Government hopes its entrepreneurial overhaul of the NHS will have as much success in cutting waiting times as Spain's experiment

The entrepreneurial over-haul of the NHS accelerated yesterday when the Government named the first 29 candidates to become foundation trusts.

The trusts, which include teaching, district and specialist hospitals, are promised freedom from Whitehall to experiment with new ways of running their affairs – provided they are for the benefit of patients.

They span the country from the Newcastle upon Tyne Hospitals NHS Trust to the Royal Devon and Exeter Trust. All are top performing, because only trusts awarded a three-star rating by the Government were eligible to apply.

Ministers see them as flagships for a localised health service, which will mark the end of the centralised command and control structure that they say has choked reform in the NHS.

But more than 60 Labour MPs voted against the Government's plans for the trusts in the Commons last week. They see them as divisive, demoralising and a Trojan horse for privatisation.

Alan Milburn, the Health Secretary, said NHS hospitals had shown "substantial interest" in being in the first wave of foundation trusts, with more than two thirds of those ranked as the best in performance tables applying.

"Freeing NHS foundation trusts from day-to-day Whitehall control will encourage greater local innovation in how services are delivered. Where these first 29 lead, I hope the rest of the NHS will follow," he said. "Subject of course to Parliament, I want every NHS hospital to have the opportunity of becoming an NHS foundation trust over the next four to five years."

He added that 12 of the 29 trusts were in deprived areas and would have greater freedom to tackle local health inequalities, an apparent attempt to rebut claims that Labour is creating a two-tier system.

The 29 candidates were selected from a list of 32 that expressed interest in gaining foundation status earlier this year. They will now begin the process of preparing a business case, setting out how they plan to use the new freedoms and consulting staff and local people on the plans. No staff group or union will have a veto on foundation status, but it was unclear yesterday how the outcome of local consultation would affect the application. A ministerial source said there was "no hard and fast rule" determining whether a majority vote against the move would be sufficient to scupper it.

Applications are due by the autumn, when a final selection will be made.

Successful trusts will be granted foundation status in April 2004, subject to the passing of the Health and Social Care Bill. They will manage their own assets, keeping any surpluses, set their own pay and conditions (within nationally agreed limits) and will have greater freedom to borrow. But they will not be allowed to sell NHS assets, and their borrowing will be limited to a level judged "prudent" by an independent regulator.

The ministerial source said regulation would not be heavy-handed, adding that it was intended to prevent trusts from getting into difficulties.

He said the aim was also to avoid differences between trusts, which would expose the policy to charges of creating a two-tier service.

He added: "There should be common standards across the NHS. But how services operate is up to local decisions. There will be different solutions in different areas."

The three trusts not named as candidates had decided to defer their applications until October 2004 to give them more time to prepare, the Department of Health said.

The candidates

* Addenbrooke's NHS Trust

* Aintree Hospitals NHS Trust

* Basildon and Thurrock General Hospital NHS Trust

* Bradford Hospitals NHS Trust

* Calderdale & Huddersfield NHS Trust

* City Hospital Sunderland NHS Trust

* Countess of Chester NHS Trust

* Doncaster and Bassetlaw Hospitals NHS Trust

* Essex Rivers Healthcare NHS Trust, Colchester

* Gloucestershire Hospitals NHS Trust

* Guy's and St Thomas' Hospital NHS Trust, London

* Homerton University Hospital NHS Trust, London

* King's College Hospital NHS Trust, London

* Moorfields Eye Hospital NHS Trust, London

* North Tees and Hartlepool NHS Trust

* Nuffield Orthopaedic Centre NHS Trust, Oxford

* Papworth Hospital NHS Trust, Cambridge

* Peterborough Hospitals NHS Trust

* Rotherham General Hospitals NHS Trust

* Royal Devon and Exeter Healthcare NHS Trust

* Sheffield Teaching Hospitals NHS Trust

* Southern Derbyshire Acute Hospitals NHS Trust

* Stockport NHS Trust

* Newcastle upon Tyne Hospitals NHS Trust

* The Royal Marsden NHS Trust, London

* The Queen Victoria Hospital NHS Trust, West Grinstead, Sussex

* University Hospital Birmingham NHS Trust

* Walsall Hospitals NHS Trust, West Midlands

* University College London Hospitals NHS Trust