications

149

(1) If a notice required or authorised by this Part to be given or sent by or to a person or to be served on a person is sent by an electronic communication, it is to be treated as given, sent or served only if the requirements of subsection (2) or (3) are met.

(2) If the person required or authorised to give, send or serve the notice is NHS England or the CMA—

(a) the person to whom the notice is given or sent or on whom it is served must have indicated to NHS England or (as the case may be) the CMA the person's willingness to receive notices by an electronic communication and provided an address suitable for that purpose, and

(b) the notice must be sent to or given or served at the address so provided.

(3) If the person required or authorised to give, send or serve the notice is not NHS England or the CMA, the notice must be given, sent or served in such manner as NHS England may require.

(4) An indication given for the purposes of subsection (2) may be given generally for the purposes of notices required or authorised to be given, sent or served by NHS England or (as the case may be) the CMA under this Part or may be limited to notices of a particular description.

(5) NHS England must publish such requirements as it imposes under subsection (3).

Interpretation, transitional provision and consequential amendments

150

(1) In this Part—

“anti-competitive behaviour” means behaviour which would (or would be likely to) prevent, restrict or distort competition and a reference to preventing anti-competitive behaviour includes a reference to eliminating or reducing the effects (or potential effects) of the behaviour;

“the CMA” means the Competition and Markets Authority;

“commissioner”, in relation to a health care service, means the person who arranges for the provision of the service (and “commission” is to be construed accordingly);

“enactment” includes an enactment contained in subordinate legislation (within the meaning of the Interpretation Act 1978);

“facilities” has the same meaning as in the National Health Service Act 2006 (see section 275 of that Act);

“financial year” means a period of 12 months ending with 31 March;

“health care” means all forms of health care provided for individuals, whether relating to physical or mental health, with a reference in this Part to “health care services” being read accordingly; and for the purposes of this Part it does not matter if a health care service is also an adult social care service;

“the NHS” means the comprehensive health service continued under section 1(1) of the National Health Service Act 2006, except the part of it that is provided in pursuance of the public health functions (within the meaning of that Act) of the Secretary of State or local authorities;

“prescribed” means prescribed in regulations;

“service” includes facility.

(1A) A reference in this Part to the provision of health care services for the purposes of the NHS is a reference to their provision for those purposes in accordance with the National Health Service Act 2006.

(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(4) Until section 181 comes into force, the following provisions in this Part are to be read as if the words “and its Healthwatch England committee” were omitted—

(a) section 83(4)(c);

(b) section 84(5)(a)(iii);

(d) section 100(2)(e).

(5) Schedule 13 (which contains minor and consequential amendments) has effect.

PART 4 — NHS foundation trusts & NHS trusts

Governance and management

Governors

151

(1) In paragraph 7 of Schedule 7 to the National Health Service Act 2006 (public benefit corporation to have governors)—

(a) in sub-paragraph (1), for “a board of governors” substitute “a council of governors”, and

(b) in sub-paragraphs (2), (3) and (4), for “the board” substitute “the council”.

(2) Omit paragraph 9(3) of that Schedule (requirement for at least one member of council of governors to be appointed by PCT).

(3) For paragraph 9(7) of that Schedule (partnership organisations) substitute—

(7) Any organisation specified in the constitution for the purposes of this sub-paragraph may appoint one or more members of the council (but no more than the number specified for those purposes in the constitution).

(4) After paragraph 10 of that Schedule insert—

(10A) The general duties of the council of governors are— (a) to hold the non-executive directors individually and collectively to account for the performance of the board of directors, and (b) to represent the interests of the members of the corporation as a whole and the interests of the public.

(5) After paragraph 10A of that Schedule insert—

(10B) A public benefit corporation must take steps to secure that the governors are equipped with the skills and knowledge they require in their capacity as such.

(6) After paragraph 10B of that Schedule insert—

(10C) For the purpose of obtaining information about the corporation's performance of its functions or the directors' performance of their duties (and deciding whether to propose a vote on the corporation's or directors' performance), the council of governors may require one or more of the directors to attend a meeting.

(7) In paragraph 23(4) of that Schedule (persons eligible for appointment as auditor by governors), in sub-paragraph (c), for “the regulator” substitute “the Secretary of State”.

(8) In paragraph 26(2) of that Schedule (information that must be given in annual reports etc.), after paragraph (a) insert—

(aa) information on any occasions in the period to which the report relates on which the council of governors exercised its power under paragraph 10C,

(9) In consequence of subsection (1)—

(a) in sections 33(4)(a) (in each place it appears), 35(2)(c) and (5)(c), 39(3)(a), 59(1), (2)(b) and (5) and 60(1) of that Act, for “board of governors” substitute “council of governors”,

(b) in section 60(2) and (3) and paragraphs 8 to 14, 17, 18, 20, 21, 23, 27 and 28 of Schedule 7 to that Act, for “the board” (in each place it appears) substitute “the council”,

(d) in the cross-heading preceding paragraph 28 of that Schedule, for “board” substitute “council”, and

(e) in paragraphs 4(2) and 5(1) of Schedule 10 to that Act, for “board of governors” substitute “council of governors”.

