Health and Social Care Committee

Hello there. Bore da. Huw Thomas, director of finance for Hywel Dda University Health Board.

Bore da. My name is Jonathan Irvine. I'm director of procurement services for NHS Wales Shared Services Partnership.

Well, thank you so much for being with us today to hopefully help inform our understanding, but to gain some of your views on the proposed Bill as well. So, I have a very general question, it's not specific at all. What is your understanding of the purpose of the Bill and the new procurement regulations?

Maybe I'll start on that. The purpose of the Bill is really to seek to align ourselves in terms of the accessibility for healthcare services procurement in a way that doesn't disadvantage Wales in comparison to England. The key issue around that is if the access to healthcare services in England is less burdensome for providers than it would be in Wales, then that has the potential risk of disadvantaging the population of Wales, making it less attractive and more difficult for providers to provide services into Wales. And in terms of capacity within the market, we could find that the capacity is actually consumed by England, simply because it's much more accessible and easier for providers to do business in England. So, the importance of the Bill from a procurement perspective—and I'll let Huw, obviously, talk from the health board perspective—but from the procurement perspective, is that we don't disadvantage our population, and we ensure that we obtain and secure the flexibility that such arrangements would bring.

Thank you. Huw Thomas.

Thank you. Yes, there is something important here about the alignment between the arrangements we have in Wales and what is being done in England. So, this is an environment where I think we're seeing an increasing consolidation of private providers in England, and the level of competition is becoming increasingly challenged. And the other, I guess, strategic overlay from an English perspective is that the development of integrated care boards in England means that, I think, there is a risk that communities in England or the areas covered by CBs will become more inward looking, consolidate the provision to make sure that the capacity within the system is consumed within the integrated care board. So, if we place an additional regulatory burden, or there's a perceived difference in regulatory burden between doing business in Wales and doing business in England, there is very much a risk that we won't be able to secure supply of provision into Wales. It's very much becoming a sellers' market now; much more difficult to procure services. So, aligning that regulatory position, I think, is important.

Thank you. So, Members are going to dig into a bit more detail now. So, on the screen, Jack Sargeant.

I'm grateful, Chair. Good morning, all. In this Bill, there's been a real sense that these changes are being driven by England rather than necessarily specifically addressing the problems within Wales and the Welsh NHS. I think the Minister herself has said in Senedd committees earlier this week that she believes we're going to have to wait for the detail of what's happening in England to come to fruition in Wales before any detail can be made available to us as a committee and through the Welsh Government. The evidence we've seen as well, and the Minister said this herself, again, it's important to have this Bill because we need to be on a level playing field with England. Now, Jonathan, I think it was in your opening that you referred to doing this so that the market doesn't directly go to England. I just want to try and understand how real is that risk and how important is having that level playing field with England, because this might not be the right option; Wales may wish to do something differently, or is that not the case?

So, it is very much a real risk. So, actually picking up on what Huw has said, which is to emphasise the fact that the market is becoming more consolidated, therefore we have fewer providers in the market, and that means that the capacity for those providers to provide services into Wales is challenged as it is. So, that is a risk. We also potentially have a risk in terms of current providers who maybe feel, then, they might want to give notice on services that they're currently providing into Wales to move into England.

The other thing I think I would point out is that in parallel with this is the UK Procurement Bill, which is actually currently going through, as you're probably aware, in the Commons, and is expected to be introduced into legislation some time in the middle of the next calendar year. That legislation in itself brings up this issue, because the current provision of healthcare services, as far as procurement goes, under the current procurement regime, requires us to implement a degree of competition. The new Procurement Bill itself, if we don't introduce this Bill, or the aspirations of this Bill, would mean that we in Wales would have to continue to procure those healthcare services in that current format, which, as we said earlier, is restrictive.

So, I suppose to get back to answering your question, I think it is a real risk, and I think that I would also add, finally, to this, that it presents opportunities to us. So, it's not about just trying to match what England's doing, to avoid and to mitigate it; it actually gives us an opportunity to develop a deeper, more collaborative arrangement with those providers who provide us with a good value-for-money service that provides good outcomes for patients, so that we won't necessarily—although we will have to justify it, more than likely—we won't have to necessarily go out to the markets for a full competition on periodic timescales, which in itself runs the risk of having to disrupt services for patients, and also the associated costs, and, as I said, the less attractive nature that that brings to our operation. So, I'm not sure if that provides some answers to your question.

It does. Thanks for that. I just want to prod a little bit into your ending to the contribution. You said this provides opportunity. Would you therefore see—? I appreciate this may be difficult to answer. If there's opportunity, there's obviously risk associated with that, and there might be potential implications about diverging from the English rules. But are you expecting Wales to have a slightly different approach to what the English rules may be?

Can I also add to that? You also talked, Jonathan, about deeper working with—the Bill offers an opportunity to work more deeply with partners as well, I think you said. I just wonder, perhaps following your answer to Jack's point, if you can perhaps give us an example of how that might pan out, just so I can have help to understand that.

Yes. Maybe Huw might want to pick that one up. Sorry. Could you come back to that question again, sorry?

Jack, sorry. What was your main question? Sorry, it was my fault. There we are.

That's fine. We've talked about the potential implications and risk, you've also talked about the opportunity—and again, I appreciate this may be difficult to answer—but would you see room for the Welsh rules to be different and to diverge from the English rules, if necessary?

