Foundation Hospitals

Oral Answers to Questions — Health – in the House of Commons at 11:30 am on 29th April 2003.

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Photo of David Taylor David Taylor Labour/Co-operative, North West Leicestershire 11:30 am, 29th April 2003

What recent representations he has received in relation to his plans for foundation hospitals; and if he will make a statement.

Photo of Alan Milburn Alan Milburn Secretary of State, Department of Health

Representations have been received from a number of organisations and individuals about NHS foundation trusts. The Health and Social Care (Community Health and Standards) Bill, which was published on 13 March, sets out our legislative proposals for NHS foundation trusts.

Photo of David Taylor David Taylor Labour/Co-operative, North West Leicestershire

The Government's commitment to a primary care-led NHS with high national standards and free from excessive bureaucracy is most welcome, but does not the foundation hospital ideology run directly counter to those values? Is not the Secretary of State engineering a US-style system of health care rooted in market morality and private provision that is not old values in a new setting, but a mistake of fundamental historic importance—a Trojan horse for Sedgefield privatisers and Darlington money changers, perhaps? [Interruption.]

Photo of Alan Milburn Alan Milburn Secretary of State, Department of Health

I got the impression that my hon. Friend was not too enamoured of the proposals. There is a fundamental difference, however, between the US system and the English and British system, and as long as this Government are in power, that will certainly remain the case. Our system is free at the point of use and it treats people according to their need, not their ability to pay. Anybody who wants to advocate the American system, as some Opposition Members do, needs only to look across the Atlantic to see what happens when profit is put before the interests of patients. Some 40 million Americans have no health insurance policy whatever. More charges for patients are not a Labour policy, but a Tory one. That is not what this Labour Government advocate or what NHS foundation trusts are about.

Photo of Liam Fox Liam Fox Shadow Secretary of State for Health

In his Budget statement, the Chancellor said that we needed to recognise local and regional conditions in pay and that the remits for the pay review bodies would have a stronger local and regional dimension. How will the Chancellor's regional pay operate in the NHS and what additional freedoms will foundation hospitals have in setting pay and conditions?

Photo of Alan Milburn Alan Milburn Secretary of State, Department of Health

It is right, as my right hon. Friend the Chancellor of the Exchequer said, that we need to recognise that there are different labour market conditions in different parts of the country. That is already recognised and, incidentally, it has been recognised for many years, if not decades, in the NHS pay system. For example, we have a London allowance, although we do not have a Darlington allowance or, for that matter, for the information of my hon. Friend David Taylor, a Sedgefield allowance.

What the hon. Gentleman should know—I hope that he recognises this—is that the "agenda for change" pay system that we have agreed with the NHS trade unions has two fundamental elements. First, there is a national framework of pay to guarantee equity in the system, which ensures, for example, that two nurses working in different parts of the country can be guaranteed broadly the same benchmark level of pay. However, the system also recognises that because there are different labour market conditions, there should be some local flexibility. That is what the Government negotiated with all the NHS trade unions—Unison, GMB and the Transport and General Workers Union. As I said, I am pleased that the first two of those unions and the Royal College of Nursing and the Royal College of Midwives have given the go ahead to that. Incidentally, that "agenda for change" pay system will apply to all NHS foundation trusts.

Photo of Liam Fox Liam Fox Shadow Secretary of State for Health

We naturally welcome it when the Government are converted to the importance of market solutions to the problems in the public services. We now have the Chancellor's regional and local pay, the Prime Minister talking about co-payment, PFI elevated to a neo-religious movement, PCTs purchasing from private providers, including private hospitals, and opt-out foundation hospitals on the way—all aimed at greater diversity in provision. The Secretary of State may recall telling the House that

"by and large, we thankfully have one monopoly provider and that is the NHS. As long as a Labour Government are in power, that will remain the position."—[Hansard, 26 June 2001; Vol. 370, c. 500.]

Just when did he decide that a monopoly provider was a bad thing?