Directors

152

(1) After paragraph 18 of Schedule 7 to the National Health Service Act 2006 insert—

(18A) The general duty of the board of directors, and of each director individually, is to act with a view to promoting the success of the corporation so as to maximise the benefits for the members of the corporation as a whole and for the public.

(2) After paragraph 18A of that Schedule insert—

(18B) (1) The duties that a director of a public benefit corporation has by virtue of being a director include in particular— (a) a duty to avoid a situation in which the director has (or can have) a direct or indirect interest that conflicts (or possibly may conflict) with the interests of the corporation; (b) a duty not to accept a benefit from a third party by reason of being a director or doing (or not doing) anything in that capacity. (2) The duty referred to in sub-paragraph (1)(a) is not infringed if— (a) the situation cannot reasonably be regarded as likely to give rise to a conflict of interest, or (b) the matter has been authorised in accordance with the constitution. (3) The duty referred to in sub-paragraph (1)(b) is not infringed if acceptance of the benefit cannot reasonably be regarded as likely to give rise to a conflict of interest. (4) In sub-paragraph (1)(b), “third party” means a person other than— (a) the corporation, or (b) a person acting on its behalf.

(3) After paragraph 18B of that Schedule insert—

(18C) (1) If a director of a public benefit corporation has in any way a direct or indirect interest in a proposed transaction or arrangement with the corporation, the director must declare the nature and extent of that interest to the other directors. (2) If a declaration under this paragraph proves to be, or becomes, inaccurate or incomplete, a further declaration must be made. (3) Any declaration required by this paragraph must be made before the corporation enters into the transaction or arrangement. (4) This paragraph does not require a declaration of an interest of which the director is not aware or where the director is not aware of the transaction or arrangement in question. (5) A director need not declare an interest— (a) if it cannot reasonably be regarded as likely to give rise to a conflict of interest; (b) if, or to the extent that, the directors are already aware of it; (c) if, or to the extent that, it concerns terms of the director's appointment that have been or are to be considered— (i) by a meeting of the board of directors, or (ii) by a committee of the directors appointed for the purpose under the constitution.

(4) After paragraph 18C of that Schedule insert—

(18D) (1) Before holding a meeting, the board of directors must send a copy of the agenda of the meeting to the council of governors. (2) As soon as practicable after holding a meeting, the board of directors must send a copy of the minutes of the meeting to the council of governors.

(5) After paragraph 18D of that Schedule insert—

(18E) (1) The constitution must provide for meetings of the board of directors to be open to members of the public. (2) But the constitution may provide for members of the public to be excluded from a meeting for special reasons.

Members

153

(1) In section 61 of the National Health Service Act 2006 (representative membership), the existing text becomes subsection (1) and, in that subsection, for “An authorisation may require an NHS foundation trust to” substitute “An NHS foundation trust must”.

(2) After that subsection insert—

(2) In deciding which areas are to be areas for public constituencies, or in deciding whether there is to be a patients' constituency, an NHS foundation trust must have regard to the need for those eligible for such membership to be representative of those to whom the trust provides services.

Accounts: initial arrangements

154

(1) In paragraph 24 of Schedule 7 to the National Health Service Act 2006 (accounts: general), for sub-paragraph (1) substitute—

(1) A public benefit corporation must keep proper accounts and proper records in relation to the accounts. (1A) The regulator may with the approval of the Secretary of State give directions to the corporation as to the content and form of its accounts.

(2) In sub-paragraph (3) of that paragraph, in paragraph (b) for “any records” substitute “the records”.

(3) In paragraph 25 of that Schedule (annual accounts), in sub-paragraph (1), for “the Treasury” substitute “the Secretary of State”.

(4) After sub-paragraph (1) of that paragraph insert—

(1A) The regulator may with the approval of the Secretary of State direct a public benefit corporation— (a) to prepare accounts in respect of such period or periods as may be specified in the direction; (b) that any accounts prepared by it by virtue of paragraph (a) are to be audited in accordance with such requirements as may be specified in the direction.

(5) In sub-paragraph (2) of that paragraph—

(a) after “annual accounts” insert “or in preparing any accounts by virtue of sub-paragraph (1A)(a)”,

(b) for “the Treasury” substitute “the Secretary of State”, and

(6) In sub-paragraph (3) of that paragraph, after “annual accounts” insert “, or of any accounts to be prepared by it by virtue of sub-paragraph (1A)(a),”.

(7) In sub-paragraph (4) of that paragraph, in paragraph (b)—

(a) omit “once it has done so,”, and

(b) at the end insert “within such period as the regulator may direct”.

(8) After that sub-paragraph insert—

(4A) The corporation must send to the regulator within such period as the regulator may direct— (a) a copy of any accounts prepared by the corporation by virtue of sub-paragraph (1A)(a), and (b) a copy of any report of an auditor on them prepared by virtue of sub-paragraph (1A)(b).