Yes, there's that potential. I mean, this, if it goes through, would be subject, obviously, to consultation, and my organisation, I expect, would be part of the work involved in helping to put the regulations into place. So, areas where it might not necessarily be different, but we could almost enhance what we're trying to do in wider programme for government initiatives, such as the lower carbon footprint associated with services provided within Wales and increasing the amount of spend that NHS Wales puts in place with local service providers. We can actually secure that, as long as those services continue to represent value for money and good outcomes for patients. But what that means is that we can actually almost lock down those services, in a way. So, I think that there's potentially opportunity for Wales maybe to be more almost forceful on that than possibly England might be, but, again, that's speculation on my part, but they're just some examples of what could be done.

I fully understand the speculation—I think we're all in speculation, the committee's speculating what may happen; it's difficult to scrutinise when we don't know the full detail. I perhaps have a question to both Huw and Jonathan, before you answer the Chair's: if the UK Government weren't doing this for NHS England, would you like to see the Welsh Government go ahead with something similar anyway?

I may jump in there, Chair. I think there's something about an opportunity coming out of a challenging situation, because we are here, fundamentally, because of a situation that has been, or we're responding to developments in NHS England and in the procurement landscape there. And I would urge against diverging in terms of the regulations that we put in place in Wales from what England will develop, because any perceived complexity or difference in doing business in Wales could make it a lot more challenging for us to be able to secure cross-border activity.

But the way in which we work—and I think there's almost something about the way in which we as public sector bodies work—is different in Wales, and that will feed through to the way in which we interpret and utilise, I guess, the enabling framework that we're talking about here. Because we do have a history of partnership working, we do have a history now of outcomes-based measurement, value-based healthcare arrangements. This does give us an opportunity to explore those further, it gives us an opportunity to think about long-term partnership arrangements we would want to put in place, and it gives us an opportunity to really think about our local communities in this.

And while we, naturally, are thinking here, primarily I guess, about private sector providers providing activity and support into the NHS, I wouldn't want to forget about the opportunity we've then got with smaller third sector organisations, social enterprises, of which there is an abundance in Wales, and for which procurement has historically been a challenge in accessing activity within the NHS, because it has been seen as a transactional relationship, and this provides us an opportunity to change that relationship into one of long-term partnership.

Now, what comes from that will be opportunities for better innovation, putting the patient at the heart of decision making, putting our communities at the heart of decision making, and, I would hope, an opportunity for us to really think about stimulating local opportunities and local businesses to enter the market, by reducing the barriers to entry. So, it's less so for me about divergence in the regulations per se from what will be coming through from Westminster, and more so about how we behave and how we respond to that in our public sector bodies.

Thank you, Huw. I know that the Chair may want to come back on his bit shortly, but probably just one final question from me on the procurement regulations, the new ones, for NHS England. Are you aware of the new procurement regulations—the provider selection regime—that the NHS in England has been consulting on? Do you know the detail of it?

Yes. It's a publicly available document from the gov.uk website. And it provides an outline of their approach to this, which is obviously out to consultation there at present, so, yes.

On the basis of that, and, obviously, you are aware of the document, from that document, would you say now there are any Wales-specific issues that need to be addressed in the Welsh one?

I would say the challenge for us will be how we make sure we are open and transparent as public sector bodies in our decision making, because one of the benefits of open tendering and procurement exercises is that that is discharged quite readily and quite easily. This does make it a little bit more challenging to really understand the offering from people who want to do business with the NHS. So, I think it will be incumbent on us to put in arrangements where we can properly understand how we are getting best value from any arrangements that we do put in place, and how we properly understand the opportunity for collaborating with anyone who does want to do business with us. So, that will be something we have to put some thought into, and governance and reporting arrangements will be quite crucial here so that we don't end up with any perception from the public, or from our stakeholders, that due process is not being followed. So, we do need to make sure we put that process in place.

Okay. Thank you for that. Thank you, Chair. I fear I'm maybe stepping into areas other colleagues might want to go into.

No, that's fine, and, for me, it was just to look for an example when you talked about procurement and collaboration with providers, just to give an example so that I can follow that through in my own mind, to understand.

So, if I pick up some challenges, then, that we have within our health board, we know that we have some real challenges in areas like dentistry, actually, and there is an opportunity here for us to work much more collaboratively with potential providers who might want to come in and provide services for us, which are inherently going to be long-term partnership arrangements. Currently, we go through procurement exercises, but that can—. You can end up in a procurement exercise with a process where you reduce the cost, but sometimes not maximise the value that we provide our communities. So, I think this will provide us with an opportunity to balance that cost-versus-value opportunity where we're really focusing on outcomes. That's just one small example.

So, in the system that we're currently in, then, what's the negative consequence, effectively? Are you not getting good value for money, or are you not getting as good value for money?

I think there is a risk that arrangements under the current—. Under current procurement guidelines, it's difficult to enter into very long-term arrangements without quite a high bar to access that from a regulatory perspective. For businesses who want to do business with the NHS, the bar to entry can be higher than you might want it to be because there is quite a regulatory burden from the procurement processes that we have currently.

So, regardless of the discussion about the need for the Bill because of what's happening in England, is it that you're saying this is a good thing, or we're making the best out of something in any case? Which is it that's true?

Based on my reading of the English guidance that's come out, I have no particular antibodies to that. I think it does present us with a really good opportunity.

Okay.

Yes, and from a procurement perspective—obviously I will say this—I do agree that we do provide a value-for-money outcome for health boards, but I think the point is that because, inevitably, organisations have to go through the full competitive process, which may still be a feature and option under any future legislation, what that means is that we can't just say, 'This organisation is providing a fantastic service. Let's do some due diligence on them to ensure that those outcomes are sustainable into the future, and then let's be transparent to say we're going to continue those arrangements into the future.' That's the flexibility that we don't have at this point in time.

And how does the Bill include procurement within the NHS?

How does it, sorry—?

