Blair backs plan for NHS 'superhospitals'

Plans to form NHS "super-hospitals" free from Whitehall control have been approved after Alan Milburn, the Health Secretary, won the support of Tony Blair in a turf war with the Treasury.

NHS trusts will be invited in the autumn to apply for status as foundation hospitals, which will be able to raise money on the financial markets.The Treasury has opposed key elements of the plans, fearing that they will take NHS borrowing off the balance sheet and force trusts to give priority to paying patients.

However, Mr Milburn has now won the backing of the Prime Minister because No 10 sees foundation hospitals as the best way of delivering world-class health services.

Mr Blair also supports Mr Milburn's argument that the plans are proof that the Government wants to back up its £40bn investment in the NHS with sweeping reform.

The Department of Health has published a new document setting out a timetable for the policy. The hospitals will still be "part of the NHS family", working within national standards but not managed by the Department of Health.

Some backbench Labour MPs, including former ministers Frank Dobson and Chris Smith, believe the foundation hospitals would opt out of local health planning.

Foundation hospitals would operate as autonomous public-interest companies, able to raise cash on the financial markets for new wards and equipment and negotiate pay rates locally.