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Health And Social Care (Community Health And Standards) Bill

Volume 404: debated on Wednesday 7 May 2003

The text on this page has been created from Hansard archive content, it may contain typographical errors.

[Relevant document: The Second Report from the Health Committee, Session 2002–03, on Foundation Trusts, HC 395.]
Order for Second Reading read.

12.41 pm

I beg to move, That the Bill be now read a Second time.

I should inform the House that I have selected the amendment in the name of the hon. Member for Wakefield (Mr. Hinchliffe)

Three years ago we set out our policy on the health service in our 10-year national health service plan. Last April, following the Budget of my right hon. Friend the Chancellor of the Exchequer, I published in the House a follow-up Command Paper, entitled "Delivering the NHS Plan". The Bill implements those plans.

Underpinning the Bill is this diagnosis: the principles of the NHS are right: service is free at the point of use, based on the scale of patients' need, not the size of their wallets. Those are principles to which at least we on the Government Benches hold firm.

Today's health service, however, is the product of decades of under-resourcing. It is the product also of the age in which it was born. If it is to keep pace with demographic change, and indeed with social change, it too must change. The NHS plan sets out the investment and the reforms that are needed to give patients the modern responsive services that they rightly expect. These are clear national standards, devolution of resources, choice for patients and flexibility for staff. It is these reforms that the Bill takes forward.

The Bill strengthens national inspection and the NHS complaints procedure. It modernises NHS dentistry and the welfare food scheme. Should general practitioners vote for a new contract in a ballot, the Bill will legislate for it. The Bill puts power and resources in the hands of local staff and local communities by strengthening primary care trusts and creating NHS foundation trusts. These reforms match the resources that are now going into the NHS and that are bringing about improvements for patients.

Our national health service is the fastest growing health service of any major country in Europe. While in the year before we came to office the NHS budget fell in real terms, by 2008 its budget will have doubled in real terms. That is the difference between a Labour party that is committed to building up the NHS and a Conservative party that is always committed to cutting it back. The hon. Member for West Chelmsford (Mr. Burns) shakes his head, but the situation could not be clearer. The Conservative party's policy document—hideously misnamed "Leadership with a Purpose"—was published at last year's Tory party conference. It boasted:
"Conservatives do not support the tax and spending increases the Government has announced."
Not only do they not agree with that extra spending, they voted against it when they had the opportunity to do so. They now plan to cut that spending by 20 per cent. across the board. That is the Conservative policy for the health service. Members of the Conservative party must be the only people who believe that we can get more out of the health service by putting less in.

The fact that resources are rising in the national health service means that staff numbers are rising too. Nurse numbers are up by 50,000 and vacancy rates are down. For the first time in decades, general and acute beds in hospitals are now growing in number. Waiting lists and waiting times are both falling. That is why the recent report from the independent Modernisation Board rightly argued that the NHS is turning the corner.

This is not the time to cut back the NHS. It is the time to continue to invest in the NHS, and it is also the time to keep pace on reform. The question is how best to go about it. Here again, there is a choice between those of us who believe in reforming the NHS and others who believe that the NHS should now be abandoned. The Bill chooses the former over the latter.

Like all my right hon. and hon. Friends, I stand foursquare behind the principles of the national health service. I do so for the following reasons. With the NHS, we all share in the security-Nye Bevan called it the serenity-of knowing that we all pay in when we can so that we can all take out when we need to, the health of each of us depending on the contribution of all of us. Those were the ideals that inspired the generation of Bevan and Beveridge and they remain our inspiration today. Indeed, in many respects, the case for the national health service, its system of funding and values is stronger today than it has ever been. Now more than ever, we live in a world where health care can do more, but costs more. Since none of us knows when we will fall ill, how long it will last or how much it will cost, having a national health service that pools risk because it is funded through general taxation and is free at the point of use, based on need not ability to pay, is the right way forward for our country. That is the Labour principle.

There is another principle of course. It was spelt out by the hon. Member for Woodspring (Dr. Fox) at the Conservative spring conference just a few weeks ago. It is the principle that the patient pays. As he put it himself, his party plans to develop
"the pay-as-you-go market where patients pay for a single procedure or item of care."
There has been much talk in relation to the Bill of two-tier care. That Conservative policy is two-tier care, and would provide a fast track to treatment for those who can afford to pay and a slower service for those who cannot. Charging for health care is a Conservative policy—it is not a Labour policy. I can tell the House that not one clause of the Bill is about introducing Tory charges. Every clause is about maintaining the NHS as a universal service, free at the point of use and based on need, not ability to pay.

certainly agree with the last thing that the Health Secretary said, but is he aware that in my constituency there is a serious problem with GP shortages? Two practices are short of a couple of GPs, and it is now taking a long time to see a GP. What is there in the Bill to try to address that problem?

Specifically, depending on how and whether GPs vote in a ballot, the Bill makes provision for a new GP contract. When many GPs look at the detail of what is on offer along with the 33 per cent. increase in resources for primary care, they will conclude that it is a good deal for the national health service, and in particular a good deal for GPs. However, may I make one general point to the hon. Gentleman? He said that he supports what I said. The problem for him is that he supports the principle but did not vote that way. When he had the opportunity to back extra resources, precisely to get more GPs into the national health service, he and his colleagues all voted against it

It is not the principles of the NHS that need to be changed it is how it works in practice. One approach is about ends, the other is about means. The Bill preserves NHS values and does so by changing NHS structures. Let me just tell my right hon. and hon. Friends who have concerns about certain aspects of the Bill that the Conservatives want it to be opposed for three simple reasons. First, so that they can claim that Labour could not reform the NHS; secondly, the NHS itself is therefore unreformable; thirdly, as a result, the very first principle of the NHS—care for free—must now go. Whatever they say, the Conservatives do not want NHS reform to happen—they want it to fail. That is their strategy for this Bill, but ours is about strengthening the national health service. The Bill does so, first, by building on the framework of national standards that we have already put in place. It establishes a new Commission for Health Care Audit and Inspection to inspect and raise standards in health care across our country. Patients have the right to know the standards of care in every NHS hospital, and I believe that it is time people knew the standards of care in every private sector hospital too.

For the first time, the new commission will provide independent inspection to common standards in both public and private sector hospitals. With more resources going into the NHS, people have the right to know what they are getting out of it. Far from adding to bureaucracy, as the reasoned amendment argues, the new inspectorate will merge into a single organisation the health functions of the Commission for Health Improvement, the National Care Standards Commission and the Audit Commission, to report on the state of the NHS, the performance of all parts of it, and indeed the use to which NHS resources are being put.

The Bill establishes a sister organisation, the Commission for Social Care Inspection, to do a similar job in social services—to guarantee standards of care for some of the most vulnerable people in our society, and in particular children and the frail elderly. Both commissions are more independent than the structures that they replace. They will both be under a duty to work together to bridge the historic divide between health and social care, which has remained unreformed for too long, so that we have what many of my right hon. and hon. Friends have long argued for: not health care competing against social care, but a single, seamless system of care.

The new commissions, like the National Institute for Clinical Excellence and the national service frameworks that we have introduced, will help raise standards of performance in all parts of the NHS.

I am puzzled, and one or two constituents have phoned me, about the lower-paid workers in the health service—the porters, cleaners and maintenance workers. They are afeard that when foundation hospitals come into being, privatisation will take over, they will be thrown to the wolves-or perhaps I should say dogs, as wolves is not a good word right now and their wages will be halved. Can my right hon. Friend give them a guarantee that that will not happen, and that their present wages will be guaranteed?

Yes, indeed. I do not know what the allusion to wolves was. My hon. Friend was being slightly wolvist. As regards the agenda for change, which is the new pay system for people in the national health service, that will apply in all aspects of the national health service, across every foundation trust. Every part of the national health service will implement it. As my hon. Friend knows, the new pay system that we have negotiated with the NHS trade unions is very good, particularly for low-paid workers. It will guarantee, for the first time in the national health service, not the national minimum wage that applies across other industries, but an NHS minimum wage that will guarantee workers a minimum of £10,000 a year. For many of us, that is not a handsome reward. For very many cooks, porters and cleaners, it represents a real improvement, and it has come about because of the policies and investment that the Labour Government have put in place.

The framework of national standards is a means to strengthen the equity that my hon. Friend asks for in the NHS, to ensure that the quality of care that people receive does not rely on the lottery of where they live.

Will any of that result in digital hearing aids being available to my constituents, who have been told that they will not have them until 2005? The Secretary of State says that the postcode lottery will no longer apply, but my constituents cannot get that important facility until 2005.

The technology for digital hearing aids to be introduced on the national health service has existed for 20 years. It is only under a Labour Government that digital hearing aids have been made available on the NHS, so before the hon. Gentleman starts bleating, he should persuade those on his Front Bench that the best thing to do is what the Labour Government have done, and commit to investment in the NHS.

National standards are helping to overcome the divide between rich and poor-the lottery of care that has existed for too long. It is kick-starting the process of improvement that was long overdue, but ultimately improvement is delivered locally, not nationally, by front-line staff in front-line services.

On the lottery of care and the action that my right hon. Friend is taking to remove it, will he give me an assurance that North Cheshire hospital trust will not be disadvantaged by the proposals, and that the hospitals, and in particular Warrington hospital, will receive all the resources that they need to provide essential patient services?

I know that my hon. Friend works closely with the local health service in Warrington, and she knows that in the past I have visited her town and gone with her to see the local hospital. I can give her those guarantees, because the system of funding will continue to work in the national health service as it does now. The funding will go from the Department of Health down to the primary care trusts. It will be for the primary care trust then to determine which hospital, if it wants to commission services from local hospitals, should get the resources. In most places, such as my hon. Friend's constituency and mine, there is one local hospital, so it would be pretty surprising if the local hospital did not continue to benefit from the extra resources that are going into the national health service.

Where the power needs to be located in the NHS nowadays, alongside the extra resources that we are putting in, is among local people, in order that we get more responsive local services.

May I ask my right hon. Friend about independent lay monitoring of foundation trusts? I understand that patients forums will not be attached to foundation trusts. Can he give me some assurance about lay monitoring?

I know that my hon. Friend has been concerned about these matters in the past and continues to be so. NHS foundation trusts will have an entirely different accountability structure from the present one, where accountability is all upwards to the Department of Health, bureaucrats and Ministers. In future, with NHS foundation hospitals the accountability will genuinely be to local people and to local staff, so it will be an improved form of democracy and accountability within the national health service. Even then, of course, there needs to be some independent scrutiny of how the NHS at local level works.

