Ministers 'planning break-up of NHS'

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Ministers 'planning break-up of NHS'

New team brought in to floundering flagship

Pioneering trust will have more freedom to innovate

Failing hospitals to be run by outside managers

Leading article: Mr Milburn is heading in the right direction. But he has a long way to go

The Government was accused of plotting a "Railtrack-style" break-up of the NHS after it unveiled plans to allow private firms to take over failing hospitals.

Alan Milburn, the Secretary of State for Health, came under attack from Frank Dobson, his predecessor, and trade unions who said the proposals signalled the end of national pay bargaining for health professionals and other NHS staff.

In a further embarrassment, Mr Milburn was forced by the Speaker of the Commons to explain his proposals to MPs after Tories complained he had leaked the plan to the media in advance.

Under the proposals, the best-performing hospitals will be turned into not-for-profit trusts with greater freedom over staffing and the power to set local rates of pay. Such "foundation hospitals" will have to meet annual performance targets but will be in effect freed from Whitehall control to innovate, keep profits from asset sales and offer higher salaries.

The idea, dreamt up by the 35 hospitals given a "three-star" performance rating by the Government, will need legislation, but could be implemented as early as next year.

The best of the primary care trusts, the GP-led groups that make up most of the NHS budget, could also be given similar "earned autonomy", Mr Milburn announced, but the worst hospitals, those deemed to have a "zero" rating in recent league tables, will be handed over to new management from private companies, charities or neighbouring NHS trusts.

A defiant Mr Milburn said he wanted a "different sort of NHS", where all patients were treated free and according to need, but where high achievers were freed to do even better. "Sadly, whether in local government services or in the health service, just because people are housed within the public sector it does not necessarily mean they deliver the best services," he said.

"Where hospitals are not performing well we will consider franchising their management to bring in fresh blood. Just because patients might be treated in a Bupa hospital today or a foundation hospital tomorrow that does not mean they cease to be NHS patients. Quite the reverse."

The GMB and Unison unions said the plans would create a "two-tier" health service, undermine the NHS national pay structure and lead to fragmentation similar to that of the privatised rail network.

John Edmonds, general secretary of the GMB, said: "This is back-door privatisation of the NHS and a recipe for anarchy. It is staggering that Alan Milburn wants to do this at a time when the problems of a fragmented railway are plain for all to see."

Mr Dobson, MP for Holborn and St Pancras, warned in the Commons that private management had been responsible for "disasters" at Railtrack, Equitable Life and Marconi.

He said private-sector health managers were unlikely to have appropriate experience as private hospitals were often small and low-tech and had few emergency admissions.

David Hinchliffe, Labour chairman of the Commons Health Select Committee, said Mr Milburn was in danger of adopting the Tory "internal market" of the 1980s. "I am finding it increasingly difficult to differentiate between my own government's health policies and those of the previous Conservative government," he said.

Gordon Prentice, Labour MP for Pendle, attacked the plans as "an invitation to asset-strip", while his colleague David Taylor, MP for North West Leicestershire, said they "stick in the throat like an unchewed pretzel".