Health and Social Care (Community Health and Standards) Act 2003

Failure

23 Failing NHS foundation trusts

(1) If the regulator is satisfied—

(a) that an NHS foundation trust is contravening, or failing to comply with, any term of its authorisation or any requirement imposed on it under any enactment and that the contravention or failure is significant, or

(b) that an NHS foundation trust has contravened, or failed to comply with, any such term or requirement and is likely to do so again and that the contravention or failure was significant,

the regulator may by a notice to the trust exercise any one or more of the powers in subsections (3) and (4).

(2) The regulator may also by a notice to the trust exercise any one or more of those powers if the regulator is satisfied that the trust has contravened or failed to comply with a previous notice.

(3) The regulator may require the trust, the directors or the board of governors to do, or not to do, specified things or things of a specified description within a specified period.

(4) The regulator may remove any or all of the directors or members of the board of governors and appoint interim directors or members of the board.

(5) The regulator’s power to remove a director, or member of the board of governors, of the trust includes power to suspend him from office, or to disqualify him from holding office, as a director or member of the board of governors of the trust for a specified period.

24 Voluntary arrangements

(1) If the regulator is satisfied that it is necessary or desirable to do so, it may by a notice to an NHS foundation trust require the directors—

(a) to take steps to obtain a moratorium, or

(b) to make a proposal for a voluntary arrangement.

(2) An order may provide for Part 1 of the Insolvency Act 1986 (c. 45) (company voluntary arrangements), including any related provision of that Act, to apply with modifications in relation to NHS foundation trusts; and the references in this Part to a moratorium or voluntary arrangement are to a moratorium under section 1A, or a voluntary arrangement under Part 1, of that Act as modified by the order.

25 Dissolution etc.

(1) The powers conferred by this section are exercisable where—

(a) an NHS foundation trust contravenes or fails to comply with a notice under section 23 or 24 or the trust’s compliance with a notice under section 24 does not result in the implementation of a voluntary arrangement, and

(b) the regulator considers that further exercise of any of the powers conferred by those sections would not be likely to secure the provision of the goods and services which the authorisation requires the trust to provide.

(2) Before the powers conferred by this section are exercised, the regulator must consult prescribed persons about prescribed matters.

• “Prescribed” means prescribed by an order.

(3) An order may transfer, or provide for the transfer of, any property or liabilities of the trust to—

(a) another NHS foundation trust,

(b) a Primary Care Trust,

(c) an NHS trust,

(d) the Secretary of State.

(4) Schedule 3 (which provides for the transfer of employees) has effect.

(5) An order may provide for the dissolution of the trust.

(6) An order may apply any provision of Part 4 of the Insolvency Act 1986 (winding up of companies), including any related provision of that Act, with modifications.

(7) Where the regulator refuses to give an authorisation to a public benefit corporation—

(a) the powers conferred by this section are also exercisable,

(b) references in this section and Schedule 3 to an NHS foundation trust are to be read as references to the corporation.

26 Sections 24 and 25: supplementary

(1) In sections 24 and 25, an order means an order made by the Secretary of State.

(2) The modifications of the Insolvency Act 1986 that may be made by an order under section 24(2) include (for example)—

(a) provision for securing that the goods and services which the trust is required by the authorisation to provide continue to be provided (whether by the trust or another),

(b) provision for securing the protection of property needed for the purposes of those goods and services.

(3) The power conferred by section 25(3) is to be exercised with a view to securing the provision of the goods and services which the authorisation requires the trust to provide.

(4) That power is also to be exercised (together, if required, with the power conferred by section 11(2)) with a view to securing that any transfer of property in pursuance of the power does not result in a net loss of value to the trust; and the question whether a transfer would result in a net loss of value is to be determined in accordance with regulations.

(5) The Insolvency Act 1986 (c. 45) may not be modified under section 25(6) so as to alter the priority of debts or the ranking of debts between themselves.