I can give my hon. Friend the assurance that the local PCT patients forum will have precisely the sort of powers and responsibilities that it needs to ensure that the standard of services in each of the NHS foundation hospitals is as high as possible. That must be right, and we must learn from the scandals of the past, when all too often, because there has not been independent scrutiny and oversight, problems that have occurred and that everybody has known about have not been picked up and properly dealt with.

Foundation hospitals will be inspected by the Commission for Health Improvement, will be regulated by the regulator, will form legally binding contracts with the PCTs, and will also be answerable to the governing body that is elected from self-appointed people in a catchment area, or from patients and staff. Will my right hon. Friend clarify for my constituents how they will know who will be responsible for which decisions? Surely that is at the heart of accountability.

Yes. My hon. Friend's constituents will directly elect the governing body. If she thinks that the current structure of appointments from Whitehall, whether by a Minister or by an independent appointments commission, in any way, shape or form represents meaningful local accountability, I would be surprised. Like her, I am a democrat. I believe in the democratic principle. I am the first to admit that democracy is not always perfect in practice, but it is a pretty good principle.

Is my right hon. Friend saying that when 35,500 of my constituents voted in a ballot in February, when all the non-executive directors were against what the local population wanted, those 35,500 people would be able to vote in their own directors if they disliked the way in which our hospital trust was going?

I am well aware of the situation in my hon. Friend's constituency, and of the part that he played in that successful ballot in getting the hospital to change its mind about some of its proposals. That is a good thing, not a bad thing. If we are honest, every hon. Member knows that all too often in the national health service—the public service to which the public are more attached than any other—the way that local services have gone about public consultation has been shameful.

I am sure that my right hon. Friend is genuinely interested in trying to promote greater local accountability, but will he reflect on the fact that there was a good deal of argument about community health councils, and a good deal of discussion of the new patient and public involvement forums, patient advice and liaison services and so on, and that there is a good deal of concern and confusion in some areas about how they are being introduced? There is concern that the Bill could add lo the confusion about how independent patient monitoring vis-à-vis the foundation trust, not vis-à-vis the PCT, would work. Does he acknowledge that that concern is widely shared and needs more thought, if the Bill goes through tonight and proceeds to Committee?

There is no reason why those detailed issues cannot be considered in Committee or on Report, but let me make one general point to my hon. Friend. Under these proposals, individual NHS patients and members of the community—and, what is more, local members of staff—will for the first time have the opportunity for which they have been clamouring for many years: they will have a say in how their local health service is run. We do not object to that principle for social services, so why should we object to it for health services?

The Secretary of State just mentioned the community representatives in hospitals. I welcome the proposals, but does he recognise that people who migrate towards a particular hospital, either across England or from Wales to the English counties, to take advantage of services there, are part of that community? When we come to the detailed consideration, if the Bill passes into Committee, how will those people be represented?

Obviously, the measures governing NHS foundation trusts apply only to England. The way in which the national health service is run in Wales is a matter for the Welsh Assembly, and rightly so. However, where there is patient movement, it is perfectly possible that patients from Wales who have been treated in English hospitals will have the opportunity to have a say, to vote and to exercise a democratic right. With public services, that must be a good principle, not a bad one.

Does my right hon. Friend accept the fact that there are many of us on the Government Benches who, although we are minded to give the Bill a Second Reading, still have some concerns that need to be addressed—specifically, those involving unfair advantages in staff recruitment, the speed with which all hospitals will be brought up to foundation status, and the arrangements for democratic accountability? Will he give an undertaking that he will continue to address those concerns during the later stages of the Bill's progress?

I give my hon. Friend that assurance. He and I have discussed this issue; he has spoken about his local area and I know that he has concerns because, rightly, he wants to ensure that if there are opportunities for NHS local services to be improved, that improvement should be available not just in some areas but in every area. Of course we will consider the proposals that are made and the discussion that takes place.

Can my right hon. Friend tell me what is in the Bill for the people whom I represent in Bristol—an area of considerable inequality in health—when the United Bristol Healthcare NHS trust has no stars, and people in the south of Bristol, which forms part of my constituency, have been campaigning for at least 30 years for a community hospital? Will he confirm that the regulator will not have the power to top-slice the NHS investment budget, thus giving foundation trusts an undue share of the cake?

On that specific point, I can give my hon. Friend an assurance, but, if she will allow me, I will come to that subject later; she has raised it before, and so have other hon. Members. She asked me what was in this for Bristol. Many of the other measures in the Bill, most notably the new Commission for Healthcare Audit and Inspection, will make a real difference, particularly in areas such as hers. She has often spoken to me about the problems in Bristol and the wider Avon area, and she knows that we try to put additional assistance in there, and that we shall make further assistance available, especially in areas such as hers, where some hospitals are struggling at the moment.

One of the great myths that sometimes pervade the debate about the national health service is that we have a one-tier health service today. We do not. Some hospitals are good, some are poor and some, sadly, need to improve. Each of them has a different starting point, so we need a different approach. It is perfectly reasonable to say that those who are doing reasonably well and have a track record of success have the ability to exercise freedom responsibly. Others, including some in my hon. Friend's area, need help and support and, where necessary, more intervention, including extra financial assistance—and that is what we plan to provide.

The Government are going in the right direction, but there is some poetic justice here, in that the Secretary of State is being attacked in the same terms as the Labour party used to attack us when we were trying to free up the system. On reflection, does he not think that we should take that into account when we conduct our debates on this matter in the House? He is facing exactly the same charges about privatisation and two-tierism as we did.

Support from the hon. Gentleman is about as welcome as myxomatosis in a rabbit hutch—although I hope that it does not have the same deadly consequences. The fundamental difference between what happened then and what is happening now is that in the internal market there were no national standards, the resources were not going into the national health service, and there were not the means to improve every NHS hospital. That is what we have put in, and that is what the Bill continues to do. It is simply not the case that this is some sort of reinvention of the Conservative internal market. For reasons that I shall come to in a moment, this is not about more competition; it is about ensuring co-operation and raising standards across the whole NHS.

I shall give way to the hon. Gentleman, and then I shall make some progress.

What would the Secretary of State say to constituents of mine in the greater Portsmouth area whose hospital, despite the best efforts of the staff and the management, who are trying to turn round a failing situation, is still carrying forward an inherited deficit that is retarding patient care? What is in it for them, when they have been told that they cannot aspire to foundation status for at least five years? What assurances can the right hon. Gentleman give to the people of the Portsmouth area to give them the confidence that they ought to have in their health service the confidence that their resources will not be cut, but that resources will be put in to improve their situation?

It is slightly premature for the hon. Gentleman to say that his local hospital has been told that it will not become an NHS foundation hospital for another five years. Nobody has been told that. Thirty-two hospitals have applied at the moment, and I will consider those before too long. Then, no doubt, there will be further waves of NHS foundation hospitals. In the meantime, we will try to get extra resources and support to hospitals that are struggling a bit at the moment, so that they all have the opportunity to acquire the freedoms that go with NHS foundation trust status. That must be right. This policy is not just for an elite few; I want to see it available for every hospital, including the hon. Gentleman's local one.

If the hon. Gentleman and my hon. Friend will give me a minute, I will make a little more progress; they can come in later.

Sustaining improvements in NHS performance can happen only when staff have more control and local communities have a greater say in how services are run. Different communities in our country have different needs. They are not uniform; they are multifaceted and multicultural. For all the great strengths of the NHS, too often the poorest services have been in the poorest communities. For those of u—on the Government side of the House, at least—who believe in the principle of social justice, it is a scandal that, for 50 years, health inequalities between the wealthiest and the poorest in our country have got wider, not narrower. For 50 years, uniformity of provision has not guaranteed equality of outcome.

The best way of tackling this unfairness is to give local people and local staff a greater say over how the health service is run. We have local councils to run local services precisely because we recognise that needs differ between communities. That is why we created primary care trusts and devolved power to them, and why they now control three quarters of the total health service budget.

Far from weakening the role of PCTs, as the amendment in the name of some of my right hon. and hon. Friends argues, the Bill strengthens that role. For example, it gives PCTs control of NHS dentistry and the £1.8 billion that goes with it. It gives them a duty to secure the provision of primary dental services, which they can do either through contracts with dentists or by providing dental services directly themselves.

I believe that the provisions in the Bill will help to plug the existing gaps in dental services. The Bill will also give PCTs new powers to focus on health prevention as well as treatment. The reason for devolving control over health services in that way is to get more responsive services for patients. That is as much the case for hospitals as it is for primary care.

My right hon. Friend has mentioned democracy and PCTs. If democracy, in terms of community involvement, is so important, why are we not starting the other way round and going for the election of PCTs?

As I have said to my hon. Friend in the past, I have no objection in principle to that. However, the issue is one of timing. She knows that in her area as well as mine, the primary care trusts are just up and running. They are new organisations and many of them are embryonic. They have to be able to commission services. Otherwise, the resources going into the national health service will not achieve the right results locally. Primary care trusts must have the ability to decide where services are going, whether that is the acute, community or primary sector. Frankly, they are not at a suitable stage of development to allow them to do that. Down the line, I have no objection whatever to the idea of applying the democratic or foundation principle to primary care trusts. All I would say is that the biggest risk in doing so now is destabilising precisely the organisations that I know she is committed to building up.

I welcome the proposal on foundation hospitals and look forward to my local hospital, Addenbrooke's, becoming a foundation trust in the first wave. However, I seek reassurance about the excellent collaborative networks that have been set up, including, in particular, the East Anglia cancer network. Can he assure me that devolution to local control will not result in the dissolution of those very good networks?

Yes, I can give my hon. Friend that assurance. I want to deal with some of the details in a moment, but suffice it to say for now that, under clause 27, there are obligations that will apply to each NHS foundation trust. This approach is not about: establishing a series of little islands in the national health service, but about ensuring that we raise standards of care across the whole service. I have always enjoyed visiting Addenbrooke's, and, as she rightly says, it is clear that its clinicians and managers want to collaborate with others to improve care for patients. Nothing that we do will get in the way of such collaboration or co-operation.

