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Published: 20/03/2003, Volume II3, No. 5847 Page 14 15

Despite the generous offer of 'ownership'of foundation trusts to the general public at up to£1 a time, critics still say the latest bill's fine words on governance do not address the real issue of control.Tash Shifrin reports

The parliamentary Labour Party is beginning to resemble an accident and emergency department on a Saturday night - increasingly busy, increasingly fraught and quite a lot of people looking battered and bruised.

As HSJ went to press, it was not clear whether and in what circumstances Britain would go to war in Iraq - the issue that has sent shockwaves through the party. But last week the government took a decisive step forwards in its second most contentious policy - setting up foundation hospitals.

The hideously named Health and Social Care (Community Health and Standards) Bill is the latest in an apparently never-ending stream of Labour health legislation, published before the controversial Community Care (Delayed Discharges etc) Bill - allowing social services departments to be fined for bed-blocking - has even cleared the House of Lords.

The new bill does not only deal with foundation trusts - or NHS foundation trusts, as they have pointedly been named - but with the creation of the Commission for Healthcare Audit and Inspection and the matching Commission for Social Care Inspection too.

There are also sections on recovery of NHS charges from people making compensation payments in injury cases, dental services and the replacement of welfare food schemes.

Measures to take account of the proposed new GP contract would have to be added later if doctors vote to accept it.

But the hot topic is foundations.

Health secretary Alan Milburn had apparently been persuaded out of dubbing the new bodies 'foundation companies' - the term used in drafts of the bill - by prime minister Tony Blair.

But It is the thought that counts, and some may find the creation of entities to be known as 'public benefit corporations' little different to the think tank favourite 'public interest companies' on which they are based.

In the pre-bill phoney war, the press focused on reported clashes between famously prudent chancellor Gordon Brown on the one hand, and key Blairite health secretary Alan Milburn on the other.

Mr Brown is said to be 'very supportive' of the foundation trust idea, but keen to ensure that their borrowing would go on the government's balance sheet.

The Treasury was this week understood to be 'content' with the bill - it falls inside the terms of the agreement reached between Mr Brown, Mr Blair and Mr Milburn in October.

But backbench anger continues amid fears of a 'two-tier NHS', with foundations poaching staff from neighbouring trusts and selling their assets to line their own coffers rather than those of the wider NHS.

Mr Milburn counters with references to the co-operative movement, presenting the new structures as a democratisation of the NHS.

'This bill is about strengthening the link between local communities and their local health services, ' he said, launching the legislation.

Foundation hospitals would 'be owned and controlled by local people, with hospital governors directly elected from the local communities'.

'As public benefit corporations they provide a new model for public ownership, firmly rooted in the co-operative and mutual tradition.'

But who will really control the new bodies? The bill says the 'public benefit corporation' will have members, who must pay up to£1 to join. Those living in the trust's local area and staff will be eligible.

Former patients could be part of the 'public constituency' of members, too.

The members - having paid their nominal sum - can elect a board of governors, more than half of whom will come from the 'public constituency'. But there will also be a board of directors, and the constitution must 'provide for all of the corporation to be exercisable' by these directors.

Foundations will be able to borrow money - up to a limit - and sell assets with the approval of a regulator appointed by the health secretary. But the amount of income raised from private patients will be capped.

Health minister John Hutton urges: 'Membership is relevant and it is possible that if you're a patient at a hospital or live in the area you can become the owner of that trust - it gives you a say. The question is how quickly you can extend that democracy to every NHS trust.

We have set ourselves a target of the next four to five years.'

But asked why people, who as taxpayers already 'own' the NHS - or at least pay for it - should stump up£1, he says: 'You do not have to pay£1.'This is later amended: 'Noone has to pay£1 upfront, ' says the minister. 'It is up to£1 if the trust decides to charge for it.'

Perhaps Mr Hutton should double-check schedule one, which makes it clear that no one can be a member of the corporation without paying.

The minister is also less than forthcoming over how the governors, with their democratic base, would control the directors: 'The governors choose the non-executive [directors].' He is unable to suggest further benefits.

Commons health select committee chair David Hinchliffe is careful not to pre-empt his committee's inquiry into foundations, but his personal view is forthright: 'The governance issue is simply a sweetener to persuade people to come on board, ' he says.

The five-year roll-out to all trusts would 'certainly defuse' some MPs' anger, but he believes that the expansion of the programme to all trusts could make things worse, not better, and 'could lead to the loss of some hospitals', as zero-star or one-star hospitals at the back of the queue 'will be so much further weakened' in competition with their soaraway rivals.

Former health secretary Frank Dobson, in battling mood, says the bill 'really doesn't address any of the criticism or concerns'.

'Although ministers said they would take action and there would be a regulator who would stop foundations offering better terms and conditions and poaching staff, there is not any way they can stop them without breaking employment law and probably human rights law.'

Mr Dobson says opposition is growing - signatures on a critical early day motion have increased, 'despite the schmoozing by the secretary of state, the prime minister and health ministers', who have been organising one-to-one meetings with concerned MPs.

Labour MPs' concerns have been stoked by 'the general introduction of competition' in the NHS and Mr Blair's hints about 'co-payments', which Mr Dobson translates as 'fashionable language for charges'.

They could be further fired up by a clause slipped into the bill covering 'other applications' to become foundation trusts.

Kieran Walshe, reader in public management at Manchester University, explains: 'The bill says explicitly that foundation trusts can be created by people other than NHS trusts - a very explicit expression of the mixed economy intentions behind the whole thing.'

This could open the way for charities to become NHS foundation trusts, he says, or for BUPA - a provident association - to 'be one or set one up for some of its activities'.

Meanwhile, NHS managers are getting to grips with the latest developments. NHS Confed-eration director Gill Morgan is happy with the principle of the scheme as outlined in the bill, but asks: 'Is it dead right or does it need tweaking?'

The membership fee is 'one of the areas where people need to do a bit of thinking' and 'some testing out of who would join to make sure it reflects the people who genuinely use the service, not just the affluent middle class'.

The balance and 'strong twoway relationship' between the governors and the directors of foundations will also need attention, she says.

And Institute of Healthcare Management acting chief executive Rosey Foster adds: 'We also hope that the experience of the first foundation trusts will be taken on board

With such a significant project, there are obvious risks and not everything will go according to plan first time round.' l Close scrutiny: the new inspectorates The bill will create the Commission for Healthcare Audit and Inspection and the matching Commission for Social Care Inspection, first signalled in the wake of the Budget.

And HSJ sources say the bill's measures to ensure CHAI's independence are 'stronger than the recent drafts', but it is thought MPs might look to beef it up further.

Manchester University's Kieran Walshe points out that in the bill, CHAI has 'no more direct powers than the Commission for Health Improvement already had' in the NHS.

But the transfer of functions from the Care Standards Act, which governs the inspection and regulation of private health and social care facilities, will give the two new inspectorates 'more powers to deal with private hospitals than with the NHS'. The act currently allows the National Care Standards Commission to apply to the courts to impose fines or revoke licences.