Your statutory duties: a draft reference guide for NHS foundation trust governors

Transcription

1 Your statutory duties: a draft reference guide for NHS foundation trust governors Issued on: 19 December 2012 Deadline for responses: 1 March 2013 This guide was first published by Monitor in October This new version has been updated to reflect the new roles and responsibilities of governors as set out in the Health and Social Care Act 2012 (the Act). Please send us your comments on the guide. We will aim to publish a final guide during April 2013.

2 Your statutory duties: a draft reference guide for NHS foundation trust governors This guide was first published by Monitor in October This new version has been updated to reflect the new roles and responsibilities of governors as set out in the Health and Social Care Act 2012 (the Act). Not all of the new governor duties introduced by the Act have come into force yet and in the meantime we would like any views, particularly from foundation trust governors and board secretaries, on this guide and its content. Please let us know by 5pm on Friday 1 March 2013 if you have any comments on this guide. Please carolyn.may@monitor-nhsft.gov.uk or write to Carolyn May, Monitor, 4 Matthew Parker Street, London, SWIH 9NP We will look at the comments we receive with the aim of publishing a final guide during April Please note that many of the references in here, for example the terms of authorisation, will change in the final guide to reflect the new provider licence, which will be introduced during 2013, and Monitor s revised approach to regulating foundation trusts. 1

3 Contents Chapter 1: background information Summary of changes to the NHS introduced by the Health and Social Care Act (2012) Working together for patients About this guidance document Chapter 2: the governance structure of NHS foundation trusts What are NHS foundation trusts? What is the governance structure of an NHS foundation trust? Who regulates NHS foundation trusts? Chapter 3: the governor s role What are the statutory powers and duties of the council of governors? What does The NHS Foundation Trust Code of Governance say about governors? Other duties Chapter 4: the governors and the chair Appointing the chair Terms and conditions of the chair Removing the chair Chapter 5: the governors and the non-executive directors Appointing a non-executive director Terms and conditions of the non-executive directors Removing non-executive directors Chapter 6: approving the appointment of the chief executive Chapter 7: the governors and the NHS foundation trust s auditor Appointing the auditor Removing the auditor Chapter 8: receiving the NHS foundation trust s annual accounts, any auditor s report on them, and the annual report Quality accounts and governors Chapter 9: preparing the forward plan Chapter 10: holding the non-executive directors to account Chapter 11: representing the interests of trust members and the public Chapter 12: taking decisions on significant transactions, mergers, acquisitions, separations and dissolutions Chapter 13: taking decisions on non-nhs income Chapter 14: further information Glossary 2

4 Chapter 1: Background information This chapter provides background information for governors. It covers: the changes to the NHS following the Health and Social Care Act (2012); how the main health care organisations are working together for patients; and what this guidance document contains. 1.1 Summary of changes to the NHS introduced by the Health and Social Care Act (2012) Monitor s role The Health and Social Care Act 2012 makes changes to the way health care is regulated in order to strengthen the way patients interests are protected and promoted. Monitor s role is changing significantly as we take on a number of new responsibilities. We will become the sector regulator for health care in England, which means that we will regulate all providers (except those that are exempt under secondary legislation) of NHS health care services in England. Our main duty will be to protect and promote the interests of people who use health care services, by promoting the provision of services which is economic, efficient and effective, and maintains or improves the quality of the services. During 2013 Monitor will start to introduce a licence for providers of NHS health care services. The licence will set out a range of conditions that providers must meet. The licence will be Monitor s main tool for carrying out the majority of our regulatory functions. We will use the licence to make sure that foundation trusts play their part in continually improving the effectiveness and efficiency of NHS health care services so they can meet the needs of patients and taxpayers, today and in the future. As the sector regulator, we will manage key aspects of health care regulation, including: regulating prices; enabling services to be provided in an integrated way; safeguarding choice and competition; and supporting commissioners so that they can ensure essential health services continue to run if a provider gets into financial difficulties. Monitor will also continue to ensure that the boards of NHS foundation trusts focus on good leadership and governance, in line with their duty to be effective, efficient and economic. In addition, we will have a continuing role in assessing the remaining NHS trusts when they apply for foundation trust status. The change from Primary Care Trusts to Clinical Commissioning Groups Primary care trusts ( PCTs ) currently commission secondary care services from NHS trusts, NHS foundation trusts and independent sector treatment centres, controlling approximately 80% of the NHS budget. PCTs play a crucial role in the management of the quality of care delivered, as measured by national and local agreements, through contractual arrangements with providers. PCTs will be abolished by April 2013 and their work will be taken on by Clinical Commissioning Groups (CCGs). Formed by GP practices, CCGs will be responsible for commissioning the majority of health care services. 3

