Published: 10/04/2003, Volume II3, No. 5850 Page 5 6

Fifteen trusts are likely to get Department of Health approval to make a final application for foundation status, according to government sources.

Over the last week, senior DoH officials have been assessing preliminary applications of 32 trusts which put their names forward in February.

Their recommendations for the successful candidates are now being examined by ministers before the identities of the trusts are made public. It had been rumoured that there would be about a dozen foundation trusts in the first wave.

Successful trusts have yet to be informed, but chief executives of trust applicants have been summoned to a dinner to be held either on 30 April or 6 May, where they will be told more. It is not clear whether an announcement will be made before then.

Speaking last week, the government source said: 'There is still some way to go. The process is not complete, but we are looking at around 15. We had more applications than we expected so We are pleased.We have been impressed with the standard. One of the strongest aspects has been the governance arrangements. There has been quite a bit of flexibility on what arrangements trusts can make, and I think we will see a number of different approaches.'

Second-phase applicants will have to embark on full consultation with stakeholders. Trusts will be subject to a full independent financial assessment and they will have to produce a report on how the new freedoms will be used to improve services for NHS patients.

A strategic vision covering the next five years, it will also have to be endorsed by local NHS partners. Although there is scope for any of the estimated 15 trusts to drop out or to be ditched, the DoH - according to one chief executive close to officials - will 'go through hell and high water to make sure they succeed' in becoming foundation trusts.

He said there were still questions for many managers over the precise nature of the new freedoms attached to foundation status.

Specifically, debate is ongoing about the freedom to borrow - the issue at the centre of the row between health secretary Alan Milburn and chancellor Gordon Brown over whether borrowing should be off the government balance sheet.

Last year, Mr Milburn's aides had reportedly feared that tight restrictions on foundation hospitals' ability to borrow were likely to reduce the number of hospitals applying for foundation status.

The chancellor won that battle, apparently concerned that too many financial freedoms would widen health inequalities through a two-tier system.

But HSJ understands the DoH has been in discussions with trusts over the extent of borrowing that will be available to foundations - even though according to government guidance an independent regulator will set a 'prudential borrowing limit' for each trust.

One prospective foundation trust chief executive said: 'The DoH team behind the policy is still being radical in its approach - they want the freedoms to be significant.

'The problem is that we are still not totally clear what powers the regulator will have and, importantly, how they will use them.'

Think tank the Institute for Public Policy Research has expressed fears that unless foundation trusts have a 'responsible borrowing regime', the foundation trust policy could 'run into the ground'.

It argues that borrowing from the private sector offers no advantage to foundation hospitals and should not be allowed.

The institute will publish a full report at the end of this month.

Political opposition to foundation hospitals continues with around 130 rebel Labour MPs having signed an earlyday motion criticising the policy for creating a two-tier health service.