Foundation Hospitals: An Attack on the Heart of the NHS

Foundation Hospitals: An Attack on the Heart of the NHS

IN SPITE of their plans for foundation hospitals being rejected by the Labour Party conference, the government is still going ahead.
25 leading NHS hospitals are scheduled to become foundation hospitals or ‘Public Benefit Corporations’.
Andy Ford, a member of Amicus North Manchester NHS branch, writing in a personal capacity, exposes what is behind this policy for the health service.

IN SOME ways the Foundation Hospitals represent a return to the pre-1945 hospital system, where most cities had at least one good, well-equipped and well-funded charitable hospital for the middle classes, while workers made do with crumbling ex-workhouses.

In the short-term, Foundation Hospitals create a two-tier NHS, rewarding a few hospitals at the expense of the rest; in the long-term the proposals create a framework for privatisation.

Initially the Bill will create one more round of re-organisation to distract NHS workers and managers.

No doubt each Foundation will need new letterheads and logos – and more managers. After all, the Bill makes explicit provision for fat-cat pay:

“Any power of the Trust to pay remuneration and allowances to any person includes power to make arrangements for providing pensions and gratuities.”

But although re-branding and fat-cattery are annoying, the impact on services will be far more serious.

The proposals mark a swing back to a market-based, competitive approach to hospital provision.


In fact they look remarkably similar to the Tories’ original NHS Trusts, introduced in 1988, which as Ken Clarke famously confessed were: “Based on a few articles by some chap in The Economist”!

Foundation Trusts will have powers to vary NHS workers’ pay and gradings, within the somewhat unclear provisions of Agenda for Change (AfC).

Even Dave Prentis of UNISON was moved to say that this meant that four years of negotiations to set up AfC would be “down the pan” (The Guardian 10 September 2003).

As the Foundation Trusts chase the latest government targets, they will inevitably compete with the rest of the NHS for scarce trained staff.

The financial provisions give more freedom to Foundation Trusts to borrow and raise money. But the money they borrow is subtracted from the NHS borrowing limit, leaving less money for the other hospitals.

They can carry over year-end surpluses, instead of returning the money to the Department of Health. There will clearly be a tendency for the Foundations to pull away from the wider NHS. Some hospitals could end up in a downward spiral of deficits, staff shortages and poor patient care.

The ‘independent’ regulator

Not to worry says New Labour – we’ll have an ‘Independent Regulator of NHS Foundation Trusts’. The regulator however, will be far from independent. He/she will be appointed by the Secretary of State and can be dismissed by him also.

The Secretary of State will determine his pay, pension and working conditions and he must report to the Secretary of State on any matter.

He can only grant Foundation status with the agreement of the Secretary of State.

This regulator, like those in the other privatised industries, serves more to deflect responsibility from ministers than to actually control or regulate the industry he supposedly oversees.

Primary care undermined

The part of the system that will have independence will be the Foundation Trusts themselves. New Labour’s focus was supposed to be on primary care. The Primary Care Trusts (PCTs, see box) were supposed to plan and commission healthcare for the usual ‘local people’ (it sounds like the League of Gentlemen!).

But the Foundation Hospitals will be able to go their own way, ripping any plan devised by the PCTs to shreds.

Once the mass of hospitals have opted into Foundation status the PCTs will be left like customers on a High Street, choosing where to place their contracts, with about as much control.

Planning and co-operation will be well nigh impossible. All that would be left of the ‘National’ Health Service would be the logo.


The Blairite robots in the House of Commons debate praised the Bill for addressing the ‘democratic deficit’ in the NHS.

But any democratic element has been introduced as a smokescreen to obscure an attack on the heart of the NHS.

In any case Foundation Hospitals were not in the Labour manifesto and they are only being debated at the party conference now – how democratic is that?

There will be a ‘public constituency’ who will elect a majority of members of the governing body. They will be drawn from the area served by the hospital. What this might mean in the case of a hospital with a regional or national catchment, such as Christie’s in Manchester or Alder Hey in Liverpool, is left unclear.

The public constituency ‘may’ include patients and carers. All those wishing to join the public constituency must pay £1. Just like an Anti-Poll Tax Union!

It was interesting to see Trotskyists mentioned in the House of Commons debate. David Hinchcliffe, one of the main opponents of the Bill, quoted an NHS manager who was concerned at the prospect of the local Trotskyists joining his Foundation.

Of course the reality is that once the mythical ‘local people’ start asserting their views and needs they will quickly find themselves rebranded as the ‘local Trotskyists’!

At least one governor will be elected by staff, at least one appointed by each PCT, one by each local authority and any medical schools or ‘partner organisations’ will also get a seat.

So far, so democratic. But although the board meetings are to be held in public, the public can actually be excluded from any meeting, for ‘special reasons’.

Also the regulator, appointed by the Secretary of State, can “remove any or all of the directors or members of the board of governors, and appoint interim directors of the board”.

No reason for removing, suspending or disqualifying directors or governors need be given by the regulator.

It’s a very Blairite version of democracy.


In the long term the proposals move the NHS towards a regulated market in healthcare. Blair and John Reid insist that the proposals are not about privatisation. But that’s not what the privatisers think.

Private Eye (25 July 2003) revealed that even while the Bill was being debated, top civil servants from the Department of Health and managers from companies like Catalyst Healthcare, Healthcare Projects, Barclay’s Private Equity and KPMG were paying £816 per head to discuss ‘Foundation Hospitals – the way forward’.