5 1.2 Working together for patients The roles of Monitor, the Care Quality Commission (CQC), NICE, the NHS Commissioning Board and the NHS Trust Development Authority may be different, but ultimately our goal is the same: to make sure people get the best possible care and service from the NHS. In the new health system we will work closely together because we can do a better job for people that way. The needs of patients and communities are more important than the boundaries between our organisations. We will all put patients first. We will work hard to give people the information they need to make choices about their own care if they want to, and to help doctors and nurses to deliver the best results for them. We will all use hard evidence to make the best possible decisions in patients interests decisions which drive improved quality and safety while making the best use of valuable public money so that it can stretch even further. In line with the principles and values set out in the NHS Constitution, together we will make sure that the people who use NHS services, the organisations which provide them and the commissioners who buy them are able to focus on the quality, safety and viability of the services people depend on in times of need. Here are some examples of how we will do that: NICE will produce national guidance, standards and information to help health and social care professionals deliver the best possible care based on the best available evidence. The NHS Commissioning Board will use NICE standards and other evidence to ensure that the 85 billion that it and Clinical Commissioning Groups spend on health services is producing the best results for patients. The CQC will drive improvement in the quality of health services by regulating and monitoring them, by listening to people and by providing an authoritative voice on the state of care. Its judgements about the safety and quality of care will play an important part in decisions made by the NHS Commissioning Board and local commissioners on which services to buy and protect, and in Monitor s decisions on whether a foundation trust is well run on behalf of patients. In addition, Monitor will only license providers which are registered with the CQC. Monitor will help drive improvement in the quality of health services by creating incentives which encourage commissioners and providers to work together effectively and deliver better care for patients. We will work closely with the Care Quality Commission and the NHS Commissioning Board in doing this. Monitor and the NHS Commissioning Board will also work together to ensure that the prices paid to providers of NHS services are designed in a way which drives improvements in quality and encourages them to deliver integrated services where that s best for patients. Close working between the two organisations will ensure that prices for 4

6 services are fair and transparent, rewarding efficient providers. The NHS Commissioning Board will set guidelines for local commissioners to ensure that a choice of NHS services is available to people where possible. Monitor will ensure that providers of NHS services give people the information they need to make their own choices about which service to use. Where commissioners decide to make use of competition to increase quality and choice, Monitor will ensure that it operates fairly and in patients interests. Monitor s ground rules for providers will ensure they use the resources for health care as effectively and efficiently as possible. NICE s guidance and advice will also help commissioners and providers to do this by providing an evidence base for investment and disinvestment. The NHS Trust Development Authority will drive improvements in the quality and efficiency of NHS trusts, using rules which are consistent with Monitor s rules for foundation trusts and other providers. Trusts which reach the required standards can then apply to Monitor for foundation trust status, which gives them greater freedoms in how they run their business to achieve the best possible care for patients. 1.3 About this guidance document When Parliament created NHS foundation trusts it gave them independence from central government and a governance structure designed to ensure that people from the communities served by NHS foundation trusts can take part in governing their local trust. NHS foundation trust governors are the direct representatives of local communities in foundation trusts. Governors do not manage the operations of NHS foundation trusts; rather they challenge the board of directors and hold them to account for the trust s performance. Governors also represent the interests of foundation trust members and the public and provide them with information on the trust s performance and forward plan. Two acts of Parliament, the National Health Service Act 2006 (the 2006 Act) and the Health and Social Care Act 2012 (the 2012 Act), provide governors with statutory responsibilities and the rights to help them deliver these. What s the purpose of this guide? There are now over 4,800 NHS foundation trust governors across England. In 2007, Monitor carried out research to find out from governors how well they felt this system of governance was working: how engaged they were in their organisations; how effective were their communications with chairs and boards of directors; and, crucially, how governors were exercising their statutory duties. Monitor undertook a further survey in 2010/11 to gauge progress since This revised guide now seeks to address some of the uncertainties raised in these surveys and also describes the updated duties for governors in the 2012 Act. Monitor is concerned not only that the governance system of an NHS foundation trust complies with the law but also that governors have the knowledge, support and resources they need to play their role in foundation trust governance effectively. The findings of both our surveys told us that governors would welcome further advice and support on 5