Accounts: variations to initial arrangements

155

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Annual report and forward plan

156

(1) In sub-paragraph (2) of paragraph 26 of Schedule 7 to the National Health Service Act 2006 (information that must be included in annual report), after paragraph (aa) (inserted by section 151(8)) insert—

(ab) information on the corporation's policy on pay and on the work of the committee established under paragraph 18(2) and such other procedures as the corporation has on pay, (ac) information on the remuneration of the directors and on the expenses of the governors and the directors,

(2) After that sub-paragraph insert—

(2A) Before imposing a requirement under sub-paragraph (2)(b) that the regulator considers is sufficiently significant to justify consultation, the regulator must consult such persons as it considers appropriate.

(3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(5) Omit section 39(2)(e) of that Act (requirement for copy of forward plan to be on register).

(6) In paragraph 22(1) of Schedule 7, omit paragraph (e) (duty to make forward plan available to the public).

Meetings

157

(1) After paragraph 27 of Schedule 7 to the National Health Service Act 2006 insert—

(27A) (1) A public benefit corporation must hold an annual meeting of its members. (2) The meeting must be open to members of the public. (3) At least one member of the board of directors of the corporation must attend the meeting and present the following documents to the members at the meeting— (a) the annual accounts, (b) any report of the auditor on them, (c) the annual report. (4) Where an amendment is made to the constitution in relation to the powers or duties of the council of governors of a public benefit corporation (or otherwise with respect to the role that the council has as part of the corporation)— (a) at least one member of the council of governors must attend the next meeting to be held under this paragraph and present the amendment, and (b) the corporation must give the members an opportunity to vote on whether they approve the amendment. (5) If more than half of the members voting approve the amendment, the amendment continues to have effect; otherwise, it ceases to have effect and the corporation must take such steps as are necessary as a result.

(2) In paragraph 28 of that Schedule (meeting of council of governors to consider annual accounts and reports), the existing text of which becomes sub-paragraph (1), after that sub-paragraph insert—

(2) Nothing in sub-paragraph (1) prevents the council of governors from holding a general meeting more than once a year.

(3) After that paragraph insert—

(28A) A public benefit corporation may hold a meeting which combines a meeting under paragraph 27A with a meeting under paragraph 28.

Voting

158

(1) After paragraph 29 of Schedule 7 to the National Health Service Act 2006 insert—

(30) (1) Regulations may amend this Chapter so as to add, vary or omit provision relating to voting by members of the council of governors of a public benefit corporation that is an NHS foundation trust, by its directors or by its members. (2) The power under sub-paragraph (1) is exercisable only in relation to provision in this Chapter that was inserted, or otherwise provided for, by Part 4 of the Health and Social Care Act 2012.

(2) In section 64(3) of that Act (regulations under Chapter 5 of Part 2 of that Act that are subject to affirmative procedure), after paragraph (a) (but before the “or” following it) insert—

(aa) regulations under paragraph 30(1) of Schedule 7,

Foundation trust status

Authorisation

159

(1) In section 30(1) of the National Health Service Act 2006 (definition of NHS foundation trust), for “which is authorised under this Chapter to provide” substitute “the function of which is to provide in accordance with this Chapter”.

(2) Omit section 33(2)(a) of that Act (requirement for application for authorisation to describe goods and services to be provided).

(3) In section 35(2) of that Act (matters as to which the regulator must be satisfied before giving authorisation), for paragraph (e) substitute—

(e) the applicant will be able to provide goods and services for the purposes of the health service in England,

(4) After section 35(3) of that Act (things the regulator must consider before deciding whether it is satisfied as to the matters in section 35(2)) insert—

(3A) The regulator must not give an authorisation unless it is notified by the Care Quality Commission that it is satisfied that the applicant is complying with (so far as applicable) the requirements mentioned in section 12(2) of the Health and Social Care Act 2008 in relation to the regulated activity or activities the applicant carries on. (3B) In subsection (3A), “regulated activity” has the same meaning as in section 8 of the Health and Social Care Act 2008.

(5) Omit section 35(4) and (7) of that Act (power to give authorisation on terms the regulator considers appropriate).

(6) Omit section 38 of that Act (variation of authorisation).

(7) Omit section 39(2)(b) of that Act (requirement for copy of authorisation to be on register).

(8) Omit section 49 of that Act (authorisation to require trust to allow regulator to enter and inspect trust's premises).

(9) Omit paragraph 22(1)(b) of Schedule 7 to that Act (requirement for copy of authorisation to be available for public inspection).

Bodies which may apply for foundation trust status

160

(1) Omit section 34 of the National Health Service Act 2006 (application for authorisation by body other than NHS trust).

(2) In section 35(1) of that Act (bodies which may be given authorisation), omit paragraph (b) (public benefit corporations) and the preceding “or”.

(3) Omit section 36(2) of that Act (public benefit corporation to become NHS foundation trust on being given authorisation).

(4) Despite subsection (1)—

(a) section 34(1) to (4) of that Act continues to have effect in the case of an application which, immediately before the commencement of that subsection, is pending determination, and

(b) section 34(5) to (7) of that Act continues to have effect in the case of an existing public benefit corporation.

(5) Despite subsection (2), section 35(1)(b) of that Act continues to have effect in the case of an existing public benefit corporation which, immediately before the commencement of that subsection, has not been given an authorisation under section 35.

