Mergers will be considerably easier for foundation trusts under the rules set out in the health bill.

Combining two foundations will no longer require de-authorisation and a fresh application to become a foundation, but will instead be granted with the approval of more than half the governors from each trust.

The bill also deletes entirely the cap on private income, freeing foundations from limits on their commercial activity.

Section 150 simply omits the sub-sections of the 2006 National Health Service Act “restriction on provision of private health services” and “cap on private income”. It does not include any safeguards to ensure private activity benefits NHS patients – something politicians have previously called for.

Sue Slipman, director of the Foundation Trust Network, told HSJ the rules on mergers and removal of the cap were what the sector expected and wanted.

She said: “This bill completes the FT journey and will help release FTs’ potential. We will work with our members to inform the government on managing the risks during the transition period.”

Other powers in the bill include allowing the regulator to appoint a panel to advise governors.

The new failure regime for foundation trusts is also set out by the bill which will be trigged if “the regulator is satisfied that an NHS foundation trust is, or is likely to become, unable to pay its debts”.

The bill also includes what is being referred to as the “Hinchingbrooke clause”, which provides a legislative framework for allowing the privately managed trust – and others that may follow in its footsteps –  to survive the abolition of NHS trusts on 1 April 2014.