Tony Blair's plans to create foundation hospitals scraped through the Commons yesterday after 60 Labour rebels defied the Government to oppose the flagship scheme.

Labour whips made frantic efforts to limit the scale of the revolt by threatening a vote of confidence in the Government if it was defeated on the issue. In the end the Government had to rely on the support of Scottish MPs - who will not be affected by the proposals - to win the vote by just 35, its smallest majority since coming to power since 1997.

Attention will now turn to the House of Lords, which is expected to give the Health and Social Care Bill a rocky ride. Rebel Labour MPs claimed the creation of the elite hospitals - which would have greater freedom to borrow money and run their own affairs - would create a two-tier health service. They also warned that extra competition in the system would harm healthcare standards and worsen mortality rates.

A rebel amendment, tabled by David Hinchliffe, the Labour chairman of the Commons Health Select Committee, was defeated by 286 votes to 251 after it won the support of the Tories, Liberal Democrats and the minor parties. Eight former Labour ministers joined the revolt.Mr Hinchliffe said: "I'm concerned this policy is part of a growing trend of policy making on the hoof. It's not properly thought through, not consulted on. Where was our manifesto commitment? I wasn't elected on foundation hospitals."

He said the principles were "exactly the same" as those that drove the previous Tory government's efforts to introduce an internal market to the NHS. Mr Hinchliffe said the health service had been subjected to 18 significant, and expensive, restructurings over the past 20 years. "The last thing we need in our healthcare system at the moment is further restructuring and change, ill thought out change that hasn't in any way been worked through in terms of its consequences," he said "It restores the competitive ethos, hospital against hospital, doctor against doctor. This policy is about winners and losers."

Frank Dobson, a former health secretary, claimed the plans would mean a return to a "dog-eat-dog" culture in the NHS and would be "astonishingly expensive" and complicated. He said research into the effects of the internal market introduced by the Tories had revealed lower care standards and higher death rates.

Mr Dobson said: "Virtually everybody in the Labour movement is opposed to this proposition. Their instincts it seems to me are right."

John Hutton, a Health minister, highlighted government concessions tabled yesterday, including greater accountability of the new watchdog that will oversee foundation hospitals and a guarantee that new NHS pay arrangements would apply to foundation trusts. He said audit rules had been tightened to ensure greater financial transparency and a cap had been introduced on the income gained from private patients.

Mr Hutton said: "We have also moved to ensure that the NHS in England won't become a two-tier service because all trusts will have the opportunity to become foundation trusts over the next few years." He rejected claims that the Government was creating a "super-elite", saying all NHS trusts would have the chance to become foundation trusts. "No one is going to be left behind," he insisted.

Liam Fox, the shadow Health Secretary, said the Tories favoured foundation hospitals "in principle" but warned that the proposals in their current form were flawed.


Diane Abbott (Hackney N & Stoke Newington), John Austin (Erith & Thamesmead), Harry Barnes (Derbyshire North East), Andrew Bennett (Denton & Reddish), Roger Berry (Kingswood), Harold Best (Leeds North West), Martin Caton (Gower), Michael Clapham (Barnsley West & Penistone), Tony Clarke (Northampton South), Iain Coleman (Hammersmith & Fulham), Michael Connarty (Falkirk East), Frank Cook (Stockton North), Jeremy Corbyn (Islington North), Ian Davidson (Glasgow Pollok), Jim Dobbin (Heywood & Middleton), Frank Dobson (Holborn & St Pancras), Gwyneth Dunwoody (Crewe & Nantwich), Clive Efford (Eltham), Louise Ellman (Liverpool Riverside), Bill Etherington (Sunderland North), Mark Fisher (Stoke-on-Trent Central), Paul Flynn (Newport West), Neil Gerrard (Walthamstow), Ian Gibson (Norwich North), Dai Havard (Merthyr Tydfil & Rhymney), Doug Henderson (Newcastle upon Tyne North), David Heyes (Ashton-under-Lyne), David Hinchliffe (Wakefield), Kate Hoey (Vauxhall), Kelvin Hopkins (Luton North), Lindsay Hoyle (Chorley), Joan Humble (Blackpool North & Fleetwood), Glenda Jackson (Hampstead & Highgate), Helen Jones (Warrington North), Lynne Jones (Birmingham Selly Oak), Alan Keen (Feltham & Heston), Peter Kilfoyle (Liverpool Walton), Andy King (Rugby & Kenilworth), Terry Lewis (Worsley), Tony Lloyd (Manchester Central), Christine McCafferty (Calder Valley), John McDonnell (Hayes & Harlington), Alice Mahon (Halifax), George Mudie (Leeds East), Doug Naysmith (Bristol North West), Gordon Prentice (Pendle), Ken Purchase (Wolverhampton North East), Malcolm Savidge (Aberdeen North), Philip Sawford (Kettering), Brian Sedgemore (Hackney South & Shoreditch), Clare Short (Birmingham, Ladywood), Dennis Skinner (Bolsover), Geraldine Smith (Morecambe & Lunesdale), Gerry Steinberg (City of Durham), David Taylor (Leicestershire North West), Desmond Turner (Brighton Kemptown), Joan Walley (Stoke-on-Trent North), Robert Wareing (Liverpool West Derby), Mrs Betty Williams (Conwy), Mike Wood (Batley & Spen). Tellers for the rebel amendment were Angela Eagle (Wallasey) and George Stevenson (Stoke-on-Trent South).