(6) Despite subsection (3), section 36(2) of that Act continues to have effect in the case of an existing public benefit corporation.

(7) In subsections (4) to (6), “existing public benefit corporation” means a public benefit corporation—

(a) incorporated under section 34 of that Act and in existence immediately before the commencement of this section, or

(b) incorporated under that section by virtue of subsection (4).

Amendment of constitution

161

(1) In section 37 of the National Health Service Act 2006 (amendments of constitution), the existing text of which becomes subsection (1), for “with the approval of the regulator” substitute

only if— (a) more than half of the members of the council of governors of the trust voting approve the amendments, and (b) more than half of the members of the board of directors of the trust voting approve the amendments.

(2) After that subsection insert—

(2) Amendments made under this section take effect as soon as the conditions in subsection (1)(a) and (b) are satisfied. (3) But an amendment is of no effect in so far as the constitution would, as a result of the amendment, not accord with Schedule 7. (4) The trust must inform the regulator of amendments made under this section; but the regulator's functions do not include a power or duty to determine whether or not the constitution, as a result of the amendments, accords with Schedule 7.

(3) Subsections (1) and (2) do not apply in the case of amendments in respect of which, immediately before the commencement of this section, Monitor has yet to decide whether or not to give approval under section 37 of the National Health Service Act 2006.

Panel for advising governors

162

After section 39 of the National Health Service Act 2006 insert—

(39A) (1) The regulator may appoint a panel of persons to which a governor of an NHS foundation trust may refer a question as to whether the trust has failed or is failing— (a) to act in accordance with its constitution, or (b) to act in accordance with provision made by or under this Chapter. (2) A governor may refer a question to the panel only if more than half of the members of the council of governors voting approve the referral. (3) The panel— (a) may regulate its own procedure, and (b) may establish such procedures, and make such other arrangements, as it considers appropriate for the purpose of determining questions referred to it under this section. (4) The panel may decide whether, or to what extent, to carry out an investigation on a question referred to it under this section. (5) The panel may for that purpose, or for the purpose of carrying out such an investigation, request information or advice. (6) Where the panel has carried out such an investigation, it must publish a report of its determination of the question referred to it. (7) If a person refuses to comply with a request made under subsection (5), the report under subsection (6) may refer to the refusal. (8) On any proceedings before a court or tribunal relating to a question referred to the panel under this section, the court may take the panel's report of its determination of the question into account. (9) The regulator— (a) must pay expenses properly incurred by the panel, and (b) must make administrative support available to the panel. (10) Regulations may make provision as to— (a) eligibility for membership of the panel; (b) the number of persons that may be appointed as members; (c) the terms of appointment of members; (d) circumstances in which a person ceases to be a member or may be suspended.

Finance

Financial powers etc.

163

(1) At the end of section 40 of the National Health Service Act 2006 (power of Secretary of State to give financial assistance to NHS foundation trusts), insert—

(5) As soon as is practicable after the end of each financial year, the Secretary of State must prepare a report on the exercise of the power under subsection (1). (6) In relation to each exercise of the power under that subsection during the year to which the report relates, the report must specify the amount of the loan, issue of public dividend capital, grant or other payment and— (a) in the case of a loan, the amount (if any) outstanding at the end of the year and the other terms on which the loan was made, (b) in the case of an issue of public dividend capital, the terms on which it was issued (or, where a decision under section 42(3) is made in relation to it during that year, the terms so decided as those on which it is treated as having been issued), and (c) in the case of a grant or other payment, the terms on which it was made. (7) In relation to each loan made under that subsection during a previous financial year but not repaid by the beginning of the year to which the report relates, the report must specify— (a) the amount outstanding at the beginning of the year, (b) the amount (if any) outstanding at the end of the year, and (c) the other terms on which the loan was made. (8) A report under subsection (5) must, in relation to each NHS foundation trust, specify— (a) the amount of the public dividend capital of that trust at the end of the year to which the report relates, and (b) the conditions on which it is held. (9) The Secretary of State must publish a report under subsection (5).

(2) Omit section 41 of that Act (prudential borrowing code).

(3) In section 42 of that Act (public dividend capital), omit subsection (4) (dividend payable by NHS foundation trust to be same as that payable by NHS trust).

(4) Omit subsection (5) of that section (requirement for Secretary of State to consult the regulator).

(5) At the end of that section insert—

(7) The terms which may be decided under subsection (3) include terms to which the exercise of any power of an NHS foundation trust to do any of the following will be subject as a consequence— (a) providing goods or services, (b) borrowing or investing money, (c) providing financial assistance, (d) acquiring or disposing of property, (e) entering into contracts, or making other arrangements, to do anything referred to in paragraphs (a) to (d), (f) applying for dissolution (whether or not when also applying for the establishment of one or more other trusts), (g) applying to acquire another body.