Include procurement with the NHS. I'm particularly thinking of cross border as well. In my constituency, a lot of the services are over the border, so especially with services perhaps in England, and England procuring services from Wales—both ways.

So, there would be no change to the current position, which is that the vast majority of NHS-to-NHS services are excluded from the normal procurement regulations under regulation 12 of the Public Contracts Regulations 2015 that we currently operate. So, those intra-NHS services, we'd continue to be able to operate unaffected and unimpeded.

So, the Bill has no effect on services within the NHS.

No.

Okay. Right, thank you. Do you want to come in, Joyce, and then come on to your questions as well?

Yes. Thank you, Huw, for your answer and explanation about the opportunities. It seems, if I've understood it right—and there's every possibility I haven't—that, under the current procurement rules, it's purely financial. That's what I was hearing, and it's just as well I asked the question because you're shaking your heads. And the future ones that you've described, the value for money we would be able to incorporate—because we've been here before, in the 1990s; I remember being here before, in the 1990s, in local government—where we can add in wider than just a monetary value, but a social value as well. Is that what you're saying?

I'll pick it up from a health board perspective and then I'll bring in Jonathan. No, services are currently contracted, tendered, on the basis of, yes, cost, which will be an element, the quality of services will be an element, but we also will include measures on social value and foundational economy opportunities within there as well. I guess the point I wanted to—. With a tendering process, there is a time-limited tendering process, so you will tender for a period or for a contract value, and that can drive you into a transactional sense of a relationship with a partner or provider. This provides us with an opportunity, I think—or a greater opportunity—for long-term partnership thinking, co-production, and, if I take it into a slightly different space, co-production with third sector providers could be a really powerful opportunity for us, particularly in areas like mental health services, which I think is an area we need to think about where the benefit of this new arrangement could be properly exploited. So, we do take account of quality and outcome measures. I think this just changes the dynamic somewhat and allows us to be longer term in our thinking.

And just to add to that from a procurement perspective, certainly my organisation's input into any future drafting of regulations would be that we would need to have criteria put into the selection of providers. So, if you want to move to a different provider, you would still, I would imagine, be expected to meet criteria around value, but also accessibility of services, equality of services, and the outcomes, obviously, most importantly. But really to drive the point home, what we have to do at this point in time—. Even though we address those issues under the current regime, which is open competitive tendering, the key thing here is it's open, which means that we find it extremely difficult if not impossible to say, for example, we're restricting that selection to a certain geographical area of providers within that area. My sense of what I've seen so far in terms of what England are planning to do—and we don't know until we see what comes out—is that we would have now the opportunity and flexibility, for example, to say we're going to look at potential providers in this geographical area and apply the criteria only to those providers. That itself brings the added benefits that Huw has alluded to, and I mentioned earlier it's wider than the healthcare, but also the wider social value that comes out of this, if that helps.

That does help, yes. Thank you. So, how much competitive tendering for health services is actually undertaken currently in Wales? And is it a significant demand on staff time and resources, and will that change?

At the minute, in terms of the area that we influence through competitive tendering procurement activity, we're just at about £60 million to £70 million-worth of expenditure per annum. Bear in mind, however, that the total spend on healthcare services that this Bill would cover for the whole of Wales is in the region of £550 million per annum. I have a dedicated team that looks after national, all-Wales projects on the healthcare service's procurement. I also have procurement teams embedded with the health boards around Wales, including in Huw's health board, which look after the local requirements for healthcare services provision in those areas. What this opportunity brings, then, is the opportunity to almost free up some time for my staff to look at some of the other areas of spend in that £550 million piece that we now need to focus on, and we can apply this much more flexible approach to ensuring that we have good governance and good transparency around that, and that we are getting good value for money in those areas as well. So, in terms of the spends in my area, we would be looking, probably, in the region of about £2 million-worth of costs for the staff involved, as well as, if we switched across, training and implementation.

I suppose, if I could add to that, maybe slightly off your question, but timing is an issue here for me, purely from a procurement perspective, because the Procurement Bill that I mentioned that's currently going through the UK Parliament is likely to land, as I said, in the middle of next year. The Health and Care Bill in England for the provider selection regime is likely to come into play in and around that time as well. So, there's a timing issue for my staff and my colleagues—that we would rather just make the change of everything in the same sort of period of time so that we've got a full switch from the regulations, as they are now, to the new arrangements, but that's just my own plea. Again, I don't know whether I've gone off track on your question.

Well, not really. So, how challenging is that, because provision is key, obviously? How challenging is that, because you said next summer, if I heard you right? It's not a great run-in time, is it? So, will you be prepared? Have you got enough information to prepare yourself for this?

We will be prepared, but I'm not going to sit here and say that there won't be some level of investment needed to ensure that we do have the right processes in place to, for example, ensure that we've got the right reporting and governance arrangements around what we do, and the training and implementation work that we would need with health boards. We also have to recognise that there will always be a cycle of contracts coming to the end of their term. Under the current regulations, we'll need to go out to the market under full competitive tendering. So, the timing of those will be critical to make sure that we don't disadvantage the renewal or continuation of those services, because the timing of the Bill's passage in Wales is significantly behind what England are doing.

Is there real danger, then, of gaps?

Yes, there is a potential danger—well, there is a danger, because we have contracts on our programme all of the time coming to renewal. We have to forward-plan taking those to the market, and so we just have to have some certainty around the timescales on this as quickly as possible.

Okay. So, we know, because we've already talked about the contracts with the third sector, the private providers and the NHS providers in both England and Wales, that's in operation now. Where do you see the challenges, going forward, if there are any?

