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Mr. Hinchliffe: I do. In a sense, my hon. Friend takes me to my next point. A number of organisations that have lobbied against foundation status have said that it is a step towards privatisation. I have never said that. I did not make that claim on Second Reading and I do not think any of my hon. Friends who oppose foundation status made it either. However, a briefing document states:

in Committee

Before my hon. Friend the Member for Lewisham, West (Jim Dowd), who will probably be in the Chamber later, accuses me of reading from a Unison briefing, the document was issued by the Independent Healthcare Association. It is a briefing from the private sector. The association fears that foundation hospitals will lead to more privatisation—more private work in those hospitals—and the impact that that will have on private hospitals. We have to take serious note of that. I have not raised the issue before, but I think that it is relevant in view of the association's comments.

Mr. Kevin Hughes (Doncaster, North): Does my hon. Friend recall campaigning against trust status, in particular the self-appointed quangos introduced by the Tories? We pledged that, when we got into government, we would do away with those. The Bill does that and installs local democracy. Does he not think that that will act as a check on the problem that he raises? I think that it will.

Mr. Hinchliffe: If my hon. Friend looks at the Health Committee report, he will see that we calculated that, rather than getting rid of bureaucracy, the new system would increase it. I remember speaking in support of my hon. Friend's candidature when he stood in Doncaster and I argued against the Tory internal market. He was with me on that. He may not be with me at the moment, but the principles are the same. I hope that he understands that we are talking about the internal market, which he opposed before he became a Labour MP.

Mr. Hughes: Will my hon. Friend give way again?

Mr. Hinchliffe: No. I want to make progress. My hon. Friend will have an opportunity to respond. I am conscious that other colleagues want to participate and I have some points to make before I conclude.

A key consideration, which relates to my pride in the way in which the Government moved towards a primary care NHS, is that the policy on foundation hospitals runs directly contrary to that. It is a return to the dominance of certain acute hospitals. It does not make sense to talk about the new GP contract enhancing the role of primary care if we are suddenly to return to the empowerment of a small number of acute hospitals. That will be to the detriment of primary care and community care.

I have argued many times in the Chamber for local governance of health. I have made all sorts of arguments over the years, including when I was on the Front

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Bench, about how we would achieve local governance, but it has been resisted up to now by the Labour party and its Front-Bench spokesmen. I welcome the commitment to move towards local governance, but I do not think that it has been properly thought through. We should consult on and think about some of the issues that it raises.

I was interested to read the Health Service Journal this week, which reported the discussions at the NHS Confederation conference last week. It publishes the comments of two chairs of trusts that hope to receive foundation trust status. John Charlton, the chair of University hospital Birmingham, said:

He went on to say:

Frankly, if that is what a chair of an applicant trust is saying, I wonder where we are coming from because I would have thought that 5,000 would be a minimum.

Mr. Gordon Prentice (Pendle): Will my hon. Friend give way?

Mr. Hinchliffe: I want to carry on.

Peter Dixon, the chair of University college London, another foundation trust applicant, remained concerned that those with an interest in governance might not represent the wider needs of the public. He said:

the Royal Marsden in London—

That sums up my concerns.

Several hon. Members rose—

Mr. Hinchliffe: With the greatest of respect, I want to conclude. I have given way several times and many hon. Members want to speak.

I am concerned that the policy is part of a growing trend of policy making on the hoof. I raised that with the Prime Minister in the Liaison Committee this morning. The policy has not been properly thought through and there has been no proper consultation. Where is our manifesto commitment on it? I was not elected on the basis of foundation trusts; I was elected to get rid of the ethos that is behind foundation trusts. Where is the policy formulation in the party? I discussed the matter with my general management committee and it has not come through for discussion in the policy forums or at conference. Where is the Green Paper? Where is the White Paper?

We are bouncing to policies that are not fully thought through. The number of Government amendments tabled gives the impression of a policy that has been

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made on the back of an envelope. I hope that the Government will remove the part of the Bill on foundation trusts and not force us to go against them. They should go back to the drawing board and leave the rest of the Bill to go through the House unchallenged.

Dr. Liam Fox (Woodspring): The debate is important. Quite how important depends on which Government view of it we take. The Prime Minister tells us that the reforms are of monumental, historic importance, but the new Secretary of State told Back Benchers this week that the reforms are of little importance so they need not be worried about the amount of change that is being introduced. Both those views cannot be true, unless one is part of the Prime Minister's closest coterie and lives in the Alice in Wonderland world where it is possible to believe two opposites at the same time.

We have never made a secret of the fact that we favour the principle of foundation hospitals, especially the way in which they have been established in Spain and Sweden. Early in the debate on the Bill, we laid out what we wanted: foundation hospitals that can borrow according to their own plans outwith the limits set by Government; that are free from political interference; that are free from central targets and bureaucracy; and that are free to set the pay and conditions that they think appropriate to attract staff in their locality and with different clinical specialties.

I realise that that puts me in a diametrically opposed position to the hon. Member for Wakefield (Mr. Hinchliffe), but I have to admit that there is much truth in what he says. The policy is a move back towards an internal market-type system, which we support and would like extended. Indeed, the Government are not moving as far in that direction as we would like. Some people say that we could build on the Bill—were we to inherit it in its current form, we could use it as a prototype to take our plans much further. Indeed, we could and almost certainly would do that, but we believe that there are a number of practical reasons why the system as it has been set out in the Bill is so flawed that it will lead to a much worse system of health care than we have at present.

What are our major objections? First, there is freedom, but only for a few. Instead of a gradual roll-out for everybody, there is to be a total roll-out for some and none for others, which seems to maximise the potential for instability in the system. If one tried to design a system to give greater instability, it would be difficult to do.

There is borrowing, but only within the limitation of the NHS budget, which by definition means that if any foundation hospital gets more investment, there will be less investment in another hospital in the NHS. That is different from the case being advanced. The Government will tell us that at present hospitals must compete for a share of the budget, and the proportionate effect will occur anyway. Under the proposals, however, some will be dealt a stronger hand than others vying for the same budget. The whole point of foundation hospitals in other countries was to allow them the freedom not to have to borrow within the state budget, but to borrow from outside, therefore not affecting the total amount available in the public system. The Government seem to have missed the point of the system in Spain and Sweden.

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2 pm

Another issue is the independence of the system. Great play was made on Second Reading about the independence of the regulator. The term "independence" was not used in a sense that any of us would recognise. The regulator is appointed by the Secretary of State, he can be dismissed by the Secretary of State, his pay and conditions and pension are determined by the Secretary of State, he has to report to the Secretary of State on anything the Secretary of State deems fit, and he cannot grant foundation status except with the prior agreement of the Secretary of State. The system is to be run by the Secretary of State in all but name.

I have a number of questions that I would like the Minister to deal with when he speaks. The first is about pay. The previous Secretary of State said that managers should have

What does "appropriately" mean, in the context of foundation hospitals? Secondly, what does it mean in terms of the Chancellor's new plan, as laid out in the Budget, to introduce regional pay throughout the public services? How would that impact on the proposals for foundation hospitals, and how does it fit with the Prime Minister's pledge last week that all NHS staff will continue, as long as the Government are in office, to have above-inflation pay settlements? How does that relate to the independence of foundation hospitals?

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