Does the Secretary of State agree that one of the elements of our multi-tiered NHS is that 300,000 people last year had to dip into their savings, without insurance, to pay for their own operations? That represents a threefold increase since the election. Does he agree that the Government's health policy will not have succeeded unless that number is reduced by the next election?

That is precisely why I want to solve the dilemma of people who are forced to choose between waiting for treatment and paying for it. The problem for the hon. Gentleman is that that is his party's policy—it wants more people to pay for treatment. That is what the hon. Member for Woodspring set out in his speech and it is what the Conservative party believes in.

Is it not the case that the hon. Member for Woodspring (Dr. Fox) not only wants people to dip into their own pockets, but wants other taxpayers to subsidise them?

Not for the first time, my hon. Friend is absolutely right. It is sorely tempting to pursue that point in detail and at length, but given the other issues that we have to deal with it would probably be wise not to give way to that temptation.

I shall do so in a moment, but let me make a little bit of progress, if I may.

It is still not certain that my right hon. Friend will get that vote, to be quite honest.

One of the problems that I have encountered over the years is that the consultants and surgeons have far too much power and determine the success of a hospital. In my constituency, when consultants and surgeons see somebody in their hospital and tell them that there is a nine-month waiting list, they often also tell them that they can see them three weeks later in a private hospital. Is it not about time that we took away some power from such consultants? How will foundation hospitals achieve that? It seems to me that they will give consultants more power, not less.

I shall reserve judgment on that matter.

I know that my hon. Friend has a close working relationship with Dryburn hospital in Durham city and that, like me, he is full of admiration for the work of its consultants. Overwhelmingly—this is not true of everybody in any walk of life—consultants do a very good job of work for the national health service and NHS patients. However, if this is a public service, it must be right that the public receiving it have a greater opportunity to have a say about how it is run. Services should not be run only by professionals. I agree with him. I think that the professionals should have a say and that we should have some humility about that. I do not treat a single patient; thank heavens for them as well as for me! I do not manage a hospital or a health centre. The people out there do that, and it seems to me that they should have some more power and control. Equally, surely the communities that receive these public services must have a greater opportunity to have a say. That is precisely what the NHS foundation trusts are all about.

I should like to move on, if I may, because I have taken a lot of interventions.

It is very tempting to give way to the right hon. Lady, but I wish to move on.

In this country, the NHS has for 50 years provided good care to millions of people, but it was formed in the era of the ration book. People expected little say and had precious little choice. Today, we live in a different world. Whether we like it or not, this is a consumer age. People demand services that are tailored to their individual needs. They want choice and expect quality—we all do it and we all know it. Those changes cannot be ignored, they are here to stay and they challenge every one of our great public services.

There is a choice about how we meet that challenge. Some say that we can do so only through the market mechanism of forcing patients to pay for their treatment. For reasons of equity and efficiency, we say that patients should not be forced out of the NHS to pay for themselves, but should be able to stay with a tax-funded NHS that is reformed and capable of providing the more responsive and modern health care services that people rightly expect.

Today, however, the NHS is controlled from the top down. If it is to be more responsive, it needs to be run from the bottom up. It cannot be right that while Whitehall is free to direct every hospital to do everything from how to cook turkeys to how to wash the bed linen—such instructions have been issued in the past—hospitals are not free even to appoint their own doctors or nurse consultants without approval from somewhere else further up the command chain. An organisation employing more than 1 million of the most highly trained, dedicated people in our country simply cannot be run in that way. Day in, day out, we put our trust in the hands of those front-line NHS staff to provide services. It is surely time that we trusted them with greater control over how those services are designed and run. It is time that we trusted local communities, too, so that they can hold those services to account. Together, NHS staff and the communities that they serve are in the best position to deliver the more responsive patient-focused services that the modern world demands.

I agree with everything that my right hon. Friend says about the importance of having more flexibility in the NHS and that local decisions should not have to be agreed nationally. However, he still has not convinced me that his way of doing that is the right way in respect of foundation hospitals. Surely, we have self-governing trusts at a local level. Why cannot we start where the inequalities are greatest, in areas such as north Stafford shire, where we have experienced inequality of health and are waiting to add to the investment that we have already received from our Labour Government? Why can he still not convince me that foundation hospitals are the right model to proceed with?

The right hon. Lady is already on her feet, but if I can take fewer interventions for now, perhaps I shall make a little progress.

My hon. Friend will find that when we give the go ahead—I want to be able to do so—for the first wave of NHS foundation hospitals, many of them will be in precisely the sort of areas about which we should be most concerned. They include the poorest communities, such as Liverpool, Bradford, Sunderland and Doncaster. Those are hardly the most affluent parts of the country. She is right about local health inequalities, but if we are to address them the issues must be dealt with locally and not nationally. With the best will in the world, we have tried for 50 years to deal with them from the top down with a one-size-fits-all approach, but what has happened to health inequalities? The gap has become not narrower, but wider.

I should like to refer back to the issue of networks. Addenbrooke's hospital is situated in my constituency. If it or other NHS trusts want to work with other hospitals and bring them together in a network, as an alternative to individual NHS trusts becoming individual foundation trusts, will the legislation permit them to do so? As it stands, it suggests that one NHS trust equals one NHS foundation trust, and I want the Secretary of State's assurance that networks are able to seek foundation status.

The hon. Gentleman has read the Bill carefully, and he knows that as drafted it does not permit that. If it is a matter that he wants to address, we shall consider it. It is wise, however, to caution him that we should not run before we can walk. We want to establish the principle, to ensure that it works, and to make it widely available across the national health service. There may be different ways of applying it—I do not know—but at this stage, on Second Reading, the Bill is about establishing the very principle of how we move forward with NHS foundation hospitals.

My right hon. Friend will be well aware of the concern that foundation hospitals may be able use their flexibilities to poach staff, thus damaging other hospitals. Will he give an assurance that if my local Derby hospitals achieved that status, they would operate the "Agenda for Change" agreement in the same way as other hospitals? In particular, would they be required to consult the other local hospitals that my constituents use if they were to employ the flexibilities within "Agenda for Change" to seek to improve rewards for staff, so that there would be co-operation about the local staffing network in local hospitals?

My hon. Friend, who is concerned about these issues, knows that the "Agenda for Change" pay system is a very good deal, and, like me, welcomes the fact that in their ballots the Royal College of Nursing voted for it by more than 80 per cent. and the Royal College of Midwives voted for it by more than 90 per cent. I look forward to the other trade unions, including my hon. Friend's union—Unison—and Amicus, getting on with their ballots so that we can get the "Agenda for Change" pay system implemented as soon as possible. When it is implemented, it will apply across the piece in every part of the national health service, whether in an NHS foundation trust or an NHS trust.

With our national frameworks of standards and inspection in place, our reforms are about opening up the system—

I shall not give way to my hon. Friend for a moment or two, if he does not mind.

Our reforms are about opening up the system so that it becomes more responsive to the patients who use it. NHS foundation trusts are part of that wider reform programme. They are about giving the staff who provide the services—doctors, nurses, managers and other front-line staff—greater control over how they are designed, delivered and run. They are about giving local communities a bigger say. They are about getting more responsive services for patients. That is why organisations such as the British Association of Medical Managers and the NHS Confederation so strongly welcome NHS foundation trusts. It is why doctors such as the renowned Oxford cancer specialist, Professor David Kerr, told us:
"Foundation status will make it much more likely that senior clinicians will become engaged in service improvement; that local solutions will be found to overcome the barriers that stand in the way of optimal care; that patients and corers can have a voice that helps shape their service."
And it is why in places such as Doncaster in Yorkshire, Addenbrooke's in Cambridge, and UCLH—University College London Hospitals—medical committees and staff-side organisations are backing their local hospitals' efforts to become NHS foundation trusts. The policy came about through discussions with staff and managers in the NHS. It has been developed in discussion with NHS hospitals. They say that what they want is greater freedom to innovate—not outside the NHS, but inside it.

I first outlined this policy more than a year ago. Since then, several concerns have been raised about it. Following dialogue and discussion, including with many of my right hon. and hon. Friends, the Bill attempts to address those concerns. Throughout, it gives more freedom to NHS hospitals, but balances those new freedoms with appropriate and necessary safeguards.

First and foremost, NHS foundation trusts will be NHS hospitals. They will treat NHS patients according to NHS principles, but they will have greater freedom to run their own affairs. Freeing NHS foundation hospitals from day-to-day Whitehall control will improve care for patients by encouraging greater local innovation in how services are delivered. As one senior nurse, Hazel Gregory from Aintree hospital, put it last week:
"morale is really high here but if we are allowed more freedom to do the things we want, I can see it going even higher".
I reject the notion advocated by some that the only place where enterprise flourishes is in the private sector. There is a spirit of enterprise in the public sector, inside our national health service, but for too long it has been held back. Releasing the innovation and imagination of NHS staff requires greater freedoms for NHS hospitals.

The Bill frees NHS foundation trusts from powers of direction from Whitehall that have been in place for umpteen years. That will give NHS hospitals the freedom to employ their own staff and to control their own assets. The Bill also gives them the ability to borrow—either from the public sector or from the private sector.

The first wave of foundation trusts is supposed to be a list of the highest-performing hospitals—three-star hospitals. However, given that the three-star system does not reflect clinical performance, what confidence does the Secretary of State have that his choice of the first trusts to receive the privileges of foundation trusts is the right one? Is he confident about the selection system and assessment by the very Whitehall civil servants whom he has criticised?

Do I have confidence in the system? Yes, I do. As I have said to the Select Committee on Health on many occasions, the star rating system is far from perfect. Any system of performance rating in any organisation, in any industry, anywhere in the world, is far from perfect. For the first time, however, the star rating system is making transparent what we already know: that some hospitals are better than others. That is a fact of life that we must address. The way to do that is to ensure that those who are capable of exercising more freedom get the opportunity to do so, then to provide extra help, support and resources into NHS organisations that have fallen behind.

Speaking as a Whitehall-watcher of 40 years' standing, is not this an historic occasion, in that never before has Whitehall striven so hard to devolve and decentralise with so much resistance from so many of us who purport to represent localities?

My right hon. Friend, in his inimitable manner, makes an extremely good point. Nye Bevan once said that the purpose of getting power was to give it away, and that is the principle that must be right in our public services if they are genuinely to be in tune with the needs of the local communities and more responsive in the way that people nowadays rightly expect.