I think the challenge is just ensuring that, within Wales, we don't see an exodus of providers providing services to our patient population or, if not an exodus, a slow drip-feed away, and that Wales continues to have a choice not just locally, of local providers, but access to those providers that are, potentially, based in England and further afield to continue to provide services into Wales. That's where I see the challenge. I don't know, Huw—.

Yes, I think there is an absolute issue there in terms of access. It's not going to be an immediate cliff edge, so having a degree of delay I don't think would be too detrimental. But, over time, it's that drip-feeding issue that could become more challenging, in terms of accessing suppliers across the border. But I think that's more likely to be English-domiciled providers who may be looking more within their integrated care board locations and, I guess, prioritising access for patients within their integrated care borders. It's very easy to take for granted that we've been a population health system in the configuration of our health boards since 2009. So, we've had quite a long time where we've been focused on our population as a whole. The integrated care boards in England now turn the arrangements in England into that kind of focus and probably for the first time have that kind of arrangement focusing on the population. So I think the dynamic will change in terms of the nature of planning and provision across the border, and we need to be open and mindful to that.

I think we're really fortunate in Wales as we've got shared services. Jonathan is here from shared services, and that served us really well in having one version of the truth. We have a collective understanding of our supply chain here that is fairly unique, I would say, and served us well in terms of planning for Brexit, served us well in terms of planning for the pandemic, and I think will help us as we really seek to maximise the opportunities we've got here. If we really grasp at the opportunity now, it could be quite an exciting opportunity to bring in new providers and get more wisdom, I think. What we haven't done is perhaps exploited the wisdom within our supply chain and our providers currently. This could not be necessarily in healthcare provision itself, but we have suppliers of prosthesis who provide us with the goods at the moment, whereas, actually, this might provide us with an opportunity to think more creatively about the arrangements we have with our suppliers of, let's say, prosthesis, and think about whole-pathway work with them. It might provide us with an opportunity to really think about value-based procurement, and put patient outcomes at the heart of our procurement processes. So, there is an opportunity for us here to come back to that point about creating a bit of a Welsh theme to how we respond to what will be an overarching framework.

Is there a danger, if we're so far ahead of the game in understanding this system, that England might pinch people like Jonathan, and start, if you like, a competitiveness—and there already is a competitiveness with procurement officers—beyond the one we've already got?

I suppose my answer to that—

This could be quite an awkward moment, couldn't it? [Laughter.]

Somebody like you, for example; not you personally.

My answer to that would be, from a personal perspective, no, there is no risk of that. I think I would emphasise, in answer to that question, Huw's point, which is well made, which is I look after a national procurement organisation as part of the wider NHS Wales Shared Services Partnership, unlike in England, where, as we know, procurement is very fragmented, and that brings significant challenges to my colleagues in England. Our approach is much more akin to what happens in Scotland and Northern Ireland from a procurement perspective, where it's much more consolidated. Apart from Northern Ireland, Wales, to me, has the most national profile, and that brings significant advantages, like Huw said, which allows us to almost bring that national power to bear in a way that even a very large trust in England is unable to do. Because we work in partnership, through our partnership committee with Huw and other colleagues from health boards and NHS orgs, what we do within Wales we can enact fairly efficiently and swiftly on the ground.

Transparency and openness—you sort of started talking about it—and effective governance will be critical here. Have you got anything further to add than what you've already said?

I think—and I'm not saying we use this as a template—you have to look at what's in the provider selection regime proposals as a starting point. What it has done is taken elements of the current regulatory arrangements to say, 'Even though we've got this flexibility, you need to record and justify your decisions. You have to make those decisions, in most cases, publicly available through some sort of notice, similar to as we have to do at the minute.' Again, this will all be subject to consultation.

There's also, within the PSR proposal in England, a continuation of the standstill period, the period of time that you would allow between your decision as to you want to use this provider and then finally awarding that contract, so that any disgruntled suppliers or suppliers with questions would have an opportunity to understand why they haven't been selected. You can still weave those elements into any potential Bill, which would certainly provide, I feel, the assurances and the transparency that I would suggest that you're asking about.

So, that standstill period is the period where you can do any checks and balances, although they probably would have done those before. But it's a safeguard, because people look for safeguards.

Correct. At the minute, with all of the contracts that we award for NHS Wales, there is a standstill period, so whenever the decision is taken as to who we wish to award the business to, following the evaluation of the tenders that come in, we notify that outcome to all of the bidders, successful or not successful. We then allow them a period of time, during which they may query, question or even challenge the decision, and if we don't feel that there's merit to that challenge, or we've answered their question sufficiently, we would then move to finally award the contract at the end of that period. It's a bit like, I suppose, the cooling-off period you have with our personal finances. You have that cooling-off period so it is that safeguard. That, to me, anyway, seems to be a sensible thing to consider, potentially, for this Bill.

Just to add, that process of market engagement is really important, especially so with local providers and smaller providers, to make sure that there is an education process that goes alongside this to make sure that providers are aware of the change and aware of the opportunity that could bring for them. That process of market engagement, I think, is really important, and being clear on our intentions. We have planning-based systems in Wales, so being clear on our intentions and open and transparent with our intentions, I think, is another part, and for our reporting arrangements to our boards and to Government to be fundamentally clear. We have a duty here to patients, clearly, to put them at the heart of decision making, and communities and the taxpayer, and balancing those three, I think, is where we probably need to put some more thought into as this develops. The other element is clearly there will be potentially unsuccessful bidders, and unsuccessful folk who want to do business with us. Managing the unsuccessful bidders, I think, is also an important responsibility that we have so that we provide that learning back into the system and make sure that this becomes an opportunity to learn and develop together.

Okay. That's fine.

Thank you. Gareth Davies.