7 discharging their statutory duties, in particular on the new governor roles and responsibilities arising from the 2012 Act, and how to exercise them properly. We want all governors to receive the help and support they need to fulfil their important responsibilities and this is why we have produced this guide. What the guide covers This guide covers the statutory duties of NHS foundation trust governors set out in the Acts of 2006 and 2012 and examines ways in which governors can fulfil them. We recognise the variety of non-statutory duties that governors may perform in foundation trusts, as well as the importance of preserving the autonomy of individual foundation trusts. So this guide is limited to commenting on the statutory duties common to all governors. However, it provides links to other bodies and resources that can support governors in any non-statutory duties they may choose to take on in their particular foundation trust. It does not seek to prescribe how governors should carry out their work day-to-day: that is for foundation trust boards and governors to agree between themselves. Although this guide describes the new governor duties introduced by the 2012 Act, not all of these have yet come into force. We will periodically update our website as new duties come into force. The types of information in this guide This guide contains two types of information for governors: 1. details of governors statutory responsibilities these are legal powers and duties which are, of course, mandatory; and 2. processes for fulfilling governors statutory responsibilities. These are not mandatory but what we can recommend from our experience of foundation trust governance. NHS foundation trusts are not obliged to follow these processes. We offer them, rather, as examples of good practice for consideration by trusts, including newly authorised trusts and those trusts refreshing their existing processes. Statutory duties Legal requirements will be clearly identified at the start of each chapter and distinguished from any non-mandatory advice or information we provide. 6

8 Chapter 2: the governance structure of NHS foundation trusts This chapter describes the role of the council of governors within the overall structure of an NHS foundation trust. It covers: the definition of NHS foundation trusts; the governance structure of NHS foundation trusts; and the regulation of NHS foundation trusts. 2.1 What are NHS foundation trusts? NHS foundation trusts provide health care in line with the core NHS principles: that care should be free and based on need, not ability to pay. Foundation trusts were created in the Health and Social Care Act They are free from central government control. This means they have the freedom to make decisions for themselves, including whether to make and invest surpluses and to manage their own affairs. Nevertheless, they are subject to statutory requirements and all have a duty to exercise their functions effectively, efficiently and economically. The concept of a foundation trust rests on local accountability, which governors perform a pivotal role in providing. Governors include elected and appointed individuals who represent members and other stakeholder organisations on a council of governors. They are the individuals who bind a trust to its patients, service users, staff and stakeholders. The 2006 Act gives governors various statutory responsibilities which have been expanded by the 2012 Act. These are the legal powers and duties that this guide primarily explores. 2.2 What is the governance structure of an NHS foundation trust? Each NHS foundation trust has its own governance structure. This is set out in the foundation trust s constitution, which is published in the NHS foundation trust directory on Monitor s website: The basic governance structure of all NHS foundation trusts includes the: 1. membership; 2. council of governors; and 3. board of directors. In addition to this basic structure, NHS foundation trusts also make use of board committees and working groups, comprising both governors and directors, as a practical way of dealing with specific issues. Some committees (appointments, audit and remuneration) are required by legislation and others are referred to in the Code of Governance and elsewhere. 7

9 Figure 1: the chain of accountability in NHS foundation trusts Every foundation trust will have its own constitution which defines how the trust s governance will operate. Governors should refer to their trust s constitution to understand the particular arrangements of their trust, including its committee structures and procedures, to enable them to fulfil their statutory duties. Although each constitution will be unique to its particular NHS foundation trust, there are several legal requirements that apply to all NHS foundation trusts. These requirements are set out in Monitor s Model Core Constitution, on which all NHS foundation trust constitutions must currently be based. When the provisions of the 2012 Act come into force, it will be the duty of governors to approve amendments to their trust s constitutions and Monitor will no longer have a role in this process. In addition to the formal statutory requirements, Monitor has also issued best practice advice on governance in The NHS Foundation Trust Code of Governance ( Code of Governance ). The Code of Governance operates on a comply or explain basis, meaning that foundation trusts must either comply with its requirements or explain why they have decided not to. Monitor may accept reasonable explanations why a foundation trust has not complied with certain elements of the Code of Governance on a case-by-case basis. The advice in this guide complements best practice advice in the Code of Governance. Membership The membership of a foundation trust consists of its staff, the general public and, sometimes, patients or service users and their carers. Members belong to various constituencies as defined in each NHS foundation trust s constitution. An NHS foundation trust must have a public constituency and a staff constituency, and may also have a patient or service users constituency. Members in the various constituencies vote to elect governors and can also stand for election themselves. Council of governors Figure two illustrates the composition of a typical council of governors. The council of governors consists of elected NHS foundation trust members and appointed individuals or representatives from other key stakeholders. Governors are unpaid and volunteer part-time 8