(6) After that section insert—

(42A) (1) The Secretary of State must publish guidance on the powers conferred by sections 40 and 42. (2) The guidance on the power to make a loan under section 40(1) must in particular— (a) explain that, in exercising the power, the Secretary of State will apply the principle that a loan should be made only where there is a reasonable expectation that it will be repaid in accordance with the terms on which it is made; (b) include other criteria that the Secretary of State will apply when determining whether to exercise the power and, if so, the terms on which to make the loan. (3) The guidance on that power must also explain— (a) the process for applying for a loan under section 40(1); (b) the consequences of failing to comply with terms on which a loan is made under that provision. (4) The guidance on the power to decide terms under section 42(3) must, in particular, include the criteria that the Secretary of State will apply when deciding the terms. (5) The guidance on that power must also explain the consequences of failing to comply with the terms decided. (6) In preparing guidance under this section, the Secretary of State must have regard (among other things) to any generally accepted principles used by financial institutions to determine whether to make loans to bodies corporate and the terms on which to make loans to them. (7) Before publishing the guidance, the Secretary of State must consult— (a) the Treasury, (b) the regulator, and (c) such other persons as the Secretary of State considers appropriate.

(7) Omit section 45 of that Act (disposal of protected property).

(8) Omit section 46(2) and (3) of that Act (limitation on power of NHS foundation trusts to borrow money).

(9) For section 50 of that Act (fees) substitute—

(50) An NHS foundation trust must pay to the regulator such fee as the regulator may determine in respect of its exercise of functions under— (a) section 39; (b) section 39A.

Functions

Goods and services

164

(1) In section 43 of the National Health Service Act 2006 (authorised services), for subsections (1) and (2) substitute—

(1) The principal purpose of an NHS foundation trust is the provision of goods and services for the purposes of the health service in England. (2) An NHS foundation trust may provide goods and services for any purposes related to— (a) the provision of services provided to individuals for or in connection with the prevention, diagnosis or treatment of illness, and (b) the promotion and protection of public health. (2A) An NHS foundation trust does not fulfil its principal purpose unless, in each financial year, its total income from the provision of goods and services for the purposes of the health service in England is greater than its total income from the provision of goods and services for any other purposes.

(2) In subsection (3) of that section (power to carry on other activities in order to generate additional income)—

(a) for “The” substitute “An”,

(b) for “subsection (1)” substitute “subsection (2)”, and

(3) After that subsection insert—

(3A) Each annual report prepared by an NHS foundation trust must give information on the impact that income received by the trust otherwise than from the provision of goods and services for the purposes of the health service in England has had on the provision by the trust of goods and services for those purposes. (3B) Each document prepared by an NHS foundation trust under paragraph 27 of Schedule 7 (forward plan) must include information about— (a) the activities other than the provision of goods and services for the purposes of the health service in England that the trust proposes to carry on, and (b) the income it expects to receive from doing so. (3C) Where a document which is being prepared under paragraph 27 of Schedule 7 contains a proposal that an NHS foundation trust carry on an activity of a kind mentioned in subsection (3B)(a), the council of governors of the trust must— (a) determine whether it is satisfied that the carrying on of the activity will not to any significant extent interfere with the fulfilment by the trust of its principal purpose or the performance of its other functions, and (b) notify the directors of the trust of its determination. (3D) An NHS foundation trust which proposes to increase by 5% or more the proportion of its total income in any financial year attributable to activities other than the provision of goods and services for the purposes of the health service in England may implement the proposal only if more than half of the members of the council of governors of the trust voting approve its implementation.

(4) Omit subsections (4) to (7) of that section (goods and services that may be authorised, etc.).

(5) For the title to that section substitute “Provision of goods and services”.

(6) In paragraph 2 of Schedule 7 to that Act (constitution), the existing text of which becomes sub-paragraph (1), after that sub-paragraph insert—

(2) If the corporation is an NHS foundation trust, the constitution must specify its principal purpose (as to which, see section 43(1)).

Private health care

165

(1) In section 44 of the National Health Service Act 2006 (private health care), omit—

(a) subsection (1) (restriction on provision of private health services),

(b) subsection (2) (cap on private income),

(d) subsections (3) to (5) (interpretation etc.).

(2) For the title to that section substitute “Power to charge for accommodation etc.”.

(3) In consequence of subsection (1)(b) and (c), omit section 33 of the Health Act 2009.

Information

166

For section 48 of the National Health Service Act 2006 (information) substitute—

(48) (1) The Secretary of State may require an NHS foundation trust to provide the Secretary of State with such information as the Secretary of State considers it necessary to have for the purposes of the functions of the Secretary of State in relation to the health service. (2) The information must be provided in such form, and at such time or within such period, as the Secretary of State may require.

Significant transactions

167

After section 51 of the National Health Service Act 2006 insert— (51A) (1) An NHS foundation trust may enter into a significant transaction only if more than half of the members of the council of governors of the trust voting approve entering into the transaction. (2) “Significant transaction” means a transaction or arrangement of such description as may be specified in the trust's constitution. (3) If an NHS foundation trust does not wish to specify any descriptions of transaction or arrangement for the purposes of subsection (2), the constitution of the trust must specify that it contains no such descriptions.