I note from the amendment that we are being invited to decline to give the entire Bill its Second Reading instead of waiting to see the nature of the Bill that emerges from Committee on Report. That is perhaps a strange way of going about parliamentary business. Can the Secretary of State advise me as to what my constituents would lose if other parts of the Bill unrelated to foundation trusts were to be lost?

They would lose the whole Bill. They would lose the new inspectorate, the new provisions for NHS dentistry, and the new cost recovery scheme that ensures that it is no longer the taxpayer that pays for wrongdoing, but the wrongdoer, which is precisely the principle that Labour Members have long argued for. The Bill contains a raft of measures. I readily admit that some are more popular than others, but none the less it is a Bill that is about modernising and strengthening the whole national health service, and doing so on the basis of NHS principles.

Given that the Secretary of State, backed by the Prime Minister, originally appeared to support the principle that foundation hospitals should be free to borrow on the open market, outwith central control, in order to fund the necessary expansion of services, but that he has now submitted to the imposition of a Treasury straitjacket, can he tell the House whether he and the Prime Minister came to be persuaded that the Chancellor was intellectually correct upon this subject, or did they just think it politically expedient to give in to him?

The Bill gives NHS hospitals substantial new freedoms to borrow. They did not have the right to borrow from the private sector in the past but they will have it in future. Hospitals told me that they want to use the extra capital that they will get through borrowing to invest in new scanners, more efficient equipment—

I shall give way shortly, but I have given way many times and many other colleagues want to speak. [Interruption.] I am generous and I hope that others will reciprocate later.

Hospitals have told me that they will use the extra resources to invest in new services not only in the hospital but in the community. Clause 12 provides that they can borrow only what they can afford to repay. To those who say that that will mean robbing Peter to pay Paul, clause 3 makes it clear that the independent regulator, who is charged with policing the way in which NHS foundation trusts work, will have to take account of the impact of their borrowing on the wider health service.

In discharging his functions, clause 3 provides that the independent regulator will have to take account of the Secretary of State's wider obligations under the National Health Service Act 1977, which a previous Labour Government passed to
"provide a comprehensive health service and the effective provision of health services which also must be free of charge".

No, not for a moment or two. I have given way a lot.

Some of my hon. Friends have expressed anxiety that NHS foundation trusts undermine the new primary care trusts. I want to reassure them that that is not the case. National health service foundation trusts will rely on PCTs for their income in the same way as every other NHS hospital. Primary care trusts will continue to have the power to use their resources as they see fit. To strengthen the hand of primary care in general, especially PCTs, they will also be represented on each NHS foundation trust's board of governors.

Hospital will not be forced to compete against hospital. The Bill enshrines co-operation, not competition. When my right hon. Friend the Member for Holborn and St. Pancras (Mr. Dobson) first introduced a legal duty of partnership in the Health Act 1999, he said on Second Reading:
"The Bill will give all the national health service organisations a duty of co-operation, in place of the competition that the Tories tried to force on them".—[Official Report, House of Commons, 13 April 1999; Vol. 329, c. 41.]
I can give the same commitment today. The legal duty of co-operation for which the Bill provides is exactly the same as that in the 1999 Act. Just as the duty applies to NHS trusts now, it will apply to NHS foundation trusts in future.

On Friday, I met representatives of my local primary care trust and my local hospital trust in Barnsley. I asked them how they believed that foundation hospitals would affect the community. They said that they thought that they would be detrimental because the PCT has a substantial deficit, which was carried over from the previous area health authority before we moved to strategic health authorities. The debt is approximately £13 million, which has to be brokered each year. That means that there is less money to go round. They fear that if a neighbouring hospital receives foundation status, it will attract people from Barnsley, who will rightly expect to receive the better treatment. That will draw resources from the area, to the detriment of—

Order. The hon. Gentleman should conclude his remarks. I think that the Secretary of State understands the question.

The Bill does not alter the power of the primary care trust in any way, shape or form. The PCT holds the power. I have found that, in life generally, and especially in the case of public services, those with more money have a bit more power. The PCT will decide where the money goes in my hon. Friend's constituency as it does in mine and in every other constituency.

I did not intend to intervene on my right hon. Friend, but since he has mentioned me, I shall ask a question. If the proposition that all parts of the national health service should co-operate is to continue to apply, why did he tell primary care trusts that he wanted hospitals to compete for their business?

With all due respect, my right hon. Friend knows that that is not the case. He was partly responsible for introducing primary care trusts. They rightly argued that we should have one local organisation that could commission services in a way that was appropriate to the needs of the local community. It is up to the primary care trust to decide where best to deploy its resources. That must be right otherwise we will never get the best services for NHS patients. The Bill's purpose is to ensure that we get the right services to patients.

The Secretary of State has just said that power lies with the primary care trusts. In that case, why will the Bill "democratise the providers", to use his words, and not the commissioners of health care?

I believe that the hon. Gentleman has been present for most of my speech. Perhaps he was asleep for part of it. [Interruption.] It is a long speech because I have tried to answer a lot of question, including many from Opposition Members. I answered the hon. Gentleman's question when I replied to my hon. Friend the Member for Vauxhall (Kate Honey), who is my local Member of Parliament. It was right to answer her question because I ask her many questions. I said that I had no problem with applying the principle of democratisation to primary care trusts but that now is not the right time to do it because the PCTs are not new.

The Secretary of State says that he has no objection in principle to introducing a democratic mandate into the primary care trusts when they are more established institutions. However, is not he creating a dilemma that cannot be resolved? There will be two democratic mandates—one in the NHS foundation trusts and the other in the PCTs. Which will prevail?

The right hon. Gentleman makes a reasonable point, which I shall try to answer reasonably. It depends on the form of democratisation that one would select for primary care trusts. For example, in the Bill, we have opted for a membership structure because the people who become members of an NHS foundation trust will incur specific legal obligations. It must therefore be right for them to opt into those obligations, which would otherwise be imposed on them. There are other forms of democratisation. For example, for primary care trusts, we could choose a model that was based on a local authority area, not least because many PCTs are now coterminous with local authority areas. The right hon. Gentleman looks startled, but coterminosity exists between PCTs and local authorities. If he wants such a proposal to be taken forward and the principle entrenched, I hope that he will vote for the foundation principle. I suspect that the hon. Member for Woodspring will tell us that Conservative Members will vote against it.

I presume that the right hon. Gentleman wants to make a personal statement.

I am grateful to the Secretary of State for giving way a second time, but if he was genuinely trying to persuade us to vote for the Bill on the basis that it is more radical than the policy that we introduced in 1990, he might find a ready constituency on these Benches. The problem with the Bill and the right hon. Gentleman's answer is that he is not persuading us that the measure is an effective vehicle for implementing the policy that he claims to espouse.

My hon. Friend has done that job adequately. I have not argued the case that I suspect the right hon. Gentleman would like me to present. The Bill is not about reinvention in the internal market. He is painfully aware that there were no national standards in 1990—after all, he was Secretary of State at the time and had to grapple with precisely the same problems of trying to devolve power and ensure equity. Every health care system in the world is trying to find ways in which it can ensure equity through national standards and greater responsiveness through local control. The right hon. Gentleman knows that getting the balance right will ensure that health services in this country are more modern, just as people in other countries try to achieve that.

No. I thoroughly respect the fact that the hon. Lady has worked in the health service. However, I shall not give way.

NHS foundation trusts will not be able to make a profit or pay a dividend. There will be a legal lock on their NHS assets, ensuring their continued use for NHS patients, and the proportion of income that foundation trusts can earn from private patients will be capped at current levels. This is the first time that that has happened in the NHS.

NHS foundation trusts will strengthen public ownership, not weaken it. They will be owned and controlled by the public locally, not nationally, so that the relationship between local hospitals and local communities can be strengthened. In no way can the Bill be reasonably described—as some have argued—as privatisation or a step in that direction, through the front door, the back door, or the side door. This is not privatisation; it is democratisation of the way in which our health service is run.

For the first time, instead of the centralised system of Government appointments to hospital boards, there will be direct elections of hospital governors by local people and local staff. Strengthening public ownership by making NHS foundation trusts more locally accountable will particularly help services in poorer areas. It is true that we are starting with existing three-star NHS hospitals, but, as I have said, in time the foundation principle will be extended not just to primary care trusts but to mental health trusts. So far 32 NHS hospitals have applied. I shall make decisions about those applications shortly, and I hope to be able to approve the vast majority.

I am also introducing a new hospital improvement programme, including extra financial support, to help each and every NHS hospital to become an NHS foundation hospital during the next four to five years. By autumn this year, each NHS trust will have a clear timetable. This policy is for all NHS hospitals, not just some. It is not about elitism or two-tierism. It is about levelling up, not levelling down. It is about raising standards in every NHS hospital.

These are the principles on which the Bill is built: community empowerment, staff involvement and democratisation. But money alone cannot deliver the modern, responsive health services that our nation needs. To obtain the best from the money, the NHS must be properly organised. I have heard it said that as the extra investment is now paying dividends in the NHS, no further reforms are needed. It is true that those resources are tackling the historic capacity problems that the NHS has faced for decades, but it is equally true that the NHS must change if it is to give the public the more responsive services that they rightly demand nowadays. That is not because the national health service has failed; it is because the world has changed.

Collectively funded public services are challenged as never before. The right in politics and in the media say with ever-growing conviction that the only way in which to make services more responsive is to force patients to pay for their treatment. They want to prove that the NHS must fail. Our job is to show that it can succeed—to prove that an NHS based on traditional Labour values can give patients a modern, responsive service.

Reform has always been difficult in the national health service. The pioneers who created that service found that. The job of re-creation will be no less difficult, but it is no less necessary. We would be failing both the public and, I believe, ourselves if we did anything other than press ahead with these reforms. This is the era of public service investment. It must also be the era of public service reform.

I commend the Bill to the House.

1.43 pm

Notwithstanding the huge interest on the Labour Benches, there can seldom have been a Bill whose importance has been so over-hyped. I know that nowadays everything that the Prime Minister says must be tinged with messianic overtones, but to describe this Bill as being of monumental historic importance is ludicrous.

