With managers awaiting the unveiling of the national plan, Alan Milburn faced a quizzical audience at this year's NHS Confederation gathering. HSJ begins six pages of conference coverage with a report on the health secretary's keynote speech

Health service managers will win the freedom to run their organisations without political interference under the NHS national plan, health secretary Alan Milburn has pledged.

He told an NHS Confederation conference which had spent two days speculating on the contents of the plan that ministers will measure hospitals, primary care groups and health authorities against a system of 'traffic lights', with those on 'green' left to run their own affairs.

The national plan to be revealed later this month will give local managers more freedom, he told the conference in Glasgow.

Mr Milburn also announced that services for children and the elderly could shift between health organisations and social services.

But the focus was on his proposal for 'annual report cards' for hospitals, primary care groups, trusts and health authorities, based on the quality of services.

Mr Milburn said he had 'agreed' to proposals from the confederation that NHS bodies 'should periodically be classified as green, amber or red'. The judgement would be based on service quality, efficiency, accessibility and patient satisfaction. Organisations' traffic light status would be known by the NHS 'and, of course, the public'.

He promised to 'get regional office off the back' of those who did well. 'Green organisations' would enjoy 'far greater freedom for manoeuvre': they could get earmarked resources 'as of right without needing to bid or get regional office approval'.

The NHS had to stop 'baling out' failures instead of supporting successful organisations, he explained after his speech. Failing organisations would get 'a sequence of escalating interventions', including 'close interest' from their regional NHS Executive offices.

They would be given expert advice from the Commission for Health Improvement and the National Patient Access Team.

Power would shift from ministers to local NHS bodies as, over time, most trusts and authorities would move towards green status.

'As we step in firmly for a minority, we will be able to step back further from the majority.'

NHS Confederation chief executive Stephen Thornton welcomed Mr Milburn's message. Earned autonomy was 'a major step forward' in bringing together the need for local flexibility with the national drive for common standards, he said.

NHS Alliance chair Dr Mike Dixon said: 'It is wonderful to hear our rhetoric of depoliticisation has got through to them. My concern about the traffic lights is that it could be so demoralising for patients and staff. . .We should be measuring relative improvement rather than absolute standards.'

Dr Jonathan Shapiro of Birmingham University's health services management centre said: 'The risk is, who would want to work in a 'red' organisation?'

Mr Milburn ducked the issue of whether poorly performing hospitals would face closure. He did not deny comparison with the notorious schools regulator OFSTED, which has the power to recommend that poor schools are shut. But he said full details would be spelt out in the national plan.

Mr Milburn is rumoured to have become impatient with CHI, for being supportive rather than tough with poorly performing organisations. But NHS Confederation policy director Nigel Edwards said he was convinced 'this is about providing people with the help and support to do better'.

Mr Milburn defended the government's record on centralising control.

When Labour came into office NHS debts had been 'spiralling out of control' and the internal market had left shortages of doctors and nurses. 'We have got a grip on the system and we are in a different period now.'

In a further bid to rebut charges of 'control freakery' he announced that the national plan would introduce an independent panel to decide whether hospitals should be closed, merged, or lose beds. He was looking at proposals for a national panel made up of a third each of doctors and nurses, patients, and managers to decide 'major service changes'.

The national plan will also signal a shake-up in the relationship between the NHS and social services. There would be new 'networks of care' for children, elderly and mentally ill people, where the lead commissioner could be either health or social services bodies.

Mental health medical, nursing and social care could be 'delivered though a single provider trust.'

Later, he explained that services for disabled people and those with learning difficulties would be brought into the new scheme and gave a strong hint that social services would lead on children's care, while the NHS would take control of services for elderly people and mentally ill patients.

The full text of major conference speeches and longer reports can be found on www.hsj.co.uk