Dobson will lead rebels opposing NHS reforms

Alan Milburn, the Secretary of State for Health, sought to reassure critics of his plans for "foundation hospitals" by unveiling laws yesterday to prevent any future government from privatising them.

But the move failed to avert a scathing attack on the scheme by his predecessor, Frank Dobson, who pledged to lead a Commons campaign against the proposals made in the Queen's Speech.

Critics have claimed the moves – under which top- performing hospitals will be able to set their budgets and clinical priorities – will create a two-tier service.

Mr Milburn said that, because of concerns that the new breed of hospitals were "about privatisation", there would be a bar on them being sold or asset-stripped.

He stressed: "They are there to serve NHS patients, not there to make profits or to distribute dividends. To prevent any future government pursuing a privatisation agenda in the NHS, there will be a legal lock on the assets of NHS Foundation Trusts to protect them from precisely the sort of demutualisation we've seen in the building society sector over recent years or any future threat of privatisation."

Mr Milburn also insisted the hospitals would be "controlled and run locally, not nationally". Local people and recent patients would elect "governors", who would make up a majority on each trust's ruling body. "For the first time since 1948 the public will be genuinely at the heart of our key public service – the NHS," he said.

The reform would help "broach the democratic deficit that has for too long kept the public out where they should have been brought in".

The Health Secretary said: "Our reforms are about giving life to a Labour ideal of common ownership, not resurrecting the corpse of Tory privatisation."

But Mr Dobson said of the plan: "I don't think it will work, I believe it will be divisive and I will do my level best to oppose it at every stage. When I first heard of the proposals for foundation hospitals they sounded to me like a bad idea and the more I've thought about them the more I've concluded they are bad.

"I believe that as presently proposed they would inevitably lead to a two-tier health service with some hospitals getting better and better and others getting worse and worse."

Stephen Byers, the former transport tecretary making his first Commons speech since quitting the Cabinet, said the plans were an example of how fresh thinking could be "embedded in the values and principles of the Labour Party founded over 100 years ago".

Another former cabinet minister, Peter Mandelson, told Mr Milburn: "You seem to be describing an entirely new, imaginative model for the entire public service of this country."

Liam Fox, the shadow Secretary of State for Health, said the foundation hospitals plan was one Labour policy an "incoming Conservative government would be very comfortable with". And he called for all hospitals to be allowed to proceed to foundation status.