We need to see the Bill in its proper context. The language of new Labour usually refers not to the treatment of patients but to the patient's journey—although from where to where has never been very clear. Perhaps the more important journey to talk about in the context of today's debate is new Labour's journey. Back in 1997, Labour's manifesto stated:
"Under the Tories … the market system has distorted clinical priorities … Labour will end the internal market in healthcare … The Tory attempt to use private money to build hospitals has failed to deliver."
Now we see the creation of a different internal market— and, far from being abandoned, the private finance initiative has been elevated to near-religious status under this Government.

Shortly after he took office, the Secretary of State himself famously told a meeting of health chiefs that he would
"come down like a ton of bricks on anyone who has anything to do with the private sector".
He then oversaw the introduction of the concordat with the private sector, and the expansion of primary care trusts to enable the private sector to tender for NHS work. How people change.

In June 2001, the Secretary of State told the House
"by and large, we thankfully have one monopoly provider and that is the NHS. As long as a Labour Government are in power, that will remain the position."—[Official Report, 26 June 2001; Vol. 370, c. 500.]
By January 2002, the language had changed somewhat. He told the New Health Network
"This middle ground between state-run public and shareholder-led private structures is where there has been growing interest in recent years. Both the Right … and the Left have been examining the case for new forms of organisation such as mutuals or public interest companies".
That is a welcome conversion, if we assume that the actions match the rhetoric.

I agree with the point that my hon. Friend is making. The Secretary of State has tried to make out that this is radically different from the thinking that we were developing in the early 1990s. It is not, in fact, but if we support the basic direction in which the Government are going, why do we not vote in favour of Second Reading, try to amend the Bill in Committee and then, if necessary, vote against Third Reading?

As I proceed, I think that it will become increasingly clear to my hon. Friend that, when we believe something is the right thing to do, as we did in the case of Iraq, we give the Government our full support, whereas when we believe that the Government are going wrong—in this case, legislating not just for a timid imitation of what I hoped foundation hospitals might be, but for something that might be to the detriment of patient care—we will not give them our support.

The hon. Gentleman says that the Government's proposals are timid. Does that mean that the Conservative preference is for NHS foundation trusts that leave the NHS?

No. I shall give details later of exactly what we want to see. We were very much in favour of what we saw when we looked at foundation trusts in other countries; it is sad that the arrangements in those countries, which have worked so well, have been so badly nobbled by the Chancellor and the Treasury.

The section of the Conservative policy consultation document, "Setting the NHS Free" that deals with foundation hospitals states:

"Where Labour breaks new ground in this area, they will receive our support."
Why is that?

If the Secretary of State were to make structural changes that might make the implementation of Conservative policy easier, I would welcome those changes. I find it sad, however, that rules and regulations that might accompany such organisational change will move in exactly the opposite direction from that favoured by Conservative policy.

On 10 April, I asked the Government about potential privatisation plans. I said—[Interruption.]

This is the usual behaviour when the Government do not want to hear things. The Chief Secretary to the Treasury in particular should listen to what I am about to quote.

When, on 10 April, I asked the Government about potential privatisation plans, I said:
"I should like to tell the Government about privatisation. The involvement of the private sector is important. We must set the parameters for future partnerships we will need between tax-funding and personal contributions … We should he opening up health care … to a mixed economy … and be willing to experiment with new forms of co-payment in the public sector."—[Official Report, 10 April 2003; Vol. 403, c. 494.]
The Chief Secretary to the Treasury, who is now in his place, immediately shouted, "That sounds like charges." Sadly, I had to agree that it did sound like charging, but they were not my words. They were the words that the Prime Minister used in his February 2003 lecture entitled, "Where the Third Way Goes from Here". The Opposition have not discussed co-payment in relation to the public services. The Prime Minister has very specifically introduced the idea in relation to those services.

My right hon. Friend the Secretary of State mentioned the cancer specialist Professor David Kerr. He told me last week that, despite the progress made with the NHS cancer plan, it can still take between four and six months in some hospitals for a patient with a cancer who has been referred by a GP to get to the point of treatment. A similar patient in an American hospital could go through the patient journey, to use the modern jargon, in four to six days. Professor Kerr told me that he needs the changes in this Bill to allow hospitals to reorganise their cancer services to meet the better standards. Why are the Opposition standing in the way of consultants such as David Kerr, who want to drive up standards?

I suggest that, for every consultant in favour of foundation hospitals, the hon. Gentleman will find many who oppose them, but he makes an interesting point. If he is suggesting that foundation hospitals move in the direction of the American health care system and the benefits that it brings, that is an interesting point of view. I think that he will find that his views are in stark contrast to some of the remarks made by the Chancellor of the Exchequer.

Sadly, the Chancellor of the Exchequer cannot be with us today. Cocooned in his time warp, he opposes what he considers to be dangerous ideological ideas, and the Prime Minister has neither the courage to remove him nor the strength to face him down. The Chancellor, either directly or indirectly, has sought to rubbish any reforming ideology before systematically emasculating any specific policy proposals.

The gap between the Prime Minister and the Chancellor is very clear. I shall give the House the best example of that. In his speech to the Social Market Foundation in February, the Chancellor said that, in health,
"not only is the consumer not sovereign, but a free market in health care will not produce the most efficient price for its services or a fair deal for its consumer."
The Prime Minister said in his speech to South Camden college that choice mechanisms
"enhance equity by exerting pressure on low-quality or incompetent providers. Competitive pressures and incentives drive up quality, efficiency and responsiveness in the public sector."
Both views cannot be correct at the same time. It was into that heady and toxic mix, the battle for the soul of and—perhaps more importantly—the succession in new Labour, that the idea of foundation hospitals was introduced.

Our view on competition and markets is, of course, much closer to that of the Prime Minister. That is because his view is far closer to ours than it is to that of his own Chancellor of the Exchequer. The Opposition have always been supportive of the concept of foundation hospitals as developed in Spain and Sweden, for example. We have visited those countries to look at the foundation hospitals. An incoming Conservative Government would be comfortable with the models developed there, but we do not see them as an end in themselves. Such hospitals would be among the building blocks that we would use to create a more diverse provision of health care that was increasingly independent of state control.

It is therefore sad to see the emasculated version of foundation hospitals presented in the Bill.

Will my hon. Friend tell the House which extra freedoms he thinks that foundation hospitals should enjoy, compared with the garbled model presented by the Government? That may calm Labour Members' impatience, as I think that they have not yet grasped his argument.

My right hon. Friend should know that we can explain the matter to Labour Members, but that we cannot understand it for them.

The emasculated version of what has been established in other countries that is contained in the Bill is not the programme of a bold and reforming Prime Minister. It is a timid and pale imitation of what works elsewhere.

Of course, the radical rhetoric will remain, but the sad reality will change insufficiently. As ever, the proposal has been spun wonderfully, but it will not be sufficient to turn the NHS around. It may well produce the worst of both worlds for the Government, whose overblown rhetoric maximises anxiety about change but whose lack of delivery still further frustrates voters whose taxes have risen but who have seen no clear benefits.

In answer to the question posed by my right hon. Friend the Member for Wokingham (Mr. Redwood), I shall look at the details of the proposed foundation trusts. The first area for concern is borrowing. In May 2002, the Secretary of State said that the intention was that foundation trusts would
"have greater freedom to decide what they can afford to borrow and … be able to make their own decisions about future capital investment."
What will foundation trusts in fact get? They will have a limit imposed by the regulator, and that limit will be reviewed annually. If a foundation trust were a freestanding organisation in the voluntary sector or the private sector, there would be no one imposing a limit. Each borrowing need would be reviewed on its merits, and the lenders would decide whether to advance the money. In the private sector, limits are negotiated, not imposed—at least, they are not imposed on well-run organisations.

An annual limit is just laughable. What about the longer-term security and planning that we were promised? What happens if the foundation trust comes up with a good idea to expand services during the year? Before it can proceed, a hospital wanting a new MRI—magnetic resonance imaging—scanner, for instance, will have to tell patients that it must wait until the following year to find out what borrowing the regulator will allow. What kind of freedom is that?

When a foundation trust gets its borrowing limit—determined by the regulator—where can it go for money? It can borrow money, but it has little real freedom as to where and how it borrows. How does that compare with the freedoms in the voluntary and private sectors? The private sector can create floating charges over its assets. Foundation trusts will be debarred from that. The private sector can enter into asset financing deals, but foundation trusts will have to ask permission from the regulator if the assets are protected property. Will scanners, for example, be protected property? Will foundation trusts have to get the regulator's agreement every time they want to improve medical equipment through the year?

Given those restrictions, it would be very surprising if foundation trusts could borrow from the private sector, as the Secretary of State has suggested, unless the Secretary of State was willing to underwrite their liabilities. That may have been what he wanted originally, but the Chancellor of the Exchequer denied him that.

The real damage produced by the borrowing restrictions will be found in the effect that the system will have on non-foundation trusts. The Chancellor's emphatic ruling that foundation hospitals will be able to borrow only within the total NHS budget has confirmed the fears on all sides as to what the Bill would mean in practice. The Chancellor has made it perfectly clear that, if any foundation hospital wants to borrow more, other hospitals inevitably will get less. The Bill will create a dog-eat-dog culture, in which financial growth in foundation hospitals will mean cuts in the budgets of hospitals elsewhere. Progress in foundation hospitals will inevitably be at the expense of patients elsewhere.

I had expected Labour Members to want to intervene at that point, but none seems to want to do so.

I shall intervene on the hon. Gentleman, as I have a simple question for him. Will he confirm that, in his wonderful world of free, independent and privatised medicine, he wants foundation trusts to have completely unregulated borrowing capacity? Will he confirm that he wants them to be utterly unfettered? When they borrow to the point that they go bust because they cannot make the repayments, what will he do to protect patients?

When the model of foundation hospitals was first proposed, the freedom to borrow was exactly what the Prime Minister put forward as one of the biggest attractions for hospitals in becoming foundation trusts. The Chancellor of the Exchequer nibbled the Prime Minister's plans, and that is why we have the version in the Bill today.

The second real disappointment is the independent regulator. Ostensibly, that office is meant to diminish the influence of the Government on foundation trusts. However, the Secretary of State appoints the independent regulator and can remove them from office. He also sets the pay and conditions and determines the pension allowances and gratuities of the independent regulator, who must report to the Secretary of State as he may require. A trust may apply to become a foundation trust only if the Secretary of State supports the application. In short, the regulator is hired, paid and fired by the Secretary of State: in what sort of new Labour parallel universe could that ever be described as independent?