10 on behalf of the trust that they represent. They are not directors and should not seek to act in a directorial capacity as their role is very different. Figure 2: illustration of a council of governors NHS foundation trust members The chair of the board of directors is also the chair of the council of governors. This is a legal requirement. Although this sometimes raises questions about the council of governor s independence, this structure allows the chair to be a link between the two groups, where they might otherwise find it difficult to communicate effectively. The legislation requires that the council of governors also appoints representatives from certain defined stakeholders, such as a local authority. Trusts are currently required to appoint a governor from a Primary Care Trust (PCT). However, PCTs will be disbanded under the 2012 Act and Clinical Commissioning Groups (CCGs) will take on their commissioning role. When the relevant sections of the 2012 Act come into force, trusts will no longer be required to have a PCT governor, and there is no equivalent requirement to appoint a governor from a CCG in their place. In addition to the appointed governors referred to above, the NHS foundation trust s constitution will identify the local stakeholders who are entitled to appoint representatives to the council of governors. Such stakeholders may include, for example, local voluntary groups, the police, trade unions or charities. There is no difference between the responsibilities of an elected and an appointed governor. The 2012 Act adopts the term council of governors from 1 October 2012 onwards, but other terms are acceptable if the trust prefers to use these. The various alternatives used by some trusts include: 9

11 governors council; membership council; members council; and governors body. Have you considered? Your trust running a skills and experience audit for each new governor, to ensure the trust: maximises governors contributions; sustains their interest; and provides additional training and induction to people who need them. Board of directors The NHS foundation trust board of directors is responsible for all aspects of the performance of the NHS foundation trust. All the powers of the NHS foundation trust are exercisable by the board of directors on its behalf. The board of directors will have executive and non-executive directors and should include some of each, although the Code of Governance recommends that a majority of the board of directors are independent nonexecutive directors. All members of the board of directors have collective responsibility as a unitary board for every decision of the board regardless of their individual skills or status. Non-executive directors and executive directors alike share the same degree of accountability. All directors have a responsibility to challenge the decisions of the board constructively, but nonexecutive directors have a particular duty to challenge executive directors and should scrutinise their performance accordingly. The board of directors is also responsible for establishing the values and standards of conduct for the trust and its staff in accordance with NHS values and accepted standards of behaviour in public life including selflessness, integrity, objectivity, accountability, openness, honesty and leadership (The Nolan Principles see page 12 for details). Executive directors The executive directors must include a chief executive (who is also the accounting officer) and a finance director. In addition, one of the executive directors must be a registered medical practitioner or dentist and one must be a registered nurse or midwife. The executive directors will each have particular responsibility for a specific function, but are all also collectively responsible for exercising the powers of the trust and its performance. Chair The chair is one of the non-executive directors and undertakes a dual role as chair of the board of directors and chair of the council of governors. This means that the chair is responsible for leading both and for ensuring that the board of directors and council of governors work together effectively. The chair is also responsible for making sure that the board and council receive accurate, timely and clear information that is appropriate for their respective duties. The dual role of the chair enables clear communication between the 10

12 board of directors and council of governors, allowing them to keep abreast of each other s discussions and decisions. Non-executive directors The non-executive directors will include the chair. A person may only be appointed as a non-executive director if he or she is a member of the public constituency (or the patients /service users /carers constituency where there is one). Where the trust has a university medical or dental school, a person may be appointed as a non-executive director if he or she exercises functions for that university/school. Non-executive directors are particularly responsible for challenging the executive directors on their decision-making and the trust s strategy, but they are collectively responsible with the executive directors for the exercise of the powers and performance of the trust. Difference between the director and governor role To fulfil their collective responsibility for the exercise of their powers and the performance of the trust, and to be accountable for both, all directors of the foundation trust must: provide effective and proactive leadership of the trust within a framework of processes, procedures and controls which enable risk to be assessed and managed; take responsibility for making sure the trust complies with its terms of authorisation, its constitution, mandatory guidance issued by Monitor, relevant statutory requirements and contractual obligations; set the trust s strategic aims at least annually, taking into consideration the views of the council of governors; be responsible for ensuring the quality and safety of health care services, education, training and research delivered by the trust; ensure that the trust exercises its functions effectively, efficiently and economically; set the trust s vision, values and standards of conduct and ensure the trust meets its obligations to its members, patients and other stakeholders and communicates them to these people clearly; take decisions objectively in the interests of the trust; take joint responsibility for every decision of the board, regardless of their individual skills or status; share accountability as a unitary board; and constructively challenge the decisions of the board and help develop proposals on priorities, risk mitigation, values, standards and strategy. The directors are paid for their skills, time and expertise in leading the trust both strategically and operationally, as well as for taking responsibility for the performance of the trust and being accountable in the event of failures. The voluntary role of the governor is entirely different. Governors are not expected to undertake the above duties or to be ultimately responsible for the performance of the trust. The governor s role is detailed in Chapter 3, and includes specific statutory duties, but the board of directors remains ultimately responsible for the trust s operations and performance. 11