Mergers, acquisitions, separations and dissolution

Mergers

168

(1) In section 56 of the National Health Service Act 2006 (mergers), in subsection (1)—

(a) in paragraph (b), after “NHS trust” insert “established under section 25”, and

(b) for the words from “authorisation” to the end substitute “the dissolution of the trusts and the establishment of a new NHS foundation trust.”

(2) After that subsection insert—

(1A) An application under this section may be made only with the approval of more than half of the members of the council of governors of each applicant (that is an NHS foundation trust).

(3) In subsection (2) of that section, omit—

(a) paragraph (c) (but not the “and” following it), and

(b) the words from “and must give” to the end.

(4) Omit subsection (3) of that section.

(5) For subsection (4) of that section substitute—

(4) The regulator must grant the application if it is satisfied that such steps as are necessary to prepare for the dissolution of the trusts and the establishment of the proposed new trust have been taken.

(6) Omit subsections (5) to (10) of that section.

(7) In subsection (11) of that section, for “On an authorisation being given under this section” substitute “On the grant of the application”.

Acquisitions

169

After section 56 of the National Health Service Act 2006 insert—

(56A) (1) An application may be made jointly by— (a) an NHS foundation trust (A), and (b) another NHS foundation trust or an NHS trust established under section 25 (B), to the regulator for the acquisition by A of B. (2) An application under this section may be made only with the approval of more than half of the members of the council of governors of each applicant (that is an NHS foundation trust). (3) The application must— (a) be supported by the Secretary of State if B is an NHS trust, and (b) be accompanied by a copy of the proposed constitution of A, amended on the assumption that A acquires B. (4) The regulator must grant the application if it is satisfied that such steps as are necessary to prepare for the acquisition have been taken. (5) On the grant of the application, the proposed constitution has effect, but where a person who is specified as a director of A in the constitution has yet to be appointed as such, the directors of A may exercise that person's functions under the constitution.

Separations

170

After section 56A of the National Health Service Act 2006 insert—

(56B) (1) An application may be made to the regulator by an NHS foundation trust for the dissolution of the trust and the establishment of two or more new NHS foundation trusts. (2) An application under this section may be made only with the approval of more than half of the members of the council of governors of the applicant. (3) The application must, by reference to each of the proposed new trusts— (a) specify the property and liabilities proposed to be transferred to it; (b) be accompanied by a copy of its proposed constitution. (4) The regulator must grant the application if it is satisfied that such steps as are necessary to prepare for the dissolution of the trust and the establishment of each of the proposed new trusts have been taken. (5) On the grant of the application, the proposed constitution of each of the new trusts has effect but, in the case of each of the new trusts, the proposed directors may exercise the functions of the trust on its behalf until a board of directors is appointed in accordance with the constitution.

Dissolution

171

After section 57 of the National Health Service Act 2006 insert—

(57A) (1) An application may be made by an NHS foundation trust to the regulator for dissolution. (2) An application under this section may be made only with the approval of more than half of the members of the council of governors of the applicant. (3) The regulator must grant the application if it is satisfied that— (a) the trust has no liabilities, and (b) such steps as are necessary to prepare for the dissolution have been taken. (4) Where an application under this section is granted, the regulator must make an order— (a) dissolving the trust in question, and (b) transferring, or providing for the transfer of, the property of the trust (if any) to the Secretary of State.

Supplementary

172

(1) In section 57 of the National Health Service Act 2006 (mergers: supplementary), in subsection (1)—

(a) for “an authorisation is given under section 56” substitute “an application is granted under section 56 or 56B”, and

(b) at the end insert “or trusts”.

(2) In subsection (2) of that section—

(a) for “such an authorisation is given, the Secretary of State” substitute “such an application is granted, the regulator”, and

(b) in paragraph (a), after “dissolving the” insert “trust or”, and

(3) After that subsection insert—

(2A) An order under section 56 or 56B is conclusive evidence of incorporation and conclusive evidence that the corporation is an NHS foundation trust.

(4) In subsection (3)(a) of that section, for “section 54(3)” substitute “section 54(4)”.

(5) In subsection (4) of that section—

(a) for “section 56(1) and (2)” substitute “sections 56(2) and 56B(3)”, and

(b) for “section 54(4)(a) to (c)” substitute “section 54(4)(a) or (c)”.

(6) In subsection (5) of that section, after “section 56” insert “or 56A”.

(7) Omit subsection (6) of that section.

(8) For the title to that section substitute “Sections 56 to 56B: supplementary”.

(9) For the cross-heading preceding section 56 of that Act substitute “Mergers, acquisitions and separations”.

(10) In section 64 of that Act (orders and regulations under Chapter 5 of Part 2 of that Act), in subsection (4)—

(a) omit the “or” following paragraph (b), and

(b) after paragraph (c), insert

, or (d) section 57A.

(11) After that subsection insert—

(4A) The Statutory Instruments Act 1946 applies in relation to the power of the regulator to make an order under section 57 or 57A as if the regulator were a Minister of the Crown.

(12) In section 271(3)(b) of that Act (territorial limit of exercise of functions under Chapter 5), for “Part 1” substitute “Part 2”.

