STPs and collective decision making

Delegation of powers - NHS trusts and foundation trusts

With the importance of strong system-wide leadership and collective decision making structures coming to the fore again in the publication of the first STP ratings, we look at delegation of powers by foundation trusts and NHS trusts.

What can be delegated?

There is often much discussion about the form of an STP decision making body but agreeing the form is only the first step. Close consideration must also be given to what powers it has and from what source. In some cases, individual organisations may decide to delegate powers e.g. to a committee or to an individual.

NHS foundation trusts

The NHS Act 2006 Schedule 7 paragraph 15(2) confirms that every foundation trust’s constitution ‘must provide for all the powers of the [foundation trust] to be exercisable by the board of directors on its behalf’. Sub paragraph (3) of that paragraph continues that the constitution ‘may provide for any of those powers to be delegated to a committee of directors or to an executive director’.   

Any power that is vested in a foundation trust can therefore be exercised by the board of directors and, in addition, the board of directors may decide to delegate one or more powers to either a committee of directors or to an individual executive director. A foundation trust could therefore decide to delegate all of its powers to, for example, a specific executive director who can exercise those powers on behalf of the organisation, perhaps following relevant discussion and debate with peers within STP partnership organisations.  

However, there are key exceptions to this principle, as follows:

1. Delegation of powers does not necessarily affect where responsibility lies. It is not possible for a director to delegate his or her responsibility to act as a director. A directorship is a personal appointment and can only be discharged by the person holding the office.  
2. Similarly, where an action requires discharge by the board itself, that act cannot be delegated. 
3. As a general principle, in light of the role of non-executive directors, it would not be advisable to delegate individual executive powers to non-executive directors.
4. Where powers/functions are specifically attributable to particular individual(s) (such as the accounting officer functions which must be carried out by the chief executive under NHS Act 2006 Schedule 7 paragraph 25(5) and the specific functions of the audit committee) they must stay with those individuals.  

NHS trusts

The NHS Trusts (Membership and Procedure) Regulations 1990 (the 1990 Regulations) provides as follows:

• Regulation 15(1) An NHS trust may appoint committees of the trust consisting wholly or partly of directors of the trust or wholly of persons who are not directors of the trust.
• Regulation 15(2) A committee appointed under paragraph 15(1) may appoint sub-committees which may comprise wholly or partly of members of the committee (whether or not they are directors of the trust) or wholly of persons who are not member of the committee (again, whether or not they are directors of the trust).
• Regulation 16 provides that an NHS trust may make arrangements for the exercise of any of the trust’s functions on behalf of the trust by a committee or sub-committee appointed under Regulation 15 subject to such restrictions and conditions as the trust thinks fit.

There are some limited exceptions to Regulations 15 and 16, such as the fact that the trust must appoint a committee of the chairman and non-executive directors to appoint the chief executive (known as the chief officer within the 1990 Regulations) and a committee of the chief executive, the chairman and non-executive directors to appoint the other executive officers.

In general, there are therefore broad opportunities for an NHS trust to set up committee(s) to which it can delegate its functions. However, the exceptions set out at points one to four above for foundation trusts are equally applicable for NHS trusts.

How does delegation and reservation work in practice?

In general, any specific delegated authority that a director or committee is intended to have should be set out expressly in the document delegating the relevant power and authority. To the extent that there is no express delegation of specific powers, there should be a clear fall-back position e.g. the board.

Trusts considering delegation should always:

• Approve clear terms of reference and membership if dealing with a committee and formally clarify the remit and any limits to delegated authority that will be given.   
• Confirm the reporting requirements and line of accountability from each committee/individual back to their originating board. 
• Approve revised schemes of reservation and delegation which mirror what has now been delegated. 
• Monitor and review the position on a regular basis.

All trusts must always be cognisant of the fact that whilst collaborating via a committee or delegating to an individual, a trust remains a separate legal entity with its own legal rights and obligations and its own board.

As discussed above, there are certain requirements that can only be fulfilled by an organisation at board level. Other matters may first be considered at committee or individual level and then taken back to the respective trust board such that the board takes the final decision and ratifies what has been proposed and recommended to the board, subject to seeking appropriate assurance.

Managing conflicts – how should conflicts be managed when taking decisions in the best interests of the respective individual organisations?

The usual principles of good governance should be applied when dealing with conflicts of interest which should be embedded already within standards of business conduct for foundation trusts and NHS trusts.

Conflicts should be a standing agenda item on any committee agenda. All members and all those in attendance at such meetings must declare any other interests and, if an interest is declared, a decision must be taken (with the chair having a casting vote) as to whether that individual must withdraw from the meeting and play no part in that item of business. Appropriate records of such conflicts of interest should be recorded in the usual way in the appropriate registers of interests and minutes. 

It is vitally important that good decision making, standards of integrity and probity are not only applied and followed but seen to be applied and followed; a perception of bias could be just as damaging as actual bias.