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14 Jan 2003 : Column 532—continued

Foundation Hospitals

4. Dr. Stephen Ladyman (South Thanet): If he intends to ensure that foundation hospitals are treated equally with non-foundation hospitals when strategic health authorities are considering hospital re-organisation. [90192]

11. Mr. Desmond Swayne (New Forest, West): If he will make a statement on financial independence for foundation hospital trusts. [90199]

12. Mr Dave Watts (St. Helens, North): If he will make a statement on his Department's assessment of the likely effect that foundation hospitals will have on staff retention in non-foundation hospitals. [90200]

The Secretary of State for Health (Mr. Alan Milburn): National health service foundation trusts will provide NHS services to NHS patients according to NHS principles and NHS standards. They will be owned and controlled locally, not nationally, by members of the public in the local community, and by local staff, patients and local primary care trusts. The freedom that they will have to improve services for NHS patients and

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meet local needs will be balanced with safeguards to ensure that their primary duty to NHS patients is always met.

Dr. Ladyman: I understand what my right hon. Friend is trying to achieve with foundation hospitals, and I support him in that. However, when schools were given grant-maintained status, many started competing against other schools instead of co-operating with them. I need to be reassured that that will not happen with foundation hospitals. If a strategic health authority that includes two trusts decides to localise services in one to create a centre of excellence, will the other trust accept that, and will the two trusts co-operate and work together? Will my right hon. Friend give me that assurance?

Mr. Milburn: Yes, I think that I can give my hon. Friend that assurance. Foundation hospitals will be part of the NHS. They will operate under a statutory duty of partnership, and we will introduce legislation to ensure that they will have the freedoms necessary to empower front-line staff and managers to shape local services to meet the local community's needs. With the best will in the world, that cannot be done from Whitehall, but those freedoms need to be balanced by significant safeguards. Our intention is definitely not to reinvent the dog-eat-dog competition that prevailed under the previous internal market. That is why so much effort is being made across the NHS to ensure that NHS standards are good in all hospitals and not just in some. As far as questions of so-called reconfiguration or service change are concerned, any NHS foundation hospital that wants to propose a service change will have to go through precisely the same process of scrutiny as any other NHS hospital. That process will involve the oversight and scrutiny committee of the local authority. That democratically elected committee will provide a significant safeguard and ensure that it is the interests of the local community, and not the vested interests of any one organisation, that come first.

Mr. Swayne: I shall stick with Question 11, Mr. Speaker, which the Secretary of State has not begun even to address. He has merely lumped three questions together and answered them according to a query that he has imagined. Will the right hon. Gentleman say precisely how much the foundation hospitals will be able to borrow from the private sector?

Hon. Members: Keep taking the tablets.

Mr. Milburn: I do not want to incur any more expense for the NHS, but the hon. Gentleman is in scary creature mode today, as he often is. His specific question concerns how much NHS foundation trusts will be able to borrow. That will be determined by each individual trust, against a prudential code that the independent regulator will have the duty of monitoring. The borrowing will be based on one simple principle, with which most people—as individuals and members of organisations—are fully acquainted. That principle is that borrowing should be based on ability to repay. Neither the hon. Gentleman nor the Government would

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want NHS foundation hospitals to overstretch themselves in such a way that local services were lost to local communities.

Mr. Watts: My right hon. Friend will know that there is much concern among Labour Members about the proposed introduction of NHS foundation hospitals. Many of us believe that that could lead to a two-tier health service. Will my right hon. Friend give me the assurance that one-star and two-star hospitals will be raised in a very short time to the standards of foundation hospitals, and that they will be allowed to join the foundation scheme as soon as possible?

Mr. Milburn: I can give precisely that assurance. I want to make one thing absolutely clear. I know that my hon. Friend is not saying such things, but all the talk suggesting that what we envisage is a group of half a dozen or a dozen elite hospitals is entirely removed from the truth. In fact, we want as many NHS hospitals—as many NHS trusts—as possible to become NHS foundation trusts, as quickly as possible. But we must start somewhere, and, as my hon. Friend knows from his constituency, there are now different starting points in the NHS.

Some hospitals are performing very well, some are producing a middling performance and a few, sadly, are persistently underperforming. We need different approaches and different strategies to deal with the different starting points. Some hospitals can benefit from more freedom, many need more support, and a few need not less but more intervention. My hon. Friend has spoken to me about that many times in the context of his local hospital. There will, however, be no arbitrary cap on numbers.

I hope my hon. Friend is also comforted by the fact that 75 per cent. of NHS trusts that were given a zero rating in our first round of star ratings had improved by the following year. Twenty-five per cent. had become two-star trusts, and I expect that before long some will have become three-star trusts.

Mr. Simon Burns (West Chelmsford): How can foundation hospitals be truly independent from Whitehall control, as the Secretary of State keeps claiming they will, when they will be subject to a star-rating system that is imposed on all hospitals by the Department of Health?

Mr. Milburn: For the simple reason that they will be owned and controlled locally, not nationally. They will be owned by members of the local community—not by me, not by any other Minister, and not by Whitehall.

What the hon. Gentleman's question reveals all too starkly is the fundamental difference of view on this. The Tories want foundation hospitals—

Mr. Speaker: Order. Every time the Secretary of State has got to his feet he has told me what the Tories want. I do not want to hear any more about that. I want to hear what the Secretary of State has to say for himself.

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Mr. David Hinchliffe (Wakefield): There have been some mischievous suggestions that the governance proposals for foundation trusts are being included as a sweetener for people like me who have some reservations about the concept of such trusts. To prove that that is not so, will my right hon. Friend consider extending the concept of these governance proposals to other elements of the NHS?

Mr. Milburn: In time, we will. The guide that we published on 11 December makes that absolutely clear.

The proposals are certainly not a sweetener. The governance structure and the ownership structure of these organisations, and their independence, are intimately related.

Michael Fabricant (Lichfield): Order. Face Mr. Speaker.

Mr. Milburn: I was not aware that the hon. Gentleman had taken over your role, Mr. Speaker. Heaven help us if he does. [Interruption.] Perhaps the hon. Member for New Forest, West (Mr. Swayne) would like to pass his pills to the hon. Member for Lichfield (Michael Fabricant). Perhaps then we will hear a bit of sense.

I was talking about the independence and the governance of foundation hospitals. We want to use our current model because whatever the great strengths of the NHS—and it has enormous strengths: its staff, its public service ethos and some of the advances it has achieved in public health—what cannot be done with the best will in the world is matching local services to local needs if these organisations are run from Whitehall. They must be run by members of the local community and local staff so that they can shape local services in accordance with communities' differing needs.

Alistair Burt (North-East Bedfordshire): I hope the Secretary of State agrees that if the House is to be reassured about foundation hospitals it is essential for us to have confidence in the views expressed by those who work in the NHS. Is he concerned about the climate described by the Institute of Healthcare Management? It says that

What does he intend to do about that climate, and who or what does he think those managers are afraid of?

Mr. Milburn: I think we should give more independence and greater freedom to NHS organisations that are capable of using it.

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