13 The Nolan Principles All holders of public office should adhere to the principles of public life, as defined by the Nolan Committee (further information at The committee sets out the principles for the benefit of all who serve the public in any way, so they apply to NHS foundation trust governors. The seven principles are: 1. Selflessness 2. Integrity 3. Objectivity 4. Accountability 5. Openness 6. Honesty 7. Leadership Committees of the board of directors The key committees included in the Code of Governance are set out below. Nominations committee The Code of Governance states that there may be one or two nominations, or appointments, committees. If you are unsure of the structure adopted by your own trust, you can find out by referring to the trust s constitution, listed in the Foundation Trust Directory on Monitor s website, or by asking your trust directly. The nominations committee or committees are responsible for identifying and nominating executive and non-executive directors. The governors are ultimately responsible for appointing non-executive directors, but they exercise this responsibility through a nominations committee. If there are two nominations committees, one will be responsible for dealing with nominations for executive directors and the other for nominations for non-executive directors (including the chair). The chair of the NHS foundation trust or an independent nonexecutive director should chair both committees. Where a nominations committee is set up to appoint a trust chair, a different non-executive director must chair the committee should the current chair be a candidate for re-appointment. Where an NHS foundation trust has two nominations committees, the nominations committee responsible for the non-executive directors should have a majority of governors. If a trust has only one nominations committee, when it discusses nominations for appointments of non-executives, including the appointment of the chair, it should again have a majority of governors on the committee and also on the interview panel. Options for nominations committees One nominations committee: a committee of the board of directors: responsible for identifying and nominating both executive and non-executive directors when considering non-executive appointments, the nominations committee must ensure there is a majority of governors on the committee and also a majority of governors on the interview panel. 12

14 Two nominations committees: one nominations committee focuses solely on nominating executive directors and welcomes the involvement of governors where helpful, especially during the appointment of a chief executive. the second nominations committee focuses solely on nominating non-executives and should consist of a majority of governors, although the committee must consult with the executive directors appropriately. Audit committee The audit committee is responsible for monitoring and reviewing matters such as the integrity of financial statements of the NHS foundation trust, its internal financial controls and the internal audit function. The main roles and responsibilities of the audit committee should be set out in written terms of reference and should include details of how the committee will execute both. Main roles and responsibilities of the audit committee Review the trust s internal And review the trust s internal control and risk management financial controls systems, unless expressly addressed elsewhere by a separate Monitor the integrity of the financial statements board committee or the board itself Including any formal announcements relating to the trust s financial performance, and review significant financial reporting judgements contained in them Monitor the internal audit function Review and monitor the external auditor s independence and objectivity Develop and implement policy on engaging the external auditor for any nonaudit services Report to the council of governors And review the effectiveness of the internal audit function And the effectiveness of the audit process, taking into consideration relevant UK professional and regulatory requirements Taking into account relevant ethical guidance regarding the provision of non-audit services by the external audit firm Identifying any matters which it considers merit action or improvement and recommending what steps to take The audit committee is not responsible for appointing external auditors; that is the responsibility of the council of governors. That said, governors may benefit from using the skills and experience of the audit committee if they feel this is appropriate. The audit committee must consist of non-executive directors and is appointed by the board of directors. The Code of Governance states the committee should have at least three independent non-executive directors and that at least one member of the audit committee should have recent and relevant financial experience. 13

