17 Financial powers
(1) An NHS foundation trust may borrow money for the purposes of or in
connection with its functions.
(2) But the total amount of the trust’s borrowing is subject to the limit imposed by
(3) The limit must be reviewed annually by the regulator.
(4) An NHS foundation trust may invest money (other than money held by it as
trustee) for the purposes of or in connection with its functions.
(5) The investment may include investment by—
(a) forming, or participating in forming, bodies corporate,
(b) otherwise acquiring membership of bodies corporate.
(6) An NHS foundation trust may give financial assistance (whether by way of
loan, guarantee or otherwise) to any person for the purposes of or in
connection with its functions.
18 General powers
(1) An NHS foundation trust may do anything which appears to it to be necessary
or desirable for the purposes of or in connection with its functions.
(2) In particular it may—
(a) acquire and dispose of property,
(b) enter into contracts,
(c) accept gifts of property (including property to be held on trust for the
purposes of the NHS foundation trust or for any purposes relating to
the health service),
(d) employ staff.
(3) Any power of the trust to pay remuneration and allowances to any person
includes power to make arrangements for providing, or securing the provision
of, pensions or gratuities (including those payable by way of compensation for
loss of employment or loss or reduction of pay).
(1) An authorisation—
(a) must require an NHS foundation trust to disclose such information as
the Secretary of State specifies to the regulator,
(b) may require an NHS foundation trust to disclose other information to
(2) The regulator may require any other health service body to disclose any
information to him which he requires for the purposes of his functions.
20 Entry and inspection of premises
An authorisation may require an NHS foundation trust to allow the regulator
to enter and inspect premises owned or controlled by the trust.
An authorisation may require an NHS foundation trust to pay a reasonable
annual fee to the regulator.
22 Trust funds and trustees
(1) The Secretary of State may by order provide for the appointment of trustees for
an NHS foundation trust to hold property on trust—
(a) for the purposes of the NHS foundation trust, or
(b) for any purposes relating to the health service.
(2) The order may—
(a) make provision as to the persons by whom trustees are to be appointed
and generally as to the method of their appointment,
(b) make any appointment subject to such conditions as may be specified
in the order (including conditions requiring the consent of the Secretary
(c) make provision as to the number of trustees to be appointed, including
provision under which that number may from time to time be
determined by the Secretary of State after consultation with such
persons as he considers appropriate,
(d) make provision with respect to the term of office of any trustee and his
removal from office.
(3) Where trustees have been appointed for an NHS foundation trust under this
section, the Secretary of State may by order provide for the transfer of any trust
property from the NHS foundation trust to the trustees.
(4) Where an NHS trust for which trustees have been appointed under section 11
of the 1990 Act is given an authorisation, the order appointing the trustees is to
have effect as an order under this section.
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
(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,
he may by a notice to the trust exercise any one or more of the powers in
subsections (3) and (4).
(2) He may also by a notice to the trust exercise any one or more of those powers
if he is satisfied that the trust has contravened or failed to comply with a
(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
(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, he 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) 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
(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
(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
(7) Where the regulator refuses to give an authorisation to a public benefit
(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 23 to 25: supplementary
(1) This section applies for the purposes of sections 23 to 25.
(2) An order means an order made by the Secretary of State.
(3) The regulator must send a copy of any notice given under section 23 to the
registrar of companies.
(4) The regulator must give notice of any dissolution of the trust to the registrar of
(5) The modifications of the Insolvency Act 1986 (c. 45) that may be made by an
order 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.
27 Co-operation between NHS bodies
In section 26 of the Health Act 1999 (c. 8) (co-operation between NHS bodies),
for “and NHS trusts” there is substituted “, NHS trusts and NHS foundation
Patient and public involvement
28 Public involvement and consultation
In section 11(2) of the Health and Social Care Act 2001 (c. 15) (public
involvement and consultation), at the end there is inserted—
“(d) NHS foundation trusts”.
29 Patients’ Forums
(1) The National Health Service Reform and Health Care Professions Act 2002
(c. 17) is amended as follows.
(2) In section 16 (additional functions of PCT Patients’ Forums), in subsection (4),
after paragraph (c) there is inserted—
“(ca) NHS foundation trusts which provide services to patients in the
area of the Primary Care Trust,”.
(3) In section 17 (entry and inspection of premises), in subsection (1), after
paragraph (f) there is inserted—
“(fa) NHS foundation trusts,”.