Photo of Alan Milburn Alan Milburn Secretary of State, Department of Health

What characterises markets—as I am sure the hon. Gentleman understands, given that he is, to use his own description, an unreconstructed Thatcherite free-marketeer—is the ability to charge, which is precisely what he is advocating. It is not what this Labour party or this Labour Government are advocating. [Interruption.] The hon. Gentleman says that that is not what he is advocating. I believe that just before Easter he produced his own patient passport proposals, which clearly set out his determination to develop what he called a "self-pay market" in which more and more people would pay for their treatments in hospitals and in other settings. That is a Conservative policy, not a Labour policy; it is what he wants to do, not what this Labour Government will do.

Photo of Geoffrey Robinson Geoffrey Robinson Labour, Coventry North West

Is my right hon. Friend aware that the greater autonomy, independence and accountability at the local level that lies at the heart of his proposals for foundation hospitals is widely accepted by Members on these Benches? Is he also aware that we welcome greater local accountability and the extra £40 billion that he has achieved from the Treasury? Does he agree that we shall need that local accountability in order wisely to spend that money over the next few years, and that it is about as much money as can be wisely and effectively spent by hospitals, be they foundation or otherwise? Will he therefore consider introducing the extra borrowing requirements that form part of the present proposals as reserve powers that could be activated later, in better circumstances, by an affirmative vote of the House? That would make it a lot more acceptable all round.

Photo of Alan Milburn Alan Milburn Secretary of State, Department of Health

I am grateful to my hon. Friend for his support for the principles of earned autonomy and greater freedom for NHS hospitals: that must be the right way forward. As far as the borrowing powers are concerned, I do not think that that would be a sensible thing to do. If we are to have genuine freedom among NHS providers, that is exactly what it should be.

I say to my hon. Friend and to other right hon. and hon. Members that the NHS foundation trust policy is part of the NHS plan reform programme to open up the NHS so that it can provide more responsive services to the local communities that receive them. The only way of doing that, having put the national standards and inspection systems in place, is to ensure that the local communities who receive those services, and the local staff who provide them, have a greater say. Although these hospitals will continue to be NHS hospitals, they will have much greater freedom from day-to-day interference from Whitehall, so that they can get on with the job of developing services that are more attuned to the needs of local communities, particularly deprived areas that all too often have not had the best standards of service, but the poorest.

Photo of Nicholas Winterton Nicholas Winterton Conservative, Macclesfield

Can I say to the Secretary of State that I fully support the concept of foundation hospitals because of the responsible freedoms that it gives to the management of the trusts that are applying for foundation status? The Macclesfield acute hospital, which is part of the East Cheshire NHS trust, is interested in foundation status. It is a three-star trust and hospital. Will he give that application a fair wind?

Photo of Alan Milburn Alan Milburn Secretary of State, Department of Health

The hon. Gentleman has a track record of supporting national health service principles and institutions. He has been closely associated with the NHS in his local area. Of course, we will consider all the applications favourably. He knows that, to date, 32 NHS trusts have applied for NHS foundation trust status. I am currently assessing those applications. We intend that, over a four to five-year period, every NHS hospital should have the opportunity of becoming an NHS foundation trust hospital, precisely so that it has the opportunities and freedoms that go with improved performance in the NHS. We set that out in the NHS plan. We said that there would be a process of earned autonomy. The more performance improves, the more freedom will be earned in the NHS. When I meet NHS staff, managers who are responsible for running local services and representatives of local communities, they all say that they want the ability to get on with the job of providing improved, responsive services to the local community. That is precisely what we should encourage.

Photo of Mr George Stevenson Mr George Stevenson Labour, Stoke-on-Trent South

Given the official Opposition's policy on the NHS, does not their enthusiastic support for foundation hospitals give my right hon. Friend cause for the slightest concern about his proposals? Should not we concentrate on our successful policy of ensuring that all NHS services are brought up to the highest possible standard rather than allowing the 30 or so allegedly best performing hospitals effectively to become free-standing health corporations?