Thank you, Chair. Good morning. I want to focus a little bit more on the scope of the Bill and the procurement regime. I know we spoke about it briefly in Jack's set of questions. In Plenary and in briefings that the committee have had with the Welsh Government, they've emphasised the role of the Bill in facilitating the procurement of services, especially from the independent and third sector in Wales, if the arrangements in England change. Obviously, regardless of what we think about that, is there potential or a need for increased commissioning from the independent and third sectors, and are there any examples of that, if you have any?

I'll provide a response. In terms of the challenges I alluded to, dentistry is a very big challenge for us, and we know that that is a challenge nationally. The care home sector is another area of real issue. I think this gets into a degree of complexity around scope, because I don't believe the scope covers social care provision, but, of course, increasingly, our work is probably becoming a lot more vague about where the boundary between health and social lies. So, where does the boundary of a domiciliary care provider end—and increasingly so in the future—and health provision begin? I think that's perhaps an area that we need to explore further around that kind of boundary potential. We are working increasingly in integration with social care, so that does provide us with a real challenge. For care homes, I think, it's a real example. And, clearly, our planned care recovery plans. While we are working on our internal plans, we will need a degree of outsourced activity from private providers to support us.

Sorry if this sounds a little bit of a silly question, but we've obviously got the health and social care Bill in England, but then the scope of this Bill in Wales doesn't incorporate social care like the English one does. Is that the difference, then, between the English and the Welsh systems, and the difficulties in incorporating some of those social care aspects that the Bill in England might achieve?

No. The proposal in England doesn't include social care. It specifically doesn't include social care, actually. So, at the moment, there's alignment there, but I think that does provide us with an area of further exploration in terms of where that boundary sits.

I'm just trying to differentiate and see how that model could look. Is there any other evidence that there are potential barriers? I know we've sort of covered it there, but more generally across the Bill, and the scope, really, in attracting third sector and independent. Because we have to obviously incorporate most services that fall under health provision, whether that be, obviously, NHS, independent, third sector. What are the barriers in incorporating all of those? Because even though the private sector and third sector, certainly, make up a small portion, there has to be, surely, some of that that incorporates them as well.

In terms of barriers in the new proposal, which is your question, there are clearly barriers for entry that are certainly perceived within our current procurement regulations, and I think this does provide us with an opportunity to actually reset the dialogue with business and with our suppliers—or our potential suppliers—to bust the myths on the barriers that are currently perceived to be there in doing business with the NHS. There is that perception of a challenge to do business with us. Perhaps less so within healthcare provision, actually, because naturally, there has been a lot of working with them in the past. But certainly in terms of small social enterprises that are certainly very active in spaces like mental health, those barriers currently would be areas of exploration in dealing with the new proposals now. But much of this is about education. I think the opportunity for us to use the change to educate the market to overcome some of those myths surrounding business with the NHS is a real opportunity for us now.

I think that's part of the reason why there are so many questions around this, because I think the education point you made is good for obviously the public, but also for us politicians as well to fully understand, because I still feel there's a lot of subjectivity around the area, without specifics. We haven't had specific regulations from the Government in that sense, so for us, trying to look at it from a subjective point of view is quite difficult at this stage; for me personally, anyway.

Just finally, how much autonomy do you feel the NHS should have in managing some of these contracts in terms of the tendering process? Do you think they should be renewed annually, as I think they currently are, or do you think that should be longer if established working relationships are formed and they have a good track record, basically?

I'll come back to your education point, actually, if I may, because I think the opportunity for us here is actually to reset the education offering, I think, we have, to make sure that decision makers across the NHS are also fully understanding of the opportunity from the new regime. I don't think it's external stakeholders and politicians only that we need to think about in that space.

In terms of frequency of renewal, I guess that varies and I think I wouldn't want to think about a fixed point to that. It will vary based on the nature of the supply and the nature of the provision of services to the NHS. This does give us an opportunity to have longer term arrangements in place, and there are benefits there, but we need to be really transparent on the logic to using an extended period without necessarily going out to retest for best value. So, provided there are arrangements that reflect the relative risk here for us, I think that's where we need to focus our effort.

Yes, and again, just to add to that, to pick up on the point earlier, the longer term arrangements obviously bring the advantage of closer integration and collaboration, so, using that word that was used earlier, 'partnership' more. But in terms of procurement, where we can add more value is that, by freeing up time in the tendering, contracting and evaluation side of things, we can divert resource into what we would call contract management. So, we can work alongside health boards and providers to say, 'Well, this is what you're doing. Is that what you are actually doing?' and help, and that further provides the assurance as well. So, to me, the length of the contract will be dependent upon the nature of the relationship and also, for example, it could be a consideration of how many potential new providers come into the market. Do we want to go out and periodically retest? And then also, I suppose, most importantly, a consideration of what this means for the patient, the member of public receiving those services. What would a disruption or a change of those services, or a continuation of those services, mean for that individual?

And just quickly on partnership, how much of a role do you think the RPBs—the regional partnership boards—play in the decision making and the management of contracts in health?

Currently, very little, but the opportunity, I think, is one—hence my point earlier about social care and whether social care might be within or outside scope. Because the opportunity for us to think about that within an RPB space clearly becomes greater if social care is within scope.

But, coming back to that issue about longevity and integration here, there are a couple of considerations. When we think about areas like mental health, we will be expecting providers to work with clients and patients for quite a long period, and of course, continuity of care becomes really important with one provider supporting. So, there are very specific issues, particularly in areas like mental health. In other areas, it may well be more around embedding value across a pathway that you'd want to have a long-term relationship for so that we can really maximise the value for patients, who may only see that provider once, but as a pathway provision, we need to make sure that we can work with them over a longer period. So, it will have to be quite a dynamic and flexible opportunity for us. So, I think autonomy to make the decisions is important, but making sure that those decisions are justifiable—and it comes back to the governance arrangements—and that the logic for having an extended period or a shortened period is really clear is important.

