Hospitals to lease homes to aged

Hospitals are to be encouraged to take on a new role as landlords for elderly people who are too frail to stay at home but not ill enough to need continuous medical attention.

The idea that foundation hospitals could buy up sheltered accommodation for the elderly is being promoted by the Secretary of State for Health, Alan Milburn, to solve the problem of "bed-blocking" which has bedevilled the NHS for decades. It would become possible once Parliament has passed legislation that would allow the best hospitals to convert to "foundation" status, giving them more control over their finances.

Mr Milburn's Bill, which is due for its second reading on Wednesday, has provoked massive opposition from health unions and MPs. More than 100 Labour MPs have threatened to vote against it. The Tories have also warned that they might vote against the Bill, although they back the idea of giving hospitals more independence. However, it appeared by the weekend that the Government may have made enough concessions to avert a rebellion to match the vote on the Iraq war, when 139 Labour MPs voted against the Government.

Mr Milburn has denied suggestions that his proposal will undermine the principle of free health care or create a two-tier NHS, claiming that its purpose is to free the best hospitals from Whitehall control. He told The Independent on Sunday: "Many of the problems that NHS hospitals have can't be solved inside the hospital. For example, you have got several thousand older people who are occupying a hospital bed when they would prefer to be at home, and are ready to go home, and the hospital wants them to be at home.

"One of the things we will try to encourage foundation hospitals to invest in is supported housing, maybe in conjunction with housing associations and local authorities, because a lot of people want to retain their independence. It's a perfectly sensible thing to do, to free up hospitals beds." Tony Blair also said there would be no two-tier NHS as every hospital in England and Wales would be able to apply for foundation trust status by 2008.

Mr Milburn is anxious to introduce an element of local democracy into the running of the health service, with local people electing members of the boards of governors. People living in the catchment areas of the foundation hospitals may find that when they receive ballot papers for next year's council elections, there will be an extra piece of paper inviting them to become members of the trust which owns the local hospitals. This will give them the power to vote in the elections of hospital governors. The big health unions are lobbying MPs to oppose the creation of the hospitals,.

Brendan Barber, the general secretary of the TUC, said: "The danger is that we're going to see a fragmentation. Foundation hospitals are going to be in an advantaged position, and the more they attract resources out of a limited budget, the more that disadvantages other parts of the system."

Frank Dobson, the former health secretary, has also attacked the scheme on the grounds that it will create unnecessary competition between hospitals. It has also been criticised privately by the Chancellor, Gordon Brown.