NHS England ('NHSE') has now published updated NHS enforcement guidance following a statutory consultation last autumn. The guidance meets two purposes:
1. It describes the approach NHSE will take when applying its licence enforcement powers to NHS providers and licensed independent providers. It should therefore be read alongside the updated provider licence; and
2. It contains NHSE's guidance to ICBs about the exercise of ICB functions and describes NHSE's approach to dealing with failures.
Status of the guidance
NHSE is under a statutory obligation to publish the guidance. When taking enforcement action against providers, NHSE itself must adhere to the guidance. In relation to the parts covering ICBs, each integrated care board must, as a matter of law, 'have regard' to it.
What has changed?
This is the first update of the guidance since it was introduced in 2013 (by Monitor; for providers only) alongside the first NHS provider licence. Much has changed since then in terms of the overall NHS architecture, legislation and the regulatory approach to providers and commissioners.
The guidance reflects changes brought into effect by the Health and Care Act 2022 (2022 Act) including:
- the abolition of NHS Improvement (which comprised Monitor and the NHS Trust Development Authority) and the transfer of their functions to NHSE;
- the establishment of ICBs and NHSE's enforcement powers over ICBs;
- the application of licensing to NHS Trusts; and
- the removal of competition functions.
It also reflects a shift of focus away from the process of opening and closing investigations prior to taking enforcement action and removes the ‘prioritisation framework’ which Monitor used to use when deciding whether to begin or continue with an investigation. Both of these policies had long since fallen out of use.
What hasn't changed?
The types of formal enforcement action have not changed under the 2022 Act. The guidance therefore continues to describe the process for undertakings, mandatory actions (legally termed discretionary requirements), financial penalties, additional governance licence conditions and licence revocation etc. The appeal process also remains the same.
How the guidance will impact providers and ICBs
NHS FTs, licensed independent providers and NHS-controlled providers will experience the least amount of change as they have been subject to the guidance since 2013. In recent years, NHSE's 'go-to' method of enforcement has been to put in place undertakings with the agreement of the provider. More severe enforcement action would take the form of the mandated discretionary requirements and, for FTs only, the imposition of additional governance licence conditions. These are now rarely seen but cannot be discounted if failures are sufficiently serious.
NHS Trusts may experience some change as this is the first time that the guidance has formally applied to them. Prior to 1 April 2023, they were not subject to licensing and therefore not subject to statutory enforcement action for breach. However, since the days of NHS Improvement (now dissolved), NHS Trusts have been treated similarly to FTs in regulatory terms wherever possible. They have long been subject to a shadow licence and experienced enforcement action in the form of undertakings akin to FTs and, similar to the mandatory actions which can apply to FTs, legal 'directions' were reserved for more severe cases of NHS Trust failure. ICBs will experience the highest degree of change as discussed below.
Enforcement regime for ICBs
ICBs are not subject to licensing and there is no direct equivalent of the provider licence for ICBs. ICBs are not therefore legally subject to the same types of enforcement actions as providers (except in limited circumstances). However, to ensure parity with providers, NHSE has adopted the 'two-tier' enforcement regime for ICBs. This means that NHSE will ordinarily seek undertakings as the first step where it has 'reasonable grounds to suspect a potential failure' or is concerned that an ICB is at risk of failing to discharge its functions. By offering and agreeing undertakings, the ICB gives a commitment that it will comply and carry out the relevant actions.
The second tier of enforcement action, the giving of legal directions to ICBs, would be reserved for instances where the ICB has breached the undertaking or where NHSE is satisfied there is a 'failure or significant risk of failure' to discharge its functions; this being the legal test for directions.
According to the consultation feedback, 84% of respondents welcomed the two-tier approach to ICB enforcement as it aligns with the provider regime. However, some respondents raised concerns that undertakings could be sought based on suspicion alone. In response, NHSE has said that it will only seek to agree undertakings where there are 'reasonable grounds to suspect' a failure or risk of failure to discharge ICB functions. This mirrors the legal threshold for provider undertakings.
Unlike for providers, there is no single comprehensive document which sets out ICBs' functions and the standards which NHSE expects ICBs to meet, save for what is contained in legislation. This means that NHSE will need to identify the relevant legal function and construct a reasonable case, based on evidence it has collected, that the function has not been properly discharged before taking action.
NHS Payment Scheme and patient choice
Failures by ICBs to comply with the rules of the NHS Payment Scheme will be dealt with in accordance with the guidance. NHSE has specific direction-making powers relating to breaches of the NHS Payment Scheme rules which are now referenced in the guidance.
The guidance does not cover ICB functions under the patient choice and procurement regulations. Pending changes to this regime, the separate enforcement guidance on the procurement, patient choice and competition regulations remains applicable with adjustments from 1 July 2022 as set out on NHSE's website.
System context
It remains to be seen how the roles and responsibilities of ICBs and NHSE with respect to enforcement action relating to providers, provider collaboratives and place-based partnerships will land in practice. As a matter of law, NHSE may not delegate statutory enforcement activity to ICBs. However, NHSE will discharge its provider-facing functions in collaboration with ICBs, asking the ICB to oversee and seek to resolve local issues before escalation by NHSE. It has said that "any action will be taken in consultation with the relevant ICB”. The guidance dovetails with the system-led approach set out in the NHS Oversight Framework.
Respondents to the consultation cited a concern around possible enforcement action with individual entities where the root cause of challenges was system wide. Similarly, there was some concern expressed that an ICB might face enforcement action for provider-specific issues. Each individual instance of enforcement action will need to meet the relevant legal threshold and be based on evidence. NHSE had said that it will only consider enforcement action against an organisation for issues that are directly within its control, however it is possible that each entity within a system could be made subject to individual but co-ordinated enforcement action.
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