Thank you, Chair.

Joyce, you want to come in.

Just coming back to governance, coming back to value for money, there are two sides, aren't there, when we're talking about provision in healthcare? And one is the education of the provider and the opportunities that that might give to those engaged in working within it, but also the surety of services for the patient. And you talked about—and I cover Hywel Dda—the integration that's happening between social care and healthcare and the lines being ever more blurred. So, my question is this: in terms of procuring a service, particularly, say, in domiciliary care or residential care, which might have previously not been considered part of health, will you be able to, in a new contract, also put in some parameters around the cost of training those staff? Because when we see services, very often, fall down, or when we see the inability to recruit in, the issue is about the staff having opportunities themselves to deliver the service, having been trained in such a way that they can see their own progression, which, of course, knocks on then, and is playing a large part now in recruitment, which is impacting at your front door, at hospitals. So, does this help that?

From a legal perspective, I might ask you to come in, but I can give a strategic intent perspective, I guess. Certainly, this is where long-term relationships become important with providers, so that we can be very clear on what the—. The point you made around domiciliary care is really quite pertinent, because over a career life span, someone might start off working with a domiciliary care provider, move into a care home, come into the health board, train to be a nurse—there's a whole host of opportunities there for us to think really creatively. We are population health systems—I come back to that—and part of our population is our workforce. And providing that long-term path for our workforce, to move in and out of providers, I think is very important for us. So, as an intent, absolutely, making sure that there is a clear path for people to follow and be flexible in their career, I think absolutely we'd support that.

And the structure would allow it as procurement.

Yes, it would. So, that would come under what we are starting to introduce more widely as almost a pathfinder, I would suggest, within the UK, public procurement's social value as an actual criterion and as a measure into our approaches to the market. So, we're pathfinding, or piloting, a measure currently on an all-Wales contract where we have a calculation of social value in pounds based around employment, around the development of staff, and what that means about—. So, it's the multiplier effect: £1 spent with this organisation will result in £1.20 coming back into Wales in terms of social value. So, we would be seeking to incorporate more so those sorts of approaches to the market. It's not throwing everything else out, but it's putting a place in for social value so that those sorts of issues are seen to be important and are actually influential in how we award business and contracts in the future, and also, then, starting to address some of the wider, non-traditional procurement areas that we're now working in. So, that's an area that we're working in, and it can be replicated into those sorts of arrangements as well, moving forward.

Thank you.

Thank you, Joyce. Heledd Fychan.

Thank you. Good morning. Thank you for joining us.

I'll be asking my questions in Welsh, if anyone needs translation.

You have outlined the potential of this Bill this morning, but could you outline how the Welsh Government so far has engaged with NHS Wales bodies on this health procurement Bill?

Yes, I can maybe start on that one. In terms of engagement with NHS Wales Shared Services Partnership, in particular myself and senior colleagues in procurement services, there has been an ongoing dialogue for quite some time now in terms of understanding the scope and scale of what we currently do and asking for our views from a procurement perspective as to what would work better, what wouldn't work as well, and just getting our views in terms of how this might look. So, yes, we've been working very closely with colleagues in Welsh Government for quite some time around this now. I don't know, Huw, about the health board perspective.

Thank you. In terms of the consultation, we have spoken as a group of finance directors with the Government. We've been working with the Government in that regard to understand what the risk of not changing would be and the opportunities for change. This clearly is a very technical consultation, so it's difficult to consult widely, but the consultation has been suitable for the kind of work we're discussing here. Because it is technical work, it has, to an extent, been fairly limited, but intentionally so, to make sure that we do fully understand what the opportunities are.

Thank you. If I could ask you specifically, has there been any engagement in terms of assessing the possible costs associated with the Bill?

In terms of the costs, I wouldn't imagine that there are additional costs arising from the Bill. We do have a procurement service that works across Wales, and that is going to continue. There are opportunities for us to reduce, maybe, some of the technical costs that we have, but I don't see that being a big change for us. We will have to ensure that our governance is suitable anyway, so I don't see that it's going to change things radically.

Clearly, we did discuss previously that the number of health providers, certainly in terms of private providers, is becoming smaller. The number of providers and the market is becoming smaller. So, the opportunity, I think, to get value out of that market is reducing in terms of our processes currently. So, there is a challenge for us, I think. We are already seeing costs increasing in terms of providing health services from private providers. I'm not sure what the impact of the new process will be on that, but I don't see it changing it radically; I think that's just a process that's ongoing due to inflation and the nature of the market.

If I could just add to that, there has been discussion around costs, specifically in relation to procurement. As I mentioned earlier, we have the much wider procurement Bill, which will come into legislation with effect in Wales from the middle of next year, roughly, which will have a significant impact on how we operate, in a positive way, I believe. But mindful of that, as well as potential changes here on the healthcare services procurement and the need to embed that work with Welsh Government colleagues, no doubt, in helping to advise, maybe, on some of the drafting—I'm not sure—as well as implementing that, yes, there have been costs discussed from a procurement services perspective as to the investment that we would require, to make sure that we could bed this in successfully.

It would be fair to say that we are expecting more, now, of procurement services as well, because it's moved beyond just access to market now to agendas like public value, social value, and maximising the value added benefit that comes from procurement—decarbonisation and the circular economy. They are all areas of good development within procurement that naturally do add to the procurement cost base but create greater value for the public sector.