Many hon. Members know that I have reservations about the Bill. However, the hon. Gentleman seems to argue for a system in which hospitals are entirely free from Government control. Under that system, would hospitals be allowed to charge for health care?

No, we want hospitals to have the freedom to borrow according to their own plans and their ability to persuade lenders to supply the money on that basis. That is what happens in other countries. It is absurd to suggest that those who run hospitals in this country are incapable of being subject to the same financial discipline as in other countries, where foundation hospitals have much more freedom and often produce better care than in the United Kingdom. The first two elements of foundation hospitals overseas—the ability to borrow and freedom from political interference—are missing from the Bill.

What about the next criterion—the ability to determine pay and conditions? The scope of the freedoms in the Bill is entirely unclear in practice. The Secretary of State has told managers that they will have
"the freedom and flexibility within the new NHS pay system to reward staff appropriately";
but in talking to the trade unions, the clear impression is given that any such freedoms will be strictly limited. The position of consultants and GPs remains utterly unclear, as a result of the Department of Health's mishandling of the negotiations.

How will the new foundation trusts be run? It is all very simple, so let me explain it to the House with reference to paragraphs 3 to 5 of schedule 1, which set out the minimum eligibilyty criteria for the membership of a foundation hospital. Members must include individuals drawn from the public, "the public constituency", and0individuals from the staff, "the staff constituency". The public constituency may include members who are eligible because they have attended an NHS foundation hospital as a patient or a carer. No time limit is specified in the schedule.

Schedule 1 also requires foundation hospitals to have a board of governors. Paragraph 7 stipulates that the public and staff constituencies should elect representatives to the board of governors—[Interruption.] I am explaining the position because the House might find it interesting to find out where it goes from here: how will it work, who can stand for election, who can vote, qnd what will the constituencies be? I shall provide an example.

The hon. Member for Bristol, East (Jean Corston) is no longer in her place, but earlier she mentioned the hospitals in her constituency. If the Bristol royal. infirmary were successful yn achieving foundation status, how would local governance work? The hospital takes patients from my constituency of Woodspring, from Weston-super-Mare, Northavon and Kingswood, as well as the four Bristol constituencies, so presumably anyone who has ever been a patient in those areas could stand for the board and have a vote. Presumably, anyone who had ever been a carer for anyone in those constituencies could do the same. The hospital serves several primary care trusts, so presumably anyone in those areas could also stand or vote in the election for the board. Doctors from outside the area might have referred patients to the hospital, so they could presumably stand and be voted on to the board, too. That could be repeated for all three hospitals in the city—chaos three times over and all because there are no definitions in the Bill. Who on earth will determine the electorate? It is not clear in the Bill. Who will organise and pay for the elections and how much will they cost? No one will have time to treat patients or run the hospital because everyone will be running for election.

It is illogical to have elections for the provider, but not for the commissioner. If there is a role for local governance, it should be for the commissioners of health care—the primary care trusts—which have a clearly defined constituency. They should be the elected body. As was pointed out, however, the Bill will create local governance for the providers—though it is unclear how exactly that will happen—which is later likely to lead to a clash with the body that genuinely represents the commissioning process. The Bill is entirely upside down. It is completely the wrong way round and will result in absolute bureaucratic chaos.

We are concerned about two further issues. First, the relationship with the private sector is utterly at odds with the Government's stated intent. Clause 15 states that the proportion of income that a proposed NHS foundation trust can derive from private charges must not increase from what it is now—not from the present level, which is what the Secretary of State said, but from the present proportion. That means, for example, that if a foundation trust borrowed to install an MRI scanner and wanted to sell any extra available time to the private sector, it could not do so if it exceeded its current proportion. However, a private hospital could install an MRI scanner and sell any extra time to the NHS. Surely that is not what the Government intended, but it is exactly the consequence of what is in the Bill.

The final issue is eligibility. We were first told that only three-star trusts—perhaps a dozen—would be eligible, on the basis that only they would have the necessary management skills. From the outset, the Conservative party called for all trusts to be given the opportunity to take part. Pressure was applied and the number was increased to about 30. Then came the accusations of a two-tier system from Government Back Benchers, and the Government then announced that all trusts attaining three-star status could join in. This week we heard that all trusts would be able to join in because they will all have reached three-star status by 2008 and that the Government will give £200 million to the management to ensure that they all do—no doubt by fiddling the criteria. What a charade. Why not simply dump the pretence of the star-rating criteria, admit that all trusts should be eligible and consider each on its merits?

As with all Bills, some elements—for example, the single regulatory body, which Conservatives have called for since the Government reforms began—will gain support from all parts of the House. We welcome the extension of the Commission for Health Improvement, but we believe that it is not sufficiently independent of the Government. If the Bill secures a Second Reading, we shall work with other parties to attempt to alter the provisions substantially here and in the other place. We want to explore the recovery of charges further and we also believe that the provisions on dental care require further consideration.

Overall, we believe that health care should be much more responsive to the individual wishes of patients as consumers, and that politicians should be taken out of the running of the NHS. We believe in greater diversity of provision and greater freedoms for health professionals to utilise their skills free from the target culture that is suffocating the service. We wanted foundation hospitals with real freedoms to borrow, real freedoms over pay and conditions and real freedom from Government interference.

I have long wanted to see in this country the successful adoption of methods used abroad to produce better health outcomes than we, sadly, have in the UK. Some have urged us to say, on tactical grounds, how wonderful the Bill is, to maximise dissent on the Government Back Benches, but we will not do so. The Bill fails to provide the real reform that we need. Foundation hospitals cannot borrow freely and cannot set their own pay and conditions. They will be run by a regulator who is entirely controlled by the Secretary of State and they will be governed by undefined people elected from undefined constituencies by undefined voters. They will still be subject to suffocating Government targets through the star-rating system and the emasculation of borrowing powers will create a dog-eat-dog culture within the system. Worse, they will create a bureaucratic nightmare. The Bill is a wasted opportunity. Money will be spent without the necessary reform. Hopes and morale will be dashed. The Government should have the courage to think again and go back to what they originally intended. We cannot support the Bill.

I remind right hon. and hon. Members that Mr. Speaker has imposed a time limit of eight minutes on all Back-Bench speeches.

2.10 pm

I beg to move,

That this House declines to give a Second Reading to a Bill which, by establishing Foundation Trusts and introducing other layers of bureaucracy, would increase disparities between hospitals and detract from the Government's commitment to a primary care led NHS, free from excessive bureaucracy, and believes that alternative ways of encouraging accountability in the NHS should be considered and a consensus established before legislation is introduced.

This is a wide-ranging Bill, and I want to make it absolutely clear that there are elements in it that I support strongly: certainly, the dentistry element reflects many of the Health Committee's recommendations. The dilemma that I and a number of my colleagues have is that, because we oppose certain principles in the Bill as it relates to foundation trusts, we are forced to put forward this amendment, as it is impossible to amend the Bill to address principles that, in our view, are at fault.

If I receive, as Chairman of the Health Committee, one clear message from national health service staff, it is that the Government have delivered record, massive levels of funding, to their great credit. The message to me is: now let us get on with the job; the last thing that we need is more restructuring. If Members have limited time today and cannot read the whole of the Health Committee report, they should just look at pages 9 and 10, which set out the major restructurings in the health service over the last 20 years—there have been 18 different significant restructurings. That is one of the reasons why the results do not reflect what the Government deserve from the investment and the efforts being made currently. Permanent revolution is impacting on performance at a local level. One witness to the Health Committee described the NHS as "an organisational shanty town", with structures and systems cobbled together hastily in the knowledge that they will be torn down again straight away.

The pace of change is so fast that new structures are being abolished even before being introduced: for example, patient forums. When community health councils were abolished, we had a long discussion about patient forums, which have been abolished before they have been introduced. That concerns me, because I was given certain clear assurances at the time of the abolition of community health councils.

The Government's central policy objective in health is for a primary care-led national health service, and I congratulate the Government on their success in going in a direction that should have been taken 50 years ago when the health service was introduced. It is the right direction, and one of the problems that the health service has had, over many years, is that we have never taken that direction. My right hon. Friend the Member for Holborn and St. Pancras (Mr. Dobson) started those reforms and the current Secretary of State for Health followed on. That is to their great credit. We are seeing the results, slowly but surely, of that direction of policy. Suddenly, however, we have a U-turn: the headline at the weekend was, "Superhospitals for all". To me, increased empowerment of hospitals undermines, or will undermine, that central plank of policy, and it entrenches divisions that we need to address rather than make worse.

A little while ago, the Health Committee produced a report on delayed discharges. We came up with the solution that the answers to pressures on the hospital sector lay within primary and community care, not within reforms in the hospital sector. Last summer, I went to my local hospital, Pinderfields general hospital in Wakefield, and I found that, according to the consultants, a third of the people occupying beds did not need to be there. They were not all delayed discharges, although some were; the majority were people who could have been treated, and should have been treated, within primary care. That is the direction that we should take. My personal view is that we are suddenly doing a U-turn and going in completely the opposite direction. I agree with the central point of my hon. Friend the Member for Vauxhall (Kate Hoey), who intervened on the Secretary of State: primary care is surely the natural starting point for new models of social ownership by local people.

No, not when I have only eight minutes. I apologise.

I support the idea of local governance. I imagine that none of my colleagues has spent more time in this Chamber arguing for local governance than I have. I have argued for that solidly, in every speech that I have made, for the past 16 years. I find the current proposals superficially attractive, but when I look at the detail as the Health Committee looks at it, the proposals are unclear and unspecific. The constituency is unknown; we spoke about Bristol earlier, and as has been mentioned, Chepstow people—Welsh people—could end up controlling a Bristol hospital. We do not know how the system will work. It worries me that on Second Reading we lack the detail to which we are entitled from the Government on such important issues. The Health Committee's criticism in respect of this area of governance was about channelling patient involvement and enthusiasm into acute hospitals, as we believe that that will undermine the step change towards primary and community care—a step change that the Government are to be commended on making.