15 Governors are not members of the audit committee. However, under the Code of Governance, the audit committee should report to the council of governors, identifying any matters that merit action or improvement and recommending the steps to take. Have you considered? If it would be helpful for governors to attend selected audit committee meetings, in addition to providing them with training? Remuneration committee The board of directors must establish a remuneration committee comprising non-executive directors. This committee has responsibility for setting the terms and conditions of office, including remuneration (pay and benefit entitlements) and allowances of the executive directors. The remuneration committee is not responsible for setting the terms and conditions of the non-executive directors including the chair. That responsibility lies with the council of governors. Other committees and governor working groups The nominations, audit and remuneration committees described above are those required by legislation and are set out in the Code of Governance. Governors can and do add value by contributing to a wide variety of other committees or governor working groups covering topics such as: clinical quality; membership strategy and engagement; strategic planning and policy; patient experience; and auditor appointment. These committees comprise a mixture of governors and directors in some trusts, enabling members of the board of directors and council of governors to work in partnership. Other useful roles in the governance structure In addition to the key statutory roles of the chair and chief executive, the Code of Governance and good practice suggest other positions that can contribute greatly to the efficient and effective running of an NHS foundation trust. Deputy chair The Model Core Constitution recommends that an NHS foundation trust s constitution provides for a deputy chair. The deputy chair will be one of the NHS foundation trust s nonexecutive directors and should deputise for the chair as and when appropriate. The deputy chair should be one of the non-executive directors and not one of the governors. Senior independent director (SID) 14

16 The Code of Governance states that one of the independent non-executive directors should be appointed by the board of directors as the senior independent director or SID. This appointment should be made in consultation with the council of governors. The SID should act as the point of contact with the board of directors if governors have concerns which approaches through normal channels have failed to resolve or for which such normal approaches are inappropriate. The SID may also act as the point of contact with the board of directors for governors when they discuss, for example, the chair s performance appraisal and his or her remuneration and other allowances. Further details about the SID and what independent means can be found in the Code of Governance. Lead governor Monitor has in the past asked all foundation trusts to let us know the name of a lead governor who could liaise between Monitor and the trust in circumstances where it would be inappropriate for the chair to contact Monitor or vice versa, for example, concerning the appointment or removal of the chair. However, the term lead governor has created some confusion. Monitor did not originally intend the person holding this role to lead the council of governors or assume greater power or responsibility than other governors. We recognise that many foundation trusts have broadened the original intention of this role and given greater responsibility or power to their lead governor. Every trust may decide how best to structure its own council. However, Monitor continues to require only that the lead governor act as a point of contact between Monitor and the council of governors when needed. Directors and governors alike should always remember that the council of governors as a whole has responsibilities and power in statute, and not individual governors. Where the role is broadened, it is essential that the council of governors itself decides what the role of lead governor should and should not include. The council of governors itself should also vote on or otherwise decide who the lead governor should be and directors (including the chair) should not be involved in this process. Having a lead governor does not, in itself, prevent any other governor from making contact with Monitor directly if they feel this is necessary. Communication from Monitor to governors will, as a matter of course, be disseminated by trust secretaries. No governor should deputise for the deputy chair of the board of directors, who should be a non-executive director. Have you considered? Alternative sources of support and advice for governors, if the NHS foundation trust does not have a trust secretary or the trust secretary does not have a role to play in supporting governors. 15

17 Trust secretary NHS foundation trusts generally have a trust secretary (sometimes known as the board or company secretary). The trust secretary, typically but not always an employee of the trust, is responsible in particular for organising the meetings and administration of the board of directors and council of governors and often plays an important role in supporting the council of governors. For example, they can be expected to: ensure the council of governors complies with its procedures laid down in the NHS foundation trust s constitution and/or elsewhere); advise the council of governors (through the chair) on all governance matters; and ensure information flows freely within the NHS foundation trust, including to/from the council of governors. Trust secretaries are usually also available, sometimes with a membership manager, to advise and support individual governors on procedural matters and to oversee governor training and development. They are typically the person governors can go to with day-to-day questions. Under the Code of Governance, appointing and removing the trust secretary will be a joint matter for the chief executive and chair. Membership secretary Some NHS foundation trusts also provide a membership office or a membership secretary. The office may be responsible for: managing the flow of information between members and governors, for example, sending out newsletters, coordinating member surveys and administering membership card schemes; coordinating, as appropriate, the elections for the council of governors; providing administrative support for governors as they perform their duties; and maintaining the membership database and providing high level reports on membership. Neither the trust secretary nor the membership secretary are mandatory roles and NHS foundation trusts may have established different roles to cover these responsibilities. You can check with your trust to see what functions or roles it has established to support governors and members. 2.3 Who regulates NHS foundation trusts? Monitor authorises and regulates NHS foundation trusts, making sure that they are legally constituted, well-led and financially robust. The Care Quality Commission monitors the quality and safety of NHS foundation trust care and a number of other bodies also have influence over aspects of NHS foundation trusts work. Monitor The 2012 Act makes substantial changes to Monitor s role, summarised in Chapter 1. For further details please see our website: 16

