A “power battle” is underway between the Department of Health and Monitor over the extent to which the regulator needs to be split in two to avoid conflicts of interest, HSJ has been told.

The DH has previously acknowledged the conflict between Monitor’s existing responsibility for authorising and overseeing foundation trusts; and its new role as sector regulator, which could see it take action directly threatening FTs’ income.

Concerns have been expressed that Monitor could help foundations at the expense of other providers.

The Health Bill gives the regulator a duty to “act so as to secure that there is not, and could not reasonably be regarded as being” a conflict between its two roles.

Several senior sources told HSJ that Monitor, currently led by chair and interim chief executive David Bennett, believes it can meet the requirement by appointing separate sub-boards and chief executives for each role.

However Mr Bennett is also said to believe that a single chair could have oversight of both boards. It is understood the DH is arguing there must be a greater separation, probably requiring the appointment of two chairs.

A source familiar with the discussions said Monitor believed it would be more effective if it continued to have a single chair. Downing Street officials are also said to favour Monitor maintaining control over FTs.

A senior source said the debate had become a “power battle” between the DH and Monitor, and the DH was seen as seeking to “divide and conquer” the regulator. A more complete split may give the department more control over FTs, the source said.

However, another source pointed out that foundation trusts and the independent sector had previously argued that a complete split – with two separate organisations – was necessary to avoid conflicts.

Both the DH and Monitor said they reject the suggestion of a conflict between them.

A Monitor spokeswoman said: “We are aware of the potential conflict of interests and would need to address this in the design of the organisation. The [bill] is clear Monitor’s duty is to ensure no conflicts arise in the exercise of its proposed main functions, including those related to foundation trusts, and we are confident that this can be achieved.”

A DH spokesman said: “The Health and Social Care Bill is clear that Monitor’s duty is to ensure that no conflicts arise in the exercise of its proposed main functions, including those related to foundation trusts, and we are confident that this can be achieved. It is for Monitor to develop proposals to achieve this.”