To go to the heart of my concerns, I am a member of the Labour party because I believe in the Labour position on the national health service. I am proud that my party introduced the national health service. I am proud that the core of our thinking is the fundamental equity principle. I worry that the proposals under discussion today will increase disparities between hospitals rather than reduce them. The Secretary of State has offered a number of concessions. For example, we have a five-year roll-out. My view is that that will add to many of the problems. Over that five-year period, in the middle of which we will have a general election, we shall see those disparities occur. Resourcing will be affected. Foundation trusts will have privileged access to capital, and will have the right to retain operating surpluses. The Health Committee asked whether borrowing by foundation trusts would count against departmental spending limits and therefore restrict capital resources available to non-foundation trusts. Last Wednesday, the Chancellor gave the answer loud and clear to the Treasury Committee: yes, it would do so. Just like the internal market, we will have winners and losers. That worries me, and it is not the direction that I expected from my Labour Government.

On staffing, it is not just a matter of rewards. If more rewards are offered, we will see more disparities. Poaching will not just be on the basis of terms and conditions; staff will be attracted to other advantages to be given to foundation trusts. As the Health Committee said:
"Areas of high mobility and workforce shortages will face problems."
Just as school league tables have resulted in the more articulate, middle-class and mobile parents moving their children, foundation trust status will result in more mobile patients being attracted from non-foundation trust hospitals. That will mean lost income and lost services in some non-foundation hospitals.

In the limited time that I have been afforded, I shall conclude with the Health Committee's conclusion that the proposals are
"not … fair, consistent and need to be rethought."
My view is that the policy is wrong. It is a departure from our commitment to a primary care-led national health service, and it resurrects the competitive market ethos, which the Government were elected to get rid of.

2.18 pm

The Secretary of State for Health is fond of saying that only he is in favour of reform. He concedes that other parties are in agreement with the extra resourcing that he is putting in, but he must accept that some on his side are not in favour of reform. The Conservative party may sometimes say that it is in favour of reform, but its proposals dare not speak their name, and certainly dare not speak their price. I therefore hope that the Secretary of State will concede that, in setting out our opposition to his plans, we have at least put forward an alternative, not only in our reasoned amendment but in the policy that we published last year. I have invited the Secretary of State to debate those proposals with us previously, and we started that debate today when we discussed what we will do about democratising and decentralising primary care.

Our proposals are essentially fivefold. We set the Government the following tests in relation to the Bill. Will the reforms concentrate sufficiently on the three Ps: primary care, prevention and health promotion? There is no evidence that this Bill will do that. Will the Government put in place measures to increase capacity in the NHS? Capacity constrains the ability of the health service to provide patients with what they need. At the top of patients' agenda is not more structural change but functional improvement in capacity.

Will there be adequate decentralisation and democratisation of the commissioning side of the health service? That is where the key decisions are made on what to buy, where it is bought and how much to buy in the internal market that still exists in our health service.

Will we see the end of targets, and of the distortions of resource allocation and clinical priority that go with them? Will we see true freedom for all parts of the health economy, with tax-varying powers locally? There is no sign of that in the Government's measure. Yes, we want to see a mixed market in providers, but without either the false elitism or the beggar-thy-neighbour approach that is inherent in the Government's foundation hospital proposals.

May I take the hon. Gentleman back a couple of sentences? He mentioned targets. His comments and the proposed Liberal Democrat amendment suggest that he and his hon. Friends are opposed to any targets at all and that they want accountability for massive spending on the NHS to be taken away completely from the Secretary of State? Is that the hon. Gentleman's view?

There are two points in relation to performance monitoring. First, there should be adequate measures of quality so as to assess the impact on patient outcomes. In the end, that is what matters, not statistics but patient outcomes. Secondly, on the political targets that the Government have imposed for their star-rating system, the Government have never offered a shred of evidence of clinical support for good outcomes related to the achievement of those targets. I invite the Secretary of State to tell me whether there is any evidence in the literature to suggest that meeting his targets leads to a solid improvement in patient outcomes, or whether, in fact, the opposite applies.

I can give the hon. Gentleman a concrete example. It is estimated that 500 patients die every year waiting for a heart operation in the NHS. The shorter the waiting time, the fewer people die. That has come about precisely because of setting a target, focusing effort and getting the good will and commitment of NHS staff. That is why, after 40 years of rising waiting times in the NHS, waiting times are starting to fall, with improved outcomes for patients.

I am grateful to the Secretary of State for choosing cardiology. He should know that the people who die while waiting for their procedure are the urgent cases—those with critical ischaemia, left main-stem disease or severe valvular disease. Clear evidence is emerging that people with those urgent conditions are being forced to wait longer. Instead of waiting for only days, they have to wait for weeks because so many slots have been given over to less urgent cases, the long waiters who also need to be treated but who are political rather than clinical priorities. I can cite for the right hon. Gentleman cardiologists up and down the country who know that their patients are now more at risk due to his maximal waiting-time target. Surely, it is straightforward for the right hon. Gentleman to see that the sickest are not being treated the quickest, because his maximum waiting time targets apply only to the least urgent cases. He must accept that there is a distortion of clinical priorities, and the hon. Member for Wolverhampton, South-West (Rob Marris) should realise that one can have quality inspection and quality standards without distorting either resource allocation or clinical priorities. That is what we want, not the political targets imposed on hospitals.

The Bill shows the Government's obsession with secondary care. It is clear from their language—from schools to hospitals; and it starts with the sham decentralisation and democratisation of the secondary care sector providers. It is sad that secondary care issues dominate the Government's agenda and the Bill. For example, the GP contract is central to the future delivery of primary care, as Ministers will agree, and we expect resolution of that negotiation, through a ballot, while the Bill is still in Committee. Will Ministers give us an undertaking that, if the Bill is still in Committee when GPs agree the new contract—as I suspect they will—the House will give Government amendments proper Standing Committee scrutiny; or is it true, as we have heard, that Government amendments to insert critical clauses on the new GP contract will receive only inadequate scrutiny on Report? I should be grateful if Ministers would give that undertaking when they reply to the debate.

The Government have missed a golden opportunity to do something about the desperate need to increase capacity. I sometimes think that the Secretary of State, having announced that he is putting in more resources, is complacent about capacity. Even if the Government meet their target for 2004 of increased numbers of NHS beds, they will still end up with 3,000 fewer beds than they inherited in 1997.

The Government know that huge amounts of their resources are spent on paying agency nurses over the odds, instead of being adequately used to recruit and retain nurses in the health service. There is a massive backlog of hospital repairs: £3.4 billion, or £117 for every taxpayer in the country. Six years after the Government came to power, less than half the people of this country are registered with a GP.

There is a huge amount to do on capacity. If the Secretary of State is interested in the secondary care sector, why does he not start by legislating to prevent the giving over of vital NHS capacity, through pay beds, to paying patients who jump the queue and thus distort clinical priorities? At a time when the limiting factor is the number of NHS beds available to treat patients, how can the right hon. Gentleman justify, even on the questionable ground that it raises revenue, giving over thousands of NHS beds—the equivalent of three district general hospitals—to treat patients more quickly simply because they have the money? That cannot be right, especially at a time when the Secretary of State is forcing trusts with pay beds to pay over the odds to the private sector to treat NHS patients. That is crazy. The Health Committee told the right hon. Gentleman that it was crazy, yet nothing in the Bill would reverse that situation. Merely keeping stable the proportion of income in foundation trusts from private payers does not tackle that distortion and the unethical situation whereby people jump the priority queue.

What will the Secretary of State do about the commissioning side of the health service? Surely he accepts that the critical decisions in health economies are made in the planning and purchasing of care. There is little point in a sham democratisation of hospitals if commissioners—the buyers and planners of health care—remain unaccountable. In response to a pertinent intervention from the hon. Member for Vauxhall (Kate Hoey), the right hon. Gentleman announced that he is now against that reform. He is against democratising and decentralising control over primary care trusts. That sounds as though he is simply against reform.

There was support for measures that we proposed for the decentralisation and democratisation of PCTs from the right hon. Member for Charnwood (Mr. Dorrell) and, perhaps, from the hon. Member for Woodspring (Dr. Fox), yet the Secretary of State has said that that is no longer his priority. There will not be decentralisation now and the hospital sector will take priority. That is a big mistake.

I have been in the Chamber since the debate began and I am not sure that the Secretary of State actually said that. He said that he would wait until things had bedded down properly. Does the hon. Gentleman agree that there is nothing wrong in principle with the concept of mutuality in health? Although I have some sympathy with his comments about PCTs, why should we not mutualise the hospital sector? Is he prepared to admit that that is a fundamental and new direction, and that it should be followed?

Yes, I am prepared to do that. I shall come to that point in a moment. However, on PCTs, does the Secretary of State accept that, by the time he gets round to some form of democratisation of commissioning, it will be too late? As the hon. Member for Woodspring and the right hon. Member for Charnwood rightly said, there will be an alternative competing democratic interest—a quasi or sham democratic interest—in the hospital sector. Why will the Secretary of State not consider merging the local commissioning function of health care with the existing local authority commissioning function for social services? If he believes that local authorities are fit to commission social services care, why does he think that they cannot commission health care? We supported the integration of commissioning at local authority level. Will he say—he was unclear about this—whether the giving of commissioning powers in health care to local authorities is a model that he supports? He said that it would be destabilising to do so, but I—let alone his own Back Benchers—can think of no policy that is destabilising the NHS more than his own policy of a sham democratisation of foundation hospitals.

If the Secretary of State believes that providers need freedom from overweening Government control through choking targets, why does he not simply drop the targets? If his argument is that foundation hospitals deserve that status only if they are dragged towards a three-star rating by his centralisation, how can it be appropriate to leave them alone once they have achieved foundation hospital status? The truth is—

How, then, would the hon. Gentleman guarantee any form of equity in the system? How can equity be guaranteed if we do not have a National Institute for Clinical Excellence, and if cancer drugs are available in one part of the country but not in another? I thought that he was opposed to that.

The Secretary of State knows that we support NICE. If he is asking a legitimate question about what to do if, under a system of local authority commissioning, people in one area voted democratically for their local authority to have priorities that differed from those in another area, my answer is that that would not necessarily be a bad thing, so long as local commissioners had tax-varying powers to raise resources, if required, from local people. The Secretary of State cannot have it both ways, which is what we are seeking to avoid. He cannot say that he wants local discretion over commissioning, yet the same provision everywhere in the country. We have accepted that if there is democracy locally and tax-varying powers for commissioners, differences will inevitably exist throughout the country, just as they do in the provision of social and other services by local authorities. What is critical is that patients who are rationed against have the ability, with their families, to vote to end that, and that the people with the power to make those decisions have the means and the discretion to raise the resources to meet that local need.