The concerns of the Independent Healthcare Association that Foundation Hospitals will steal private work from them were quoted in the Commons debate.

New Labour did not abolish the crucial component of the Tories’ internal market, the purchaser-provider split, they simply re-organised the purchasers into the PCTs.

We have had the concordat with the private sector and the recently unveiled privately-owned ‘fast-track treatment centres’.

But where the Tories created not a market, but a pseudo-market; New Labour have created, in Foundation Hospitals, pseudo-charities; and in the fast-track centres, fully-fledged private clinics, subsidised by the taxpayer.

Foundation Trusts can enter into PFI deals. Significantly, it is not only NHS Trusts who can apply to the regulator to become Foundation Hospitals, but also “persons (other than an NHS Trust)”, so long as they have the support of the Secretary of State.

These mysterious ‘other persons’ could be charities or private health companies.


The second part of the Bill sets up a Commission of Healthcare Audit and Inspection (CHAI), to continue the star rating system.

The trouble with the star ratings is that they measure what the hospital does, rather than what it achieves.

All a three-star rating shows is that the managers are good at reaching, or appearing to reach, the latest targets.

The quality of healthcare provided is a different matter.

CHAI will set a framework of standards to apply across the healthcare system. Again we can imagine Blair saying that it doesn’t matter who owns a hospital, so long as it reaches the standards set by CHAI.

And that everything is rosy under the care of the ‘independent regulator’ who will most likely be some overpaid academic with special qualifications in not rocking the boat.

Blair’s plans could blow up in his face

But Blair’s plans could blow up in his face. What will happen if a Foundation gets stuck with a failed PFI deal and ends up handing all its income over to banks and construction companies? The regulator would have to decide whether to let it go bust, or ask the Secretary of State to bail it out.

Also there have been many campaigns against hospital closures and mergers, the most high profile being the Kidderminster campaign.

In future such campaigns are more likely, not less, as it is actually easier for Foundations to close or merge services.

In a situation like Kidderminster, where virtually the whole community was united in defence of their hospital, campaigners would naturally seek to influence or replace the elected governors and the regulator would then have to choose between removing them and allowing them to vent working-class anger at cuts, mergers or disastrous PFI deals.

In any case the Bill is not on the statute book yet. Trades unionists must force the union leaders to move from verbal to real opposition and the New Labour robots who vote for this pernicious attack on the NHS should be exposed in every High Street in the country.

A socialist programme for the NHS

  • No to foundation hospitals, for a properly funded NHS so good quality health care is available to everybody.
  • No more privatisation, take all the privatised services, private hospitals and beds into public ownership.
  • Abandon PFI, no more profiteering by the building companies and the banks. Fund new hospital building programmes through central government, using direct labour.
  • A minimum wage of £8 per hour and a 35-hour week for all health service workers.
  • Genuine democratic control of the NHS, involving the trade unions, patients, carers and elected representatives.
  • Senior managers should be accountable to elected bodies.
  • Nationalise the pharmaceutical industry, the pharmacy chains and the medical supply industry and integrate them into a democratically controlled NHS.
  • Massively increase spending on health care as part of a socialist planned economy. The wealth already exists in society to provide good quality health care for all. Take the top 150 companies into public ownership under democratic workers’ control and management.

Primary Care Trusts

PRIMARY CARE Trusts (PCTS) are the bodies which are responsible for providing and co-ordinating the first, primary level of the NHS – the health centres, clinics, GP services and dentistry.

They also commission and pay for the next, secondary, level of healthcare – which is basically the hospitals.

They do this by negotiating and placing contracts with hospitals in their area. The contracts can either be block contracts for a year, or pay according to the number of operations performed.

Of course this generates huge numbers of managers and accountants, as each PCT employs a team to negotiate and agree contacts with another team employed by the hospitals.

And the fact that healthcare is such a political hot potato and that all NHS bodies have a legal duty to co-operate means that the aggressive competition of the Thatcher era is now muted but in its fundamentals, in principle, it remains.

The Foundation Hospitals threaten to return to the dog-eat-dog days of the 1980s.

PCTs are run by a board composed of health professionals and appointed ‘public representatives’. There is no democratic component but at least the jobs on the board are advertised and filled after an interview, as opposed to the Tory system of appointing local Tories with no adverts or open appointment process.

But the boards of PCTs still tend to be made up of local businessmen, political stooges, clergymen and token appointments of women and ethnic minority members.

As socialists we would say that the whole attempt to force market mechanisms into the NHS is misguided, expensive and wasteful, and doesn’t even end up bringing in the ‘good’ aspects of markets.

The NHS ends up with the worst of both worlds.

The following NHS Trusts have been shortlisted for foundation status:

Addenbrooke’s, Basildon and Thurrock General Hospitals, Bradford Hospitals, Calderdale & Huddersfield, City Hospital Sunderland, Countess of Chester, Doncaster and Bassetlaw Hospitals, Gloucestershire Hospitals, Guy’s and St Thomas’ Hospital, Homerton University Hospital, King’s College Hospital, Moorfields Eye Hospital, North Tees and Hartlepool, Nuffield Orthopaedic Centre, Papworth Hospital, Peterborough Hospitals, Rotherham General Hospital, Royal Devon and Exeter Healthcare, Sheffield Teaching Hospitals, Southern Derbyshire Acute Hospital Services, Stockport, The Royal Marsden, The Queen Victoria Hospital East Grinstead, University Hospital Birmingham, University College London Hospitals