Photo of Alan Milburn Alan Milburn Secretary of State, Department of Health

I think that my hon. Friend knows that that is not our policy. Much mythology surrounds NHS foundation trusts. I do not believe that it applies to my hon. Friend, but people initially claimed that only half a dozen or a dozen NHS foundation trusts would be formed. That is not and has never been the case. Our intention is to ensure that every NHS trust gets the opportunity to become an NHS foundation trust. We will put in place the measures, support and assistance, including the extra financial help that is needed, to help raise standards of performance of organisations that are frankly not doing as well as they should.

As my hon. Friend knows, it is a myth that we have a one-tier health-care system in our country. We do not. Some organisations are capable today of using the extra freedoms that NHS foundation trusts will give them, others need extra help to put them in that position. We shall do that and ensure an equity guarantee so that every part of the NHS has the opportunity of taking advantage of the extra freedoms in a framework of national standards and a national system of inspection. Most important, the system is based on the NHS values that the Labour party supports—care for free that is based on need, not ability to pay—not the charging that the Conservative party advocates.

Photo of David Heath David Heath Shadow Spokesperson (Trade and Industry), Shadow Spokesperson (Home Affairs)

What will the effect of the proposals be on hospitals that are already in difficulties, for example, the Royal United hospital in Bath? There is no problem with its surgical, medical or nursing care, but it has huge historic problems with disastrous management. How does such a hospital compete when it has a financial millstone round its neck every year? How does it get to the starting point?

Photo of Alan Milburn Alan Milburn Secretary of State, Department of Health

No Labour Member suggests that NHS hospitals should be forced to compete. That happened in the old NHS internal market, which I helped to get rid of. I certainly do not advocate bringing it back. I know about the problems in the hon. Gentleman's area and in the Bath hospital. Some hospitals are in a different position from others and we therefore need different strategies according to the hospital's individual circumstances. The hon. Gentleman knows that the history of underperformance—not by the staff who are doing a fine job in difficult circumstances, but sadly by the people in charge of the hospital—is the reason for our advocacy, through the NHS franchising system, of bringing in new management to turn the hospital around. When we have operated the franchising policy and brought in new management, it has had a dramatic impact on the performance of the relevant hospitals.

It is worth pointing out that when we introduced star ratings, which set out the relative performance of NHS hospitals, several received a zero rating. Subsequently, three quarters improved their performance precisely because of the sort of measures that we are taking. We will continue to give help, support and advice, including extra financial support, to hospitals such as the hon. Gentleman's that are in difficulties.

Photo of Mr David Hinchliffe Mr David Hinchliffe Labour, Wakefield

I think that I ought to try to make a supportive comment at this stage. My right hon. Friend knows that I am attracted to some of the Government's ideas that he is exploring, although there are other aspects of this policy that I am profoundly worried about. Will he clarify the confusion over the eligibility for trust membership? I have a close personal friend—who is known to one or two other people here as well—who has, to my knowledge, been in hospital in at least 10 different locations in the last three years. According to the guidance in the Bill, he would be eligible to stand for election as a trustee in all those separate hospitals. Could he do that, if he were so motivated—he is certainly very motivated—and will my right hon. Friend clarify the exact constituencies that will be used to elect the boards of trustees?

Photo of Alan Milburn Alan Milburn Secretary of State, Department of Health

I know that my hon. Friend takes a close interest in these issues, and that he is attracted by certain aspects of the proposal if not by the proposal in total, although I keep working on him and trying to persuade him that it is a good idea and not a bad one, and that it is very much in keeping with the values to which both he and I subscribe. On his specific question, he will be aware, having read the Bill, that the governance structure of NHS foundation trusts works like this: the majority of places on the board of hospital governors are reserved for members of the local community. It is possible for an individual NHS trust, in putting forward its proposal to become an NHS foundation trust, to extend the franchise still further—for example, to patients who have used the hospital in question—but that will be a matter for the NHS trust to determine. My hon. Friend will also be aware that places on the board of governors are reserved for members of staff, which is important precisely to ensure that local members of staff, who, in the end, are responsible for delivering the services, also have some control over how those services are delivered. Finally, the primary care trusts will also be represented on the board of governors, precisely to address the concerns that were raised earlier. That must be right, because if we want to move to a system that has more locally responsive NHS services, we have to have greater local democratic control. It is good enough for local leisure centres; it must be good enough for local health services.