18 Assessment of applicant trusts Monitor will continue to receive and consider applications from NHS trusts which are seeking to obtain NHS foundation trust status. When Monitor is satisfied that an NHS trust meets certain criteria, it authorises the trust as an NHS foundation trust. As part of this authorisation, the new NHS foundation trust is issued with terms of authorisation. These set out various conditions under which an NHS foundation trust is required to operate. Each NHS foundation trust s full terms of authorisation are published on Monitor s website. The essential terms of authorisation are the same for every NHS foundation trust. The schedules to the terms of authorisation contain bespoke requirements for each individual NHS foundation trust. Governors should familiarise themselves with their trust s terms of authorisation. Monitor s role of assessing applicant trusts will continue until all NHS trusts have been authorised as foundation trusts, anticipated to be no later than April However, in line with the 2012 Act, Monitor will start in 2013/14 to issue all qualifying providers of NHS health care services with a licence rather than terms of authorisation. Existing foundation trusts will be automatically issued with a licence and will not need to apply for one. Compliance and oversight Monitor oversees an NHS foundation trust s activities to ensure that the trust complies with its terms of authorisation. The terms of authorisation set out the requirements placed on NHS foundation trusts and these include, but are not limited to: putting in place, keeping in place and complying with arrangements for monitoring and improving the quality of health care provided by and for that NHS foundation trust; delivering health care services to specified standards under agreed contracts with their commissioners; operating effectively, efficiently and economically as a going concern; and governing themselves in accordance with best practice, maintaining the organisation s capacity to deliver mandatory services. Monitor oversees foundation trusts by asking them to submit various reports on their finance and governance, typically annually and quarterly, although we may sometimes require monthly reports if we have concerns about the trust. During 2013 we will start to regulate NHS foundation trusts against the terms of their licence rather than the terms of their authorisation. Monitor can use its statutory powers to intervene in the running of a failing NHS foundation trust, where it is in significant breach of its terms of authorisation. Intervention could include: requiring the NHS foundation trust, its directors or governors to do, or not do, certain things; or removing or suspending any or all of the board of directors or council of governors. These powers may only be used where an NHS foundation trust significantly fails to comply with its terms of authorisation. However, all governors need to appreciate that these powers exist. 17

19 As this guide explains, the council of governors has its own powers to intervene where its trust s performance is not acceptable. For example, the council of governors can also remove the chair and/or the non-executive directors of an NHS foundation trust. The powers of the council of governors in this regard are described more fully on page 20 of this guide and are unchanged by the 2012 Act. Care Quality Commission The Care Quality Commission (CQC) drives improvement in the quality of health services by regulating and monitoring them, by listening to people and by providing an authoritative voice on the state of care. Its judgements about the safety and quality of care will play an important part in decisions made by the NHS Commissioning Board and local commissioners on which services to buy and protect, and in Monitor s decisions on whether a foundation trust is well run on behalf of patients. In addition, Monitor will only license providers which are registered with the CQC. We share information and work closely together to deal with trusts in difficulty. There are also regular meetings between the two regulators to ensure each has the relevant information from the other when working with foundation trusts on issues concerning quality of care. Other stakeholders of NHS foundation trusts Health Overview and Scrutiny Committees The Health Overview and Scrutiny Committees of local authorities inquire into any matter relating to the planning, provision and operation of health services in the area of its local authority. NHS foundation trusts must consult with the relevant overview and scrutiny committees before making any material changes to their service offerings that will change mandatory services, and must provide the Health Overview and Scrutiny Committees with any information these committees request. A number of Health Overview and Scrutiny Committees, some from outside a trust s locality, may take an interest in the provision of an NHS foundation trust s services if it offers a regional or national tertiary referral service. Governors may be helpful to Health Overview and Scrutiny Committees by representing the interests of foundation trusts in decision-making when asked. However, this is not a requirement of governors, who operate entirely independently of Health Overview and Scrutiny Committees. Governors should also take care to disclose only information that the chair has agreed is not confidential to the trust. If a foundation trust governor were to also serve at the same time on the Health Overview and Scrutiny Committee overseeing the foundation trust, a conflict of interest could arise. The individual in question would need to consider where his or her interests lay and discuss this with the foundation trust chair. LINks and local Healthwatch The role of LINks is to give local communities a voice in commissioning health and social care. The Local Government and Public Involvement in Health Act 2007 that established 18