Failure

Repeal of de-authorisation provisions

173

(1) Omit section 52C of the National Health Service Act 2006 (guidance etc. on de-authorisation notices).

(2) Omit sections 53 to 55 of, and Schedule 9 to, that Act (voluntary arrangements and dissolution); and in consequence of that—

(a) in section 57 of that Act (as amended by section 172 of this Act)—

(i) in subsection (3)(a), for “the persons mentioned in section 54(4)” substitute “another NHS foundation trust, an NHS trust established under section 25 or the Secretary of State”,

(ii) omit subsection (3)(b), and

(iii) in subsection (4), for “any of the bodies mentioned in section 54(4)(a) or (c)” substitute “another NHS foundation trust or an NHS trust established under section 25”,

(b) in section 64(4) of that Act (as amended by section 172 of this Act), omit paragraph (b), and

(3) Omit section 65E of the National Health Service Act 2006 (NHS foundation trusts: de-authorisation and appointment of administrator).

(4) Omit Schedule 8A to that Act (de-authorised NHS trusts and NHS foundation trusts).

(5) Omit section 15 of the Health Act 2009 (which inserts sections 52A to 52E and Schedule 8A in the National Health Service Act 2006).

(6) In section 272 of the National Health Service Act 2006 (orders, regulations, rules and directions)—

(a) in subsection (5), omit paragraph (aa), and

(b) in subsection (6A), omit “52D(1), 52E(6),”.

(7) In section 275(1) of that Act (interpretation), in the definition of “NHS trust”—

(a) omit “, subject to Schedule 8A,”, and

(b) omit “52D(1) or”.

(8) In section 206(1) of the National Health Service (Wales) Act 2006, in the definition of “NHS trust”, omit “52D(1) or”.

Trust special administrators

174

(1) In section 65A of the National Health Service Act 2006 (bodies to which trust special administration regime applies)—

(a) in subsection (1), for paragraphs (b) and (c) substitute—

(b) any NHS foundation trust.

, and

(b) omit subsection (2).

(2) For the title to section 65B of that Act substitute “NHS trusts: appointment of trust special administrator”.

(3) In section 65D of that Act (NHS foundation trusts: regulator's notice), for subsections (1) to (3) substitute—

(1) This section applies if the regulator is satisfied that an NHS foundation trust is, or is likely to become, unable to pay its debts. (2) The regulator may make an order authorising the appointment of a trust special administrator to exercise the functions of the governors, chairman and directors of the trust. (3) As soon as reasonably practicable after the making of an order under subsection (2), the Care Quality Commission must provide to the regulator a report on the safety and quality of the services that the trust provides under this Act.

(4) In subsection (4) of that section—

(a) for “giving a notice” substitute “making an order”,

(b) after paragraph (a) insert—

(aa) the Board,

(d) in paragraph (c), omit “goods or”, and

(e) after paragraph (c) insert

, and (d) the Care Quality Commission.

(5) After that subsection insert—

(5) An order under subsection (2) must specify the date when the appointment is to take effect, which must be within the period of 5 working days beginning with the day on which the order is made. (6) The regulator must lay before Parliament (with the statutory instrument containing the order) a report stating the reasons for making the order. (7) If the regulator makes an order under subsection (2), it must— (a) appoint a person as the trust special administrator with effect from the day specified in the order, and (b) publish the name of the person appointed. (8) A person appointed as a trust special administrator under this section holds and vacates office in accordance with the terms of the appointment. (9) A person appointed as a trust special administrator under this section must manage the trust's affairs, business and property, and exercise the trust special administrator's functions, so as to achieve the objective set out in section 65DA as quickly and as efficiently as is reasonably practicable. (10) When the appointment of a trust special administrator under this section takes effect, the trust's governors, chairman and executive and non-executive directors are suspended from office; and Chapter 5 of this Part, in its application to the trust, is to be read accordingly. (11) But subsection (10) does not affect the employment of the executive directors or their membership of any committee or sub-committee of the trust. (12) The regulator may indemnify a trust special administrator appointed under this section in respect of such matters as the regulator may determine.

(6) For the title to that section substitute “NHS foundation trusts: appointment of trust special administrator”.

(7) Omit the cross-heading preceding that section.

