Blair scrapes win in NEC vote on foundation hospitals

Tony Blair came within one vote of a humiliating defeat over foundation hospitals yesterday at a stormy meeting of the party's ruling national executive committee.

It took the votes of the Prime Minister and his deputy, John Prescott, to swing the result in the leadership's favour at the early-morning NEC session in the conference's headquarters hotel.

In the end, a motion condemning the controversial plan to give top-performing hospitals more financial freedom was defeated by 16 votes to 15.

Never has the NEC, most of whom are regarded as leadership loyalists, come so close to defeating Mr Blair. His critics at the heart of the party's structure have rarely been able to muster more than a handful of votes. The scale of the rebellion in the NEC underlines the depth of opposition to the scheme and sets the scene for a bruising conference debate on the issue tomorrow. Although party leaders are braced for a heavy defeat, Mr Blair has made clear he is not prepared to water down the plans.

The NEC vote, tabled by the public service union Unison, denounced the foundation hospitals plan as "the end of the National Health Service".

It accused ministers of undermining public confidence in the service and playing into the hands of political opponents intent on privatising public services.

The rebellion was led by union leaders, voting as a group, and supported by left-wingers voted on to the ruling body by constituency parties, including Ann Black, Mark Seddon and Christine Shawcroft.

It provided an awkward reminder for Mr Blair of the regular defeats inflicted on the Labour governments of Harold Wilson and James Callaghan by the NEC in the 1960s and 1970s. And it will be a warning to Downing Street of the emergence of a determined and organised band of critics on the party's ruling body.

Labour sources insisted the victory, however narrow, was what mattered. One said: "We won. They lost. The unions all went in one direction." Sources said the leadership had always expected a close vote because the union representatives had been mandated to oppose foundation hospitals.

Those casting their vote to avert the rebellion included the Secretary of State for Health, John Reid, who will face activists tomorrow, and the party chairman, Ian McCartney.

Mr Blair has risked antagonising his critics on the issue by urging them to try "these new ways of working". He said foundation hospitals would produce an "even better service', helping patients to "good treatment irrespective of wealth".

Frank Dobson, a former health secretary, gave Mr Blair a foretaste of the criticism facing the Government, accusing Downing Street yesterday of secretly plotting to end the health service in its present form. He said a recent meeting at No 10 had mooted the idea of changing the NHS from being a "provider of health care to being a health insurance scheme".

Mr Dobson said allowing foundation hospitals to spend more would widen the national inequalities in health provision. It would also increase regional disparities because trusts in London and the South-east would be able to raise more cash by selling land than those in other parts with lower property prices.

He also criticised plans to set up private diagnostic and testing centres. Hitting back at suggestions that the proponents of foundation hospitals are modernisers, Mr Dobson said: "There's nothing new about the idea the private sector is more efficient than the public sector and the idea competition is the way forward for ever. These ideas are as old as the hills."

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