20 LINks sets out their role and function and also gives the Secretary of State power to make regulations, as well as imposing duties on commissioners and certain providers of health and social care services. Healthwatch England was established in October LINks will evolve into local Healthwatch bodies that will: have the power to enter and view services; influence how services are set up and commissioned by having a seat on the local health and wellbeing board; produce reports which influence the way services are designed and delivered; provide information, advice and support about local services; and pass information and recommendations to Healthwatch England and the Care Quality Commission. Healthwatch England will be able to advise the Secretary of State for Health, the NHS Commissioning Board, local authorities, Monitor and the Care Quality Commission about concerns raised by local Healthwatch bodies for possible investigation. It may be helpful for a foundation trust to have a governor who is also a member of LINks or local Healthwatch. However, this is not compulsory and trusts may decide that this would risk a potential conflict of interest which they would rather avoid. Health and Wellbeing Boards Each local authority will have its own Health and Wellbeing Board. This will be a forum in which health and social care service representatives can collaborate to understand local needs and agree priorities for addressing the broader determinants of health and wellbeing and reducing health inequalities among their local population. Boards will operate in shadow form during 2012/13 and will take on their statutory functions from April Foundation trusts do not have an automatic right to sit on Health and Wellbeing Boards, which may themselves decide if they wish to appoint additional persons. 19

21 Chapter 3: The governor s role This chapter sets out what it means to be a governor of an NHS foundation trust in formal terms. The chapter covers: the statutory powers and duties of governors; non-statutory requirements of governors, particularly those set out in the Act and Code of Governance; types of governors; and support for governors and their work. 3.1 What are the statutory powers and duties of the council of governors? The 2006 Act gives the council of governors various statutory roles and responsibilities and the 2012 Act expands and adds to these. Statutory powers of governors unchanged by the 2012 Act The statutory powers and duties of the council of governors that continue unchanged by the 2012 Act are to: appoint and, if appropriate, remove the chair; appoint and, if appropriate, remove the other non-executive directors; decide the remuneration and allowances and other terms and conditions of office of the chair and the other non-executive directors; approve the appointment of the chief executive; appoint and, if appropriate, remove the NHS foundation trust s auditor; and receive the NHS foundation trust s annual accounts, any report of the auditor on them, and the annual report. In addition: in preparing the NHS foundation trust s forward plan, the board of directors must have regard to the views of the council of governors. Additional powers and duties for the council of governors in force from 1 October 2012 Governors must decide whether the trust s private patient work would significantly interfere with the trust s principal purpose, which is to provide goods and services for the health service in England, or performing the trust s other functions (See Chapter 13). The council of governors must also approve any proposed increases in non-nhs income of 5% or more in any financial year. Approval means that at least half of the governors taking part in the vote agree with the increase (See Chapter 13). 20

22 Additional powers and duties for the council of governors to come into force at a later date The 2012 Act sets out some further powers and duties for governors but the Department of Health has not yet determined the dates when these duties will come into effect. We will periodically update our website with these dates. Statutory duties and powers in this category are: To hold the non-executive directors, individually and collectively, to account for the performance of the board of directors (see Chapter 10). To represent the interests of the members of the trust as a whole and the interests of the public (see Chapter 11). The council of governors may require one or more of the directors to attend a governors meeting to obtain information about the trust s performance of its functions or the directors performance of their duties, and to help the council of governors to decide whether to propose a vote on the trust s or directors performance (See Chapter 10). Significant transactions must be approved by the governors. Approval means that at least half of the governors taking part in the vote agree with the transaction. The trust may choose to include a description of significant transactions in the trust s constitution (See Chapter 12). The council of governors must also approve an application by the trust to enter into a merger, acquisition, separation or dissolution. In this case, approval means that at least half of all the governors agree with the application (See Chapter 12). Amendments to the trust s constitution must be approved by the council of governors. Approval means at least half of the governors taking part in the vote agree with the amendments. Amendments will no longer need to be submitted to Monitor for approval. Changes to the council of governors, its advisers and its work, to come into force at a later date The 2012 Act makes the following changes to the council of governors, its advisers and its work: There will no longer be a requirement for a PCT governor. The trust may, but is not required to, replace the PCT governor with a governor from another commissioning body, such as a CCG. Monitor has the power to establish a panel of people to whom a governor can refer questions to determine whether the trust has failed or is failing to act in accordance with its constitution. The council of governors will need first to approve any such referral. Approval means at least half of the governors taking part in the vote agree with the referral. 21