Tensions are emerging in government plans to remove the “shackles” of central control by liberating foundation trusts and strengthening regulators.

Proposals for regulating providers, published this week, set out a range of freedoms for foundation trusts, including removing the private patient income cap, removing borrowing limits and making it easier to merge.

‘The service must be free from the shackles of central control’

Andrew Lansley

Announcing the plans, health secretary Andrew Lansley said: “In order to truly improve health outcomes and the service the NHS gives to patients, it must be free from the shackles of central control.”

But there are tensions in some of the proposals to liberate foundation trusts.

The paper says management of the taxpayers’ risk and interest in foundation trusts, for example the public investment in its assets, may be transferred to another agency from Monitor, which will become the independent economic regulator.

This could potentially be the Department of Health, the involvement of which would raise concerns about foundation trusts’ independence. Sources said it could also be the Shareholder Executive, which oversees companies owned by the state such as Ordnance Survey and the Post Office.

This may give better protection to foundation trusts’ independence.

The proposals are intended to balance the roles of the DH, the NHS commissioning board and Monitor in other areas. The board and Monitor both have a role in designing and setting prices, for example.

At a conference last week Audit Commission chief executive Steve Bundred expressed frustration at comments made by NHS chief executive Sir David Nicholson in HSJ.

Sir David had said the DH would be “talking to Monitor” about limiting the rate at which foundations spent their £2.9bn cash surplus “to ensure foundation trusts are not committing their reserves too early” over the period of financial uncertainty.

The DH had not communicated the plans to Monitor and Mr Bundred said Sir David’s words were a further illustration of the department’s “centralising” approach, which was at odds with the freedom and autonomy pledged in the health white paper.

A DH review of arm’s length bodies, also published this week, will increase the independence of bodies such as the Information Centre for Health and Social Care, but other functions are being centralised.

The Appointments Commission is being scrapped, leaving ministers accountable for national public appointments, although key appointments may also be subject to health committee scrutiny.

The Health Protection Agency and National Treatment Agency for Substance Misuse are being abolished, with their functions moved into a new public health service directly accountable to Mr Lansley.