(4) In section 18 (annual reports), in subsection (2), at the end there is inserted—
“(e) where the report includes provision which relates to any NHS
foundation trust, the Independent Regulator of NHS
30 Commission for Patient and Public Involvement in Health
In section 20(12) of the National Health Service Reform and Health Care
Professions Act 2002 (c. 17) (Commission for Patient and Public Involvement
in Health), in the definition of “health service bodies”, for “and NHS trusts”
there is substituted “, NHS trusts and NHS foundation trusts”.
(1) In section 519A of the Income and Corporation Taxes Act 1988 (c. 1) (taxation
of health service bodies), in subsection (2), after paragraph (b) there is
“(bb) an NHS foundation trust”.
(2) Section 61(3) of the 1990 Act (health service bodies: stamp duty) applies to an
NHS foundation trust as it applies to an NHS trust.
(3) In section 41 of the Value Added Tax Act 1994 (c. 23) (application to the
Crown), in subsection (7), after “1978” there is inserted “an NHS foundation
32 Other amendments relating to NHS foundation trusts
Schedule 4 (which makes amendments relating to NHS foundation trusts) has
(1) A person may not vote at an election for the board of governors of an NHS
foundation trust unless, within the specified period, he has made a declaration
in the specified form that he is a member of the public constituency or (as the
case may be) staff constituency.
(2) A person may not stand for election to the board unless, within the specified
period, he has made a declaration in the specified form that he is a member of
(3) A person elected to the board may not vote at a general meeting of the board
unless, within the specified period, he has made a declaration in the specified
form that he is a member of the trust.
(4) Specified means specified for the purpose in the trust’s constitution.
(5) A person is guilty of an offence if he—
(a) makes a declaration under this section which he knows to be false in a
material particular, or
(b) recklessly makes such a declaration which is false in a material
(6) A person guilty of an offence under this section is liable on summary
conviction to a fine not exceeding level 4 on the standard scale.
34 General duty of NHS foundation trusts
An NHS foundation trust must exercise its functions effectively, efficiently and
35 Interpretation of Part 1
(1) In this Part—
“the 1990 Act” means the National Health Service and Community Care
Act 1990 (c. 19),
“authorisation” means an authorisation under section 6,
“health service body” means a Strategic Health Authority, a Special
Health Authority, an NHS trust, an NHS foundation trust or a Primary
“the registrar of companies” means the registrar or other officer
performing under the Companies Act 1985 (c. 6) the duty of
registration of companies in England and Wales,
“regulations” means regulations made by the Secretary of State.
(2) Other expressions used in this Part and in the 1977 Act have the same meaning
in this Part as in that Act.
(3) Any references in this Part, in relation to property held on trust, to the purposes
of an NHS foundation trust are to the general or any specific purposes of the
NHS foundation trust (including the purposes of any specific hospital at or
from which services are provided by the trust).
(4) Any references in this Part to goods and services are to be interpreted in
accordance with section 14(5).
36 The Commission for Healthcare Audit and Inspection
(1) There is to be a body corporate known as the Commission for Healthcare Audit
and Inspection (in this Part referred to as the CHAI).
(2) Schedule 5 (which makes further provision about the CHAI) has effect.
37 The Commission for Social Care Inspection
(1) There is to be a body corporate known as the Commission for Social Care
Inspection (in this Part referred to as the CSCI).
(2) Schedule 6 (which makes further provision about the CSCI) has effect.
38 Transfer of property etc to CHAI and CSCI
Schedule 7 (which makes provision for the transfer of property, rights and
liabilities to the CHAI and the CSCI) has effect.
39 Abolition of former regulatory bodies
(1) The Commission for Health Improvement is abolished.
(2) The National Care Standards Commission is abolished.
NHS health care: introductory
40 Quality in health care
(1) It is the duty of each NHS body to put and keep in place arrangements for the
purpose of monitoring and improving the quality of health care provided by
and for that body.
(2) In this Part “health care” means—
(a) services provided to individuals for or in connection with the
prevention, diagnosis or treatment of illness; and
(b) the promotion and protection of public health.
(3) In subsection (2)(a), “illness” has the meaning given by section 128(1) of the
41 Standards set by Secretary of State
(1) The Secretary of State may prepare and publish statements of standards in
relation to the provision of health care by and for English NHS bodies and
(2) The Secretary of State must keep the standards under review and may publish
amended statements whenever he considers it appropriate.
(3) The Secretary of State must consult such persons as he considers appropriate—
(a) before publishing a statement under this section;
(b) before publishing an amended statement under this section which in
the opinion of the Secretary of State effects a substantial change in the
(4) The standards set out in statements under this section are to be taken into
account by every English NHS body and cross-border SHA in discharging its
duty under section 40.
42 Standards set by Assembly
(1) The Assembly may prepare and publish statements of standards in relation to
the provision of health care by and for Welsh NHS bodies.