Commentary on Sections Part 2 – Powers in Relation to Health Bodies Chapter 1 – Powers in Relation to Failing NHS Bodies in England Section 15 and Schedule 2: De-authorisation of NHS foundation trusts
196.Section 15(1) inserts new sections 52A to 52E into the NHS Act and section 15(2) incorporates Schedule 2 in the Act which inserts new Schedule 8A into the NHS Act. The new sections and Schedule provide for the de-authorisation of NHS foundation trusts. The provisions are in addition to the provisions for de-authorisation of NHS foundation trusts under the trust special administrator provisions of section 16 (see below).
197.New section 52A sets out the NHS foundation trusts to which new sections 52B to 52E apply. They apply to NHS foundation trusts which were authorised after an application by an NHS trust under section 33 of the NHS Act (a “section 33 foundation trust”). The provisions also apply to NHS foundation trusts which have been established under section 56 of the NHS Act (mergers between NHS foundation trusts, or between NHS trusts and foundation trusts), but only where at least one of the trusts which formed part of the merged trust was an NHS trust or a section 33 foundation trust or, where there has been a succession of mergers under section 56, only if any of those mergers involved an NHS trust or a section 33 foundation trust.
198.New section 52B allows Monitor to give the Secretary of State a written notice that an NHS foundation trust should be de-authorised. This notice can be given if Monitor is satisfied that an NHS foundation trust has contravened or failed to comply with any term of its authorisation, or any requirement in legislation, and that the breach (or breaches taken together if more than one) is sufficiently serious to justify de-authorisation. Monitor must consult with the persons or bodies listed in subsection (4) (including the trust and the local Strategic Health Authority) before giving a notice. When it gives a notice, it must also provide a report to the Secretary of State stating the reasons why it is satisfied that the conditions for de-authorisation are met. That report must be published within 7 days of the Secretary of State making an order to de-authorise the trust under new section 52D (new section 52D(8)).
199.New section 52C deals with the grounds for the de-authorisation notice. The section requires Monitor to consider the matters set out in subsection (1) when it is deciding whether a breach is sufficiently serious to justify de-authorisation and whether to give notice to the Secretary of State. In addition, Monitor must publish guidance, following consultation with the bodies and persons set out in subsection (3), on the matters (including the specific matters listed in subsection (1)) which it proposes to take into consideration.
200.New section 52D sets out the procedure for the Secretary of State to make an order de-authorising an NHS foundation trust. On such an order taking effect the trust becomes a National Health Service trust (NHS trust). The Secretary of State must make such an order if Monitor has given notice under new section 52B. The order must specify the name of the NHS trust, the functions of the NHS trust and the number of non-executive and executive directors; if the trust has significant teaching commitments then one of the non-executive directors should be a person from a university with a medical or dental school (subsection (4)). The number of directors of the de-authorised NHS foundation trust may exceed the number permitted under the regulations governing NHS trust membership, or there may be an insufficient number and subsection (5) allows these arrangements to continue for a temporary period, specified in the order. New subsection (7) enables the Secretary of State to appoint or remove directors to meet requirements for NHS trusts.
201.New section 52E enables the Secretary of State to make a written request to Monitor to exercise its power to give a de-authorisation notice, where it appears to the Secretary of State that there are grounds on which Monitor could exercise that power.. The request must specify the NHS foundation trust to which it relates and the grounds for making the request and the request must be laid before Parliament. The request will set a period within which Monitor must either give a de-authorisation notice, or publish its reasons for not doing so (subsection (4)); that period is either 14 days or such longer period as is specified in the request (subsection (5)). If necessary, the Secretary of State may extend that period by order (subsection (6)).
202.Section 15(2) and Schedule 2 insert new Schedule 8A to the NHS Act, which makes provision about de-authorised NHS foundation trusts. In particular the trust’s constitution is to cease to have effect on de-authorisation (paragraph 2) and, subject to the other provisions of the Schedule, the trust is to be subject to the provisions of the NHS Act in relation to NHS trusts (including the provisions of Schedule 4 relating to the board of directors). Paragraph 4 provides that the number of executive and non-executive directors is to be that of the former NHS foundation trust, but this is subject to any provision made in the de-authorisation order (see section 52D(4) and (5)). In relation to finance, paragraph 7 provides that the public dividend capital (PDC) of the trust continues as public dividend capital of the NHS trust and paragraph 8 makes provision as to the trust’s accounts. Paragraphs 9 to 11 provide that the trust may continue to:
	be a party to a contract entered into when the body was an NHS foundation trust,
	hold property which the trust held as an NHS foundation trust, and
	be a member of a body corporate (e.g. a company shareholder) of which the trust was a member as an NHS foundation trust,
and ensure that the rights or liabilities of any third party are not affected by de-authorisation.
203.Paragraph 12 of the new Schedule 8A clarifies that the provisions for continuity do not affect the power of the Secretary of State to direct the new NHS trust; for example, to direct them to dispose of certain property.