Milburn: All hospitals will be set free from Whitehall

Alan Milburn, the Secretary of State for Health, announced a dramatic expansion of his foundation hospitals plan yesterday with a prediction that every NHS trust in England could be free of Whitehall control within four years.

Mr Milburn shrugged off threats of a Labour backbench rebellion over the policy as he revealed a detailed timetable to give high-performing hospitals new financial powers. Foundation trusts will be allowed to raise their own finance from capital markets, set pay rates and will be free of interference from the Government.

Gordon Brown, the Chancellor, has made plain his reservations about the idea and more than 100 MPs signed a Commons motion opposing the plans, fearing they would create a "two-tier" health service.

But Mr Milburn said he had "never, ever" intended that foundation status would be granted only to half a dozen elite institutions. Instead, there would be annual waves of foundation hospitals created until all 300 NHS trusts in England had achieved the three-star rating needed for the new status.

The Department of Health published a list yesterday of 32 high-performing trusts that had expressed an interest in the plans and said a shortlist would be announced in the autumn.

Mr Milburn said a Bill would be introduced to the Commons in the next four weeks and would have its second reading in the Commons by May. The first wave of foundation hospitals would be in place by April 2004 and a second wave would follow a year later, he said.

In a substantial extension of the policy, Mr Milburn will also write this week to all two-star rated NHS trusts asking them to begin preparations to apply for foundation status.

Mr Milburn refused to rule out giving similar freedom to primary care trusts, which plan and fund GPs and other services. Speaking to the Commons Health Select Committee, he revealed that he expected all hospitals to become foundation hospitals by 2007 or 2008.

"I don't see any reason why we shouldn't be able to achieve that," he said. "This is not just for a few, it is for everybody."

Mr Milburn also reassured MPs that any surplus reported by foundation trusts could be used to boost primary care in their locality. "MPs worry [that] their local hospital, which they are very attached to ... is somehow going to be disadvantaged What I am saying to you is that is not the case," he said.