Yes, absolutely, and maybe going slightly off tangent, but just to emphasise what Huw has said, certainly, I see my division as increasingly, particularly since COVID, becoming more looked to by Welsh Government in terms of policy delivery on the ground in much wider areas than have traditionally been the preserve of procurement professionals. So, that's the reason why I think it was recognised that there would be some investment required into my teams.

Heledd, do you mind if Joyce just comes in quickly? I think she had a specific point.

That's fine.

Joyce.

Thank you, Heledd. Just the opposite—. I'm going to come from the other end now—the disadvantage. You just said that providers are shrinking and therefore the costs will be rising. Those two things always go together. We can see it at the fuel pumps. Is it likely, then, with shrinking budgets—and this is your domain, of course—that we'll end up in a situation of disadvantage from all that we've just said, taking it from the other end, because procurement could become an all-Wales basis to drive that cost down? I just want to look at both sides of the argument here.

Chair, if I clarify my point. The number of suppliers in the private sector are reducing, but partly because of takeovers. So, we've ended up seeing that within the private hospital industry, which does reduce competition, and then creates pressure, of course. I think we've got a balance within our procurement services between a national organisation, through shared services, and I would say it's a national organisation that is run very much in a co-operative way; I have a seat on the board or the managing committee for shared services, alongside a director from each health board and participating organisations. So, it's very much run in partnership across Wales. And there's a balance there between what is done on a 'once for Wales' basis, and, it would be fair to say, if we went back a few years, 'once for Wales' was seen as an answer, certainly in procurement, with large contracts delivering, I guess, at a cost-out opportunity.

There is—and as Jonathan alluded to—we do have local teams that are embedded within each of our organisations, and I've got a local procurement team that I've got a very close relationship with that report to Jonathan, and that gives us the balance between local versus national. So, where there is an opportunity for us to think about local procurement and local opportunities, that team would very much support us to drive that opportunity. And where there's an opportunity that things could be done better at a national level, that's very much, then, the focus that Jonathan's central team can provide. So, we get the best of both worlds.

Thank you. Is it all right to come back to Heledd, and we can pick this up again at the end, if that's all right? Heledd.

Thank you very much. You've mentioned some of the issues, and perhaps concerns that have been raised, but are there any additional concerns in terms of engaging on this issue? Do you think that any comments that you've raised have been addressed in the Bill and the explanatory memorandum, as introduced?

I don't see any additional concerns, apart from the issues that I've raised in relation to making sure that my colleagues in my profession have the time and the space to bed this in within our area of operation. My concerns are around our existing procurement work plan, and, as I said earlier, the timing of when we're taking those existing contracts back out to the market under the current full competitive arrangements. So, there could potentially be concerns in the future if the timing is such that that will disadvantage us, because, for example, we're out to the markets at a point in time when England introduce their Bill into a fact. And what we might find is that we get very few bids, or we get bids that are maybe costly to compensate providers, potentially, for doing business with Wales. I'm not saying that would be the outcome, but that's a potential risk.

So, I would come back, from my perspective—Huw may have others—the issue for me would be around the investment, which we've mentioned, but also the timing of this as well.

No, I think I'd concur with that. The timing that—. I guess the concerns are more now around how do we move from a policy framework to operationalising, and that links very much back into that timing issue.

I guess I do have a concern around regulatory divergence between Wales and England, which will particularly impact colleagues within specialist services who commission activity across the border, and particularly the bordering health boards, more so than us in Hywel Dda. But any divergence will have an effect there, although it will also, potentially, have an effect for some of our patients who do go across the border. So, divergence would be a worry, in terms of the perception, but it doesn't preclude us from still thinking about how we maximise the benefit for the way in which we operate in Wales. That doesn't need to be, necessarily, as part of the regulation; that can be as part of our guiding principles that we work to.

Diolch yn fawr iawn. Obviously, as the explanatory memorandum of the Bill shows, there will be a 12-week consultation exercise undertaken during the development of the regulations. Are you aware of any plans for engaging with the NHS and other stakeholders on developing and consulting on these regulations? You've mentioned in terms of time pressures and so on. It would be interesting just to better understand, really, how you'll be able to input into that process, if you're aware of that.

Certainly, from a procurement perspective, we've already been in discussions with Welsh Government colleagues and are certainly agreed and of the view that we would be directly involved in that, to the extent that I will probably have to ring-fence dedicated staff resource to work alongside colleagues to assist where we can in that process. So, yes, very much from my perspective. I'm not sure, Huw, if—.

Yes, we have been involved and we've got a very close relationship with officials in drafting and developing anyway. As I said, it's a particularly technical process that we're going through to a certain extent. The important thing for me will be using this time to think about the journey to operationalising and the journey for us to make sure that we avoid any regulatory divergence, as I say, and how we then develop our response to it, in terms of governance arrangements, in terms of decision-making arrangements. So, it's about, now for me, focusing on that period of response.

Diolch. Just finally from me, are you aware who have been engaged with within health boards and NHS Wales, then? You've mentioned in terms of 'as director of finance', et cetera, but at which level has the engagement been to date?

Beyond what I do know, in terms of the engagement that we've had within the finance director peer group, and of course we're responsible for procurement, professionally, within our organisations as well, then, clearly, we've been engaged. I'm not sure of the whole engagement framework that Government is following, but I believe what we've had at the moment is proportionate to the need to develop the response, and I'm sure the 12-week period will allow that to be expanded.

Diolch yn fawr iawn.

Thank you, Heledd. You've no more questions, Heledd, from yourself, no?

No.

Thank you. Thank you, Heledd. I was reading, in the impact assessment linked to the Bill, the cost to the NHS bodies is estimated to be £2.7 million. So, I’m wondering if you have any views on these potential costs. And also you've spoken quite a bit about the potential benefits, and I wonder if that can be quantified in any way to help us understand.

