'The world's changed. So must the NHS'

Alan Milburn faces a Commons revolt over foundation hospitals. But he's certain it's the right policy, says Andy McSmith

The Government is limbering up for its first big Commons confrontation since the Iraq war. Dozens of Labour MPs, and all the big health unions, have declared their opposition to a Government proposal to allow some NHS hospitals to convert to a new status as "foundation" trusts, which have greater freedom in recruiting staff and managing their own affairs.

On Wednesday, there will be a revolt by backbench MPs. At one stage this looked as if it could be even bigger than the Labour rebellion over Iraq.

But now, some of those who have private doubts about the legislation are saying that they will vote for it anyway because it has been so watered-down by the Government that it does not amount to much.

Even the Health Secretary, Alan Milburn, concedes that the Bill now before MPs is very different from the original proposal. The biggest change to come out of his talks with Labour MPs is that a scheme which was going to apply only to a handful of top hospitals is to be opened up to them all within four or five years, with extra government help for the weakest applicants, thus dealing with fears that he was creating a "two-tier" NHS.

But on the big point, Mr Milburn is determined to have his foundation hospitals, and is quietly confident that he has the votes to get his legislation through. And the Health Secretary is adamant that the change is so big that it bears comparison with the creation of the NHS.

Speaking in his Whitehall office, he said: "It is true that the Bill is a better Bill as a consequence of the discussions I have had with Labour colleagues over the course of the last few months, but it is still a big change.

"This is a controversial policy, I understand that, but it's the right policy. If you want stronger public services, you have got to preserve them by changing them. That is a very, very difficult thing to do. You have got to change them not because the NHS has failed, but because the world has changed.

"We live in a different era. People expect services that are responsive and which offer them choice. What you can't do is pretend that this century is the same as the era of the ration book, when the NHS was created."

Mr Milburn made light of his bruising encounter with the Chancellor, Gordon Brown, who insisted that any money that foundation hospitals borrow privately must count as part of the NHS's overall total, which is kept within a limit set by the Treasury.

This is not a great problem, according to Mr Milburn, because the NHS is not suffering from a shortage of capital, and there are rules that will prevent a foundation hospital from borrowing excessive sums, thereby limiting what is available for NHS hospitals.

Trade unions have also raised fears that foundation hospitals will poach staff from other NHS hospitals by offering better pay and working conditions. Mr Milburn's answer is that the unions themselves agreed a pay package called Agenda for Change, which allows pay packages to vary from one hospital to another.

"They can't have their cake and eat it," he said. "They can't agree to Agenda for Change and extol its virtues, and in the cases of the nurses and the midwives have between 80 per cent and 90 per cent of people voting in favour of it, and then say 'oh it's not a good enough thing to apply to foundation trusts'. If it's good enough for parts of the NHS then it's good enough for all of the NHS."

Mr Milburn also vehemently insisted that the reform is not going to increase the number of private patients in foundation hospitals, which will be restricted by law, and that it will not bring in new charges for patients.

Fears about charging were whipped up by an article written by Tony Blair, which called for "a mixed economy under the NHS umbrella" and "new forms of co-payment in the public sector".

According to Mr Milburn: "More charges for patients is a Tory policy. It's not a Labour one. If the impression from that article is that we say that – either Tony or I – that's completely wrong. Over my dead body."

On the contrary, the people who stand to benefit most from the reforms, he claimed, are precisely those who have not sufficient money to buy private health care.

"There is a class reason for doing this, which is this: on choice, wealthier people have always had the chance to choose because they have had the cash to choose," the Health Secretary said. "The people that haven't, in health care, have been poorer people.

"When the NHS was created, that was a difficult struggle – and recreating it is going to be no less difficult now. It isn't a failure, it's a success story in my view, but it hasn't fully realised its potential.

"But it is simply impossible to get high standards by finger wagging, naming and shaming from Whitehall.

"Those who argue that reform is about undermining public services have got it so wrong. It's about strengthening the public services."

Decked out: main players

In the domestic war, the National Health Service will be a life-and-death issue. These are the key figures that Tony Blair must win over – or take out – if his vaunted plans for NHS reform are to succeed.

Dr Ian Bogle, chairman of the British Medical Association

Influential, but increasingly hostile to the Government, Dr Bogle says: "The crisis of confidence is damaging at every level. Doctors are demoralised."

Dr Liam Fox, Shadow Health Secretary

The formal political opposition, he says: "Despite a huge increase in resources the NHS actually treated fewer patients last year. [It] remains over-centralised, over-politicised, over-bureaucratic and under-managed."

Beverley Malone, general secretary of the Royal College of Nursing

A seasoned campaigner who tells it like it is, Ms Malone says: "The nursing shortage is not sorted. Ask any patient. Ask any nurse. We have to keep blowing the whistle about the shortages and risks to care."

Frank Dobson, former health secretary

Leading Labour's backbench rebellion on foundation hospitals, he says: "The NHS deserves better."

Gordon Brown, Chancellor of the Exchequer

The man with his hand on the closed purse strings, says: "The additional investment that hospitals make ... has got to be kept within the NHS budget."