INTRODUCTION
1. The proposed establishment of NHS Foundation Trusts is an issue
which has rapidly become loaded with ideological tensions, as
evidenced by the headlines that have followed Government announcements
on this subject:
"Milburn's 'Railtrack of the NHS"' (Guardian,
20 Jan 2002)
"NHS plan threatens mental patients" (Independent,
19 Jan 2003)
"Alarm at NHS 'companies'" (Guardian, 8 Mar 2003)
2. As well as from the more expected sources, polarised views
have also been expressed by those who may usually be less forward
in entering debates about the ideology of the NHS. Ken Jarrold,
Chief Executive of County Durham and Tees Valley Strategic Health
Authority, was reported in the Health Service Journal as
describing the reforms as "the end of the NHS as we know
it",[1] and the Royal
College of Nursing has argued that "many clinicians are suspicious
that Foundation Trusts are a threat to the service to which they
are committed".[2]
3. Although initially Foundation status will only be available
to 3-star organisations, the Government is quite clear about its
intention that within the next four to five years it intends for
all NHS acute trusts to have become Foundation Trusts. This will
mean that all NHS acute trusts will be given greater autonomy
than currently, and will be accountable to an appointed independent
regulator, rather than directly to the Secretary of State for
Health. In addition to this, boards of governors will be established
by local stakeholders to attempt to strengthen local accountability.
4. Political opinion remains divided over the fundamental changes
these reforms imply for the structure, make up, governance and
culture of the NHS. There are many critical and difficult questions
surrounding these proposals: should the three elements of the
reforms, the increased financial freedoms, introduction of an
independent regulator, and the reforms to local accountability,
be considered and introduced separately? Will the introduction
of Foundation Trusts, coupled with reforms to NHS financial flows,
reintroduce some of the problems that led to the abolition of
the internal market in 1997? Should chief responsibility for the
NHS be moved from the Secretary of State to a regulatory body
about which very little is yet known? Are high-performing acute
trusts the most appropriate place at which to start these reforms?
5. These very broad, difficult issues will obviously be the subject
of considerable debate as the legislation necessary to introduce
Foundation Trusts is presented to Parliament. Rather than attempting
to anticipate these discussions and provide conclusive answers
to these questions, we have instead used this inquiry to focus
in detail on the policies set out in the Government's Guide
to Foundation Trusts, assuming legislation in its current
form is enacted, in order to assess their likely impact on those
who stand to gain or lose the most by their success or failure:
current and future patients of the NHS. In doing so, we are considering
the practicalities of these policies from a purely pragmatic standpoint.
6. We announced this inquiry on 20 November 2002, with the following
terms of reference:
The Committee will examine Government proposals to create Foundation
Trusts from existing NHS organisations, considering in particular:
- Financial implications
- Staffing implications
- Governance and accountability
- Impact on quality of management and quality of patient
care
- Impact on the wider NHS
7. Our advisers for this inquiry were: Melanie Henwood, an independent
health and social care analyst; Professor John Mohan of the University
of Portsmouth; Professor Nick Bosanquet of the Imperial College
School of Medicine; and Séan Boyle of the London School
of Economics. We are very grateful to them for their help with
the more technical aspects of this inquiry. We also very grateful
for the very high quality research and analytical support provided
by the newly-formed Clerk's Department Scrutiny Unit.
8. We took oral evidence from the leaders of a range of NHS trusts
in Teesside, Bradford, East Anglia and London. We encountered
considerable reluctance amongst NHS organisations to discuss the
policy of Foundation Trusts on the record at such an early stage,
especially amongst organisations who were not eligible to apply
for Foundation status, and so we are particularly indebted to
those who agreed to give evidence. We also took very useful evidence
from experts in social ownership and patient involvement, including
the Cooperative Union, Mutuo, the Democratic Health Network
and the Association of Community Health Councils; and from the
Rt. Hon. Alan Milburn MP, Secretary of State for Health.
9. The NHS Confederation arranged an informal meeting for us with
representatives of a wider crosssection of NHS organisations
than we were able to take formal oral evidence from. This gave
us an invaluable opportunity to gauge the views of NHS organisations
off the record, and we are extremely grateful both to the NHS
Confederation and to the NHS representatives who attended.
10. We received 32 written memoranda from a diverse range of interested
organisations and individuals, including NHS organisations, independent
healthcare providers, the BMA, the RCN, the NHS Confederation,
and policy organisations and academic institutions including the
King's Fund, the University of York, and the Nuffield Centre.
We are very grateful to all those who submitted evidence.
11. The concept of NHS Foundation Trusts has been introduced in
two key documents: the eligibility criteria and timetable document
published in July 2002, and the Guide to Foundation Trusts
published in December 2002.[3]
The Health and Social Care (Community Health and Standards) Bill
which implements these reforms was introduced in the House of
Commons on 12 March 2003.[4]
12. Foundation Trusts will differ from other NHS Trusts in three
key areas:
- They will have access to increased financial freedoms, including
the freedom to borrow capital, sell off assets and retain surpluses.
- They will see the relaxation of central control by the Department
of Health, signalled by the removal of the Secretary of State's
powers of direction. Linked to this will be greater management
freedoms, including increasing flexibilities to reward staff.
Foundation Trusts will be governed by an independent regulator
appointed by the Secretary of State.
- They will have to establish a new Board of Governors which
will be elected in part by local communities.
13. The first wave of Foundation Trusts will be drawn from 3-star
Trusts according to the performance ratings published in July
2003, whose application is approved by the Secretary of State.
The aim of the Government is that, subject to sufficient performance
improvement across the NHS, all NHS acute trusts will "graduate"
to Foundation status within the next four to five years.[5]
In the first instance, Foundation status will not be available
to Primary Care Trusts (PCTs), mental health trusts or other types
of NHS trust, although this may happen in the future. Subject
to legislation, successful organisations will become 'shadow'
Foundation Trusts in October 2003, and will begin operating as
Foundation Trusts in April 2004.[6]
To set these reforms in context, a summary of the freedoms and
constraints within which NHS organisations currently operate is
included in an Annex. The past 12 months have seen a number of
significant structural reforms in the NHS, the most relevant of
which are also summarised in the Annex for ease of reference.
Report outline
14. Our report is divided into two chapters which aim to explore
what we believe to be the two key issues that will determine the
success of this policy:
1. Will the proposed changes bring about improvements
for patients who are treated by Foundation hospitals?
2. What implications will the proposed changes have for
patients being treated in the rest of the NHS?
1
Health Service Journal, 5th December 2002 Back
2
Ev 113 Back
3
Foundation Trusts - eligibility criteria and timetable, Department
of Health, July 2002; A Guide to Foundation Trusts, Department
of Health, December 2002 Back
4
Health and Social Care (Community Health and Standards) Bill. Back
5
Q 482 (Secretary of State for Health) Back
6
A Guide to Foundation Trusts, Department of Health, December
2002, p 44 Back