If I could maybe take your second point first, if that's okay, in terms of the benefits. I think what I would like again to emphasise is in terms of the wider Procurement Bill, to go back to that. That came out to consultation as part of the Green Paper and so on at the time, and the consultation in Wales was around, 'Should Wales have its own separate public procurement Bill?' Following consultation, which we and our services input to, was, 'No, we shouldn't.' And the reasons for that are very similar to the reasons why I think we should pursue this as well.

The reasons were that, as Huw said, regulatory divergence would cause, we believed from a procurement perspective, significant problems for us with our supply base, in that suppliers who are common to England and Wales would find difficulty in accessing or find it more costly or difficult to access opportunities in Wales or England because we had two different regimes. And with England accounting for 85 per cent, it was likely that we would, potentially, lose out. Scotland, as you know, have gone a separate path and made a decision to have their own procurement legislation, but certainly Wales, and I expect Northern Ireland, will follow suit as well and make that decision. I think that's an important point, because that principle also applies as to why I feel we need to reflect the same or similar arrangements here in Wales on the healthcare services procurement. The principle to me is the same: it's about making it easier for the market to access opportunities within Wales, and for us to access suppliers as well and service providers. So, that would be my comment on that.

In terms of the costings, again, I've alluded to the procurement costs associated with that, and there will be a cost associated with putting in the governance and transparency arrangements that maybe currently aren't there, and making sure that's common and standard practice across the piece.

Yes, in terms of costs, for organisations, they will be marginal, and mainly in management time. It's very difficult to quantify what the impact of that is. Clearly, there's lost opportunity cost to do something else, I guess, but it's all fairly marginal from a health board perspective, I would say. The cost of not doing it would probably be greater; the cost of staying with the status quo and having regulatory divergence would be greater for us. So, I think it's incumbent on us to make sure that we do change.

I guess, coming back to your point around opportunities, it's very difficult to cost out or put a sense of what that opportunity might be at this stage, but the opportunity for us to really think about innovations in a co-produced way with our supply chain is an absolutely phenomenal opportunity for us, to really lever what we're doing now on outcomes measurements within our health boards, and think about value-based procurement as part of that. There will be an opportunity for that. I have no sense of how significant that opportunity could be. And then the public value opportunity, coming back to the question around local opportunities for economic development and workforce development, I have no idea what that might be, but the opportunity is there for the taking.

Okay, thank you. Is there any potential that integrated care boards becoming more local could affect the NHS services that they might offer to Wales?

I think, as ICBs become population focused, they're naturally going to get to a place where they want to secure capacity for the needs of their population. So, there is a potential risk for certainly cross-border activity there that we need to be cognisant and mindful of. It's very difficult to influence that directly, but certainly we wouldn't want to create any more hurdles to work in Wales than working within that population base. So, it's an area to keep an eye on, but it's difficult to say much more on that in terms of the risks at this stage.

Is there anything else that you think that we haven't covered this morning? Are there any questions that perhaps we should have asked you, or something else that you think it's important for us to be aware of in our scrutiny?

That's always the difficult question to respond to, isn't it?

Yes. I can't think of anything else from my perspective.

Joyce.

You talked a lot about divergence. Do you want to give us an example, just for the record?

I guess, if we stayed with our current arrangements, there would inevitably be divergence because England is changing its approach, and if we end up changing the legislation too much, to diverge from what the proposal is in England, that will create a perception of divergence, and in this respect, I think perception may be as important as the reality, because any perceived barriers or greater barriers to working in Wales could be a challenge for us. Any perceived complexity from an English-domiciled provider to work in Wales would create risk for them and make it less likely, I guess, to bid for activity on this side of the border.

Yes. The last—

But that's not an example. Can you give an actual example of what you mean by divergence so that anyone looking in here would understand it?

In terms of what we're talking about today, what would happen is that we would have the Health and Care Act 2022 in operation in England next year, and in Wales the procurement of those services would be then subject to the procurement Act, which is currently going through. So, those are two separate pieces of legislation. In Wales, we would have to then continue to competitively tender for all healthcare procurement services. In England, because of that regulatory divergence, those services could be procured much more easily without necessarily going through a competitive process. That's the difference.

That's what I was looking for. Thank you. Thank you very much.

We had some evidence from the Welsh Government about mixed procurement. Do health boards understand what is meant by this?

Yes. So, in terms of mixed procurement, we currently have mixed procurement within public procurement. So, if we set healthcare services to one side and just look at normal goods and services, the area for the current regulations that govern whether what you're buying is a good or service is where is the greater amount of the actual spend going into. So, quite often, we buy products, but there are services wrapped around them. So, are we subject to the goods or are we subject to the services? And at present, the rule is, if more than 50 per cent of it is goods, it's under goods; if more than 50 per cent of that spend, on that contract, is services, it's services. So, in terms of the mix between health and social care, we'd expect that there would be some determination, potentially, around what constitutes the largest part of the spend on that, possibly.

Thank you. And there's nothing else you can think of that we haven't asked, now you've had a bit more time to think about it? No. That's great. That's been a really helpful session, because you've put some flesh on to something that—perhaps I shouldn't say—looks a bit dry on paper, but you've helped us to understand quite a bit about the Bill, so thank you very much for coming to us today. We'll send you a transcript of proceedings, and if there's anything you want to add or—. And, certainly, if you're following the rest of the scrutiny sessions, if something jogs your memory and you think you want to add something to what you've said that would help us, then please drop us a note on that. But thank you for being with us today. Diolch yn fawr iawn.

Thank you.

Diolch.