ANNEX A: OUTLINE OF THE EXISTING LAW Existing legislation about the NHS The National Health Service and Community Care Act 1990 NHS trusts
376.Section 5 of the 1990 Act, and the immediately following provisions, provide for the setting up of bodies known as NHS trusts. These are not Health Authorities but are separate, independent bodies set up to assume responsibility for the ownership and management of hospitals or other establishments or facilities previously managed or provided by a Health Authority; or to provide and manage hospitals or other establishments or facilities that were not previously so managed or provided . Section 5(1), as amended by section 13 of the Health Act, now provides that trusts are established to provide goods and services for the purposes of the health service. A trust’s functions are conferred by its establishment order made under section 5(1) and by Schedule 2 to the 1990 Act.
377.Nearly all the hospitals in the country are now run by NHS trusts, although increasingly, smaller “community” hospitals are being run by Primary Care Trusts. The essential difference between NHS trusts and the hospitals run directly by Health Authorities is that the latter were funded by money paid to Health Authorities for the purpose by the Secretary of State under (what is now) section 97(3) of the 1977 Act; whereas (subject to certain exceptions) NHS trusts have no money paid to them directly by the Secretary of State, but instead must compete with each other for orders for their services placed by Health Authorities . Health Authorities are thus now seen as “purchasers” or “commissioners” of health care on behalf of the local population; while trusts are included among the “providers” of this health care. Health Authorities may also choose to purchase health care from private sector institutions.
378.This system created the “internal market”, whereby the whole of the operation (including trusts) is still the NHS, but for internal purposes the purchasers or commissioners were split from the providers.
379.The 1990 Act conferred on NHS trusts a substantial degree of autonomy. As well as not being funded centrally, the Secretary of State was able to give directions to NHS trusts only in relation to a limited range of subjects (paragraph 6 of the Schedule). The Health Act restricted this freedom by extending to NHS trusts the Secretary of State’s power of direction under section 17 of the 1977 Act (section 12 of the Health Act).