Objective of trust special administration

175

(1) After section 65D of the National Health Service Act 2006 insert—

(65DA) (1) The objective of a trust special administration is to secure— (a) the continued provision of such of the services provided for the purposes of the NHS by the NHS foundation trust that is subject to an order under section 65D(2), at such level, as the commissioners of those services determine, and (b) that it becomes unnecessary for the order to remain in force for that purpose. (2) The commissioners may determine that the objective set out in subsection (1) is to apply to a service only if they are satisfied that the criterion in subsection (3) is met. (3) The criterion is that ceasing to provide the service under this Act would, in the absence of alternative arrangements for its provision under this Act, be likely to— (a) have a significant adverse impact on the health of persons in need of the service or significantly increase health inequalities, or (b) cause a failure to prevent or ameliorate either a significant adverse impact on the health of such persons or a significant increase in health inequalities. (4) In determining whether that criterion is met, the commissioners must (in so far as they would not otherwise be required to do so) have regard to— (a) the current and future need for the provision of the service under this Act, (b) whether ceasing to provide the service under this Act would significantly reduce equality between those for whom the commissioner arranges for the provision of services under this Act with respect to their ability to access services so provided, and (c) such other matters as may be specified in relation to NHS foundation trusts in guidance published by the regulator. (5) The regulator may revise guidance under subsection (4)(c) and, if it does so, must publish the guidance as revised. (6) Before publishing guidance under subsection (4)(c) or (5), the regulator must obtain the approval of— (a) the Secretary of State; (b) the Board. (7) The Board must make arrangements for facilitating agreement between commissioners in determining the services provided by the trust under this Act to which the objective set out in subsection (1) is to apply. (8) Where commissioners fail to reach agreement in pursuance of arrangements under subsection (7), the Board may make the determination (and the duty imposed by subsection (1)(a), so far as applying to the commissioners concerned, is to be regarded as discharged). (9) In this section— - “commissioners” means the persons to which the trust provides services under this Act, and - “health inequalities” means the inequalities between persons with respect to the outcomes achieved for them by the provision of services that are provided as part of the health service.

(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Procedure etc.

176

(1) In section 65F of the National Health Service Act 2006 (administrator's draft report), in subsection (2)—

(a) before paragraph (a) insert—

(za) the Board,

, and

(b) omit paragraph (a) (but not the following “and”).

(2) At the end of that section insert—

(4) For the purposes of this section in its application to the case of an NHS foundation trust, the references to the Secretary of State are to be read as references to the regulator. (5) In the case of an NHS foundation trust, the administrator may not provide the draft report to the regulator under subsection (1)— (a) without having obtained from each commissioner a statement that the commissioner considers that the recommendation in the draft report would achieve the objective set out in section 65DA, or (b) where the administrator does not obtain a statement to that effect from one or more commissioners (other than the Board), without having obtained a statement to that effect from the Board. (6) Where the Board decides not to provide to the administrator a statement to that effect, the Board must— (a) give a notice of the reasons for its decision to the administrator and to the regulator; (b) publish the notice; (c) lay a copy of it before Parliament. (7) In subsection (5), “commissioner” means a person to which the trust provides services under this Act.

(3) At the end of section 65G of that Act (consultation plan) insert—

(4) In the case of an NHS foundation trust, the administrator may not make a variation to the draft report following the consultation period— (a) without having obtained from each commissioner a statement that the commissioner considers that the recommendation in the draft report as so varied would achieve the objective set out in section 65DA, or (b) where the administrator does not obtain a statement to that effect from one or more commissioners (other than the Board), without having obtained a statement to that effect from the Board. (5) Where the Board decides not to provide to the administrator a statement to that effect, the Board must— (a) give a notice of the reasons for its decision to the administrator and to the regulator; (b) publish the notice; (c) lay a copy of it before Parliament. (6) In subsection (4), “commissioner” means a person to which the trust provides services under this Act.

(4) In section 65H of that Act (consultation requirements), in subsection (7)—

(a) before paragraph (a) insert—

(za) the Board,

(b) omit paragraph (a),

(d) after paragraph (c) insert

; (d) any other person specified in a direction given by the Secretary of State.

(5) In subsection (8) of that section, omit paragraphs (a) to (d).

(6) In subsection (9) of that section—

(a) after “representatives of” insert “the Board and”, and

(b) for “(7)(a) or (b)” substitute “(7)(b), (c) or (d)”.

(7) At the end of that section insert—

(12) For the purposes of this section in its application to the case of an NHS foundation trust— (a) in subsection (7)(b), the words “goods or” are to be ignored, and (b) in subsections (7)(c) and (d) and (10), the references to the Secretary of State are to be read as references to the regulator. (13) In the case of an NHS foundation trust, the Secretary of State may direct the regulator as to persons from whom it should direct the administrator under subsection (10) to request or seek a response.

(8) At the end of section 65I of that Act (administrator's final report) insert—

(4) For the purposes of this section in its application to the case of an NHS foundation trust, the references to the Secretary of State are to be read as references to the regulator.

(9) At the end of section 65J of that Act (power to extend time limits for preparing reports and carrying out consultation) insert—

(5) For the purposes of this section in its application to the case of an NHS foundation trust, the references to the Secretary of State are to be read as references to the regulator.

Action following final report

177

(1) In section 65K of the National Health Service Act 2006 (Secretary of State's decision on what action to take), in subsection (1), after “a final report under section 65I” insert “relating to an NHS trust”; and in consequence of that, for the title to that section substitute “Secretary of State's decision in case of NHS trust”.

(2) After that section insert—

Reading this document does not replace reading the official text published on legislation.gov.uk. Contains public sector information licensed under the Open Government Licence v3.0. We assume no responsibility for any inaccuracies arising from the conversion of the original CLML XML to this format.

This text is published under legislation.gov.uk's own terms of reuse, not a Legalize or public-domain licence. legislation.gov.uk
Open Government Licence v3.0 (attribution required)
© Crown and database right. Derived from content available under the Open Government Licence v3.0 from legislation.gov.uk.