Does the hon. Gentleman agree that the most important factor in considering whether a trust should move to foundation status should be the quality of care that it gives and the clinical outcomes? The basic problem is that the star-rating system is largely a management tool that is concerned with management of trusts, rather than with quality or outcomes as they apply to patients.

Yes, I am more than willing to endorse that entirely. I shall come to the question of what the Commission for Healthcare Audit and Inspection is supposed to be doing in a moment.

For those of us who want hospitals freed from central control, one of the many problems with the Government's proposals is that there are at least three ways in which they are still controlled. In order to get foundation hospital status, they are forced to follow Government bidding on the star-rating system, which relates only to Government political targets and has nothing to do with clinical outcomes. Secondly, they will still be subject to inspection by the new Commission for Healthcare Audit and Inspection, which will be forced to measure performance according to the star-rating system, and according to standards and priorities that are set nationally, so there is no escape. Thirdly, such hospitals will be forced to enter into contracts with commissioners, who are subject to exactly the same national priority setting and political target setting as the rest of the hospitals. So there is nowhere for foundation hospitals to hide from the overweening control of central Government, despite this veneer of freedom.

This point is recognised by the NHS Confederation itself, which one would have expected to be particularly eager to acknowledge the freedoms that the Government offer. Its briefing states:
"Foundations appear still to be subject to most DH data collection and star ratings, and PCTs, CHAI and the regulator will be responsible for a very rigorous oversight of the organisation."
Again, that is through the star-rating system. So there is a problem with the way in which the Government monitor performance, and nowhere in this Bill is that more clearly demonstrated than in the flawed proposals for the CHAI, which will not be an independent body. The Bill makes it clear that it will be forced to assess hospital performance according to criteria laid down by the Secretary of State. They will not be clinical criteria, and there will still be not a shred of the clinical support that is needed for the performance indicators.

I shall give the Secretary of State another example in addition to that of cardiology. Would it give him pause if he read in the published literature that the two-week wait policy for breast cancer patients was damaging their welfare because they were not being referred and had to wait much longer than they used to wait before he introduced that policy? King's College hospital has provided clear evidence that about 40 per cent. of breast cancer patients who are not referred under the two-week wait policy—because diagnosis is difficult, or because some suspicion exists in respect of primary care—have to wait 12 weeks, as they do not qualify under that policy. Potentially, that is killing patients, and the Secretary of State must say whether he will stop the star rating of quality assessments if he is given clinical evidence that it damages patient outcomes. It is a simple question: if he is shown evidence that targets kill patients, will he stop insisting on those targets? [Interruption.] He can answer that question yes or no. His refusal to do so suggests that he has made up his mind that he will carry on no matter what.

What does the Secretary of State do when a hospital with a three-star or two-star rating is subject to a scandal, a bad Commission for Health Improvement report or a very low rating from Dr. Foster? Does not the star-rating system get torn up whenever CHI condemns a hospital for failures? Is not the Secretary of State a man with three watches? He has the league tables from Dr. Foster, which his Department partly sponsors, CHI performance ratings and inspections, and the star-rating inspections. Those three never match because only one—the existing, independent Commission for Health Improvement and its rigorous inspections—has any credibility.

I turn to the issue raised by the hon. Member for Stroud (Mr. Drew). We want a mixed economy of providers in the mutual sector, but we have several criteria. That status must not be imposed by central Government; they must not be seen as an elite that is better than everyone else; they must not be given powers to poach staff until all local health economies—through the ability to raise resources locally via tax-varying powers—are able to respond in kind if there is competition through pay at local level for staff. That is the sort of system that we want. We have already put in print our wish to see more mutuals providing services, but they must come forward; the system must not be imposed in a falsely elitist way from the centre. That has been the problem with the Government's approach.

We have set out our policy, and the Government can disagree with it—I know that the Secretary of State agrees with large chunks of it—but it cannot be said that we do not have an alternative reform policy. We have set out the ways in which we disagree with significant parts of the Bill, particularly in respect of the Commission for Healthcare Audit and Inspection and the foundation hospitals proposal. We look forward to working in Committee on those aspects of the Bill about which we agree, but I hope that the Government will change significant parts of it. We will oppose it on Second Reading because there are certain measures in it that we are against. [Interruption.] The Conservatives have not explained what their policy is—we have. The proposals in the Bill differ from our policy, which is why we oppose it.

I pay tribute to the Health Committee, the hon. Member for Wakefield (Mr. Hinchliffe), and the proposers of the reasoned amendment that was selected for debate. All the criticisms were made in measured terms, and we share many of those made in the reasoned amendment by the Select Committee, and by the hon. Member for Stroud and the right hon. Member for Holborn and St. Pancras (Mr. Dobson) in previous contributions. For that reason, we will support the amendment in the Lobby tonight.

2.39 pm

It is always worth reminding the House that, whatever the problems are with the national health service as it stands, it is the most popular institution in the country—more popular than any politician, more popular than the BBC, more popular than the Church, more popular than the monarchy, more popular than the Co-operative movement and more popular than elected local authorities.

I believe that the Government's proposals for foundation hospitals are the very last thing that the NHS needs, first, because they would impose another round of structural upheaval on the NHS, when most of its managers and staff just want to be left alone to get on with their jobs.

Secondly, I believe that foundation hospitals would harm non-foundation hospitals and set back the integration of hospitals with local primary and community health services. Thirdly, foundation hospitals represent part of a reintroduction of competition into the NHS, deliberately setting hospital against hospital in a way that, sadly, reflects the lamentable and failed policy of the Conservatives, who introduced division and expense into the NHS.

Endless reorganisation has harmed the NHS for years. Each round of structural upheaval has followed so hard on the heels of its predecessor that NHS management and staff have seldom been able to concentrate on treating patients. Instead, their efforts have been diverted into contemplating and taking part in another reorganisation. That has caused staff a great deal of stress and dissatisfaction, and it has harmed patients.

We know that change consumes resources and management attention in any organisation. When an organisation is reorganised, output is likely to fall during the process, and to rise again when people get used to the new system. If the reorganisation is a good idea, output may, in fact, rise above the original level, but in the NHS, time and again, just as performance is beginning to pick up, someone comes along with another demand for modernisation, reorganisation and reform, and the whole debilitating process starts all over again.

Since 1997, the Government have introduced revolutionary changes in the NHS—with, I emphasise, the support of the professions. For the first time in the history of the health service, local management is responsible for promoting high-quality treatment. National standards have been introduced for treating illnesses such as heart disease and diabetes, or for caring for patient groups such as the elderly, integrating primary and hospital services to the benefit of patients.

The Commission for Health Improvement has been introduced to monitor, advise and help. Primary care trusts have been established in an effort to give all GPs the advantages once enjoyed only by fundholders, involving nurses and social services in setting local priorities both for themselves and for local hospitals. The training and career development of nurses and midwives has been modernised. The medical profession has accepted the concept of revalidation, keeping doctors up to date with recent developments.

Everyone working in the NHS is now committed to making those things work. Wherever I go, staff say, "Give us a break. For God's sake, just let us alone to get on with the job. We may or may not like the new structure, but we just want to be left alone." They want to be spared another reorganisation and, as far as I can gather from most people who approach me, they certainly do not want this one.

Foundation hospitals would be a cuckoo in the local health nest. With more funds, they would be able, in the Government's own words,
"to offer new rewards and incentives to staff",
attracting from non-foundation hospitals staff who were valuable to those hospitals, thus getting better at the expense of their neighbours. We are told that, with the new, flexible terms and conditions, every hospital would be able to offer better terms and conditions, but that is like saying that everyone can dine at the Ritz— people may have the ability to offer those better terms and conditions, but it is not much use if they do not have the money to do so.

It has also been said that foundation status will be available to everyone in four or five years' time, so that is all right then. Well, it is not. Let us consider this as a marathon race. The back markers will only get to the start line in five years' time, but they are apparently expected to catch up with Paula Radcliffe, who starts in about a year's time, and I do not think it likely that they will do so. She will be permanently in front, and so will the foundation hospitals.

If foundation hospitals' borrowing, which has been mentioned already, counts against the NHS global total, the more that they can borrow, the less will be available for everyone else. If they get their borrowing wrong—we know that some of them will—other parts of the NHS will have to give up money to bail them out of their problems.

That brings me to the problem of competition. If we look at what happened when the Tories introduced their internal market, we can see the damage that competition can do to the NHS. When they introduced the internal market, the bureaucratic costs of hospitals doubled, waiting lists exceeded 1 million for the first time in the history of the health service and hospitals stopped cooperating with neighbouring hospitals. I remember going with my fellow MPs from Camden and Islington to meet the chief executives of the various local hospitals. When I asked, "Why can't you co-operate on this?", I was told, "It's dog eat dog now in the national health service, Mr. Dobson." It will be dog eat dog again if we go through with this.

There is a lot of talk about how the present system stifles innovation. I do not think that it stifles innovation. If hon. Members go to practically any hospital in this country, they will see someone doing something new. The health service's problem is spreading the useful innovations, and evidence shows that competition stifles the spreading of innovations. If a new technique was developed at a hospital, management often believed that it gave the hospital a competitive advantage, so they kept quiet about it; they did not spread it to the next hospital in case that undermined their competitive advantage.

Worst of all, there has been only one reputable academic study of the impact of the internal market on the NHS. It was undertaken by Bristol university, which looked at death rates following emergency admissions after heart attacks, and those who undertook the survey said:
"Our central finding is that competition is associated with higher death rates—in other words, competition is associated with lower quality."
They do not claim that that applied in other spheres; they had not conducted research into other spheres, but neither had any advocate of competition or foundation hospitals. The case for competition and foundation hospitals is largely based on assertion, not on evidence. I do not think that there is much to suggest—I say this as someone who is Labour through and through—that a Labour competitive model is likely to be much better than a Tory competitive model.

2.47 pm

I have been attending health debates for quite a long time now and have spoken in debates before and after the right hon. Member for Holborn and St. Pancras (Mr. Dobson). I have seldom agreed with him, and I am afraid that I did not agree with him this afternoon.

I want to start from the point of view of someone who spoke in January this year in support of the Secretary of State's initiative for foundation hospitals. I have no doubt at all that the policy for greater freedom for NHS trusts that he described when he spoke last May is correct. It is worth reminding ourselves of the words that he used to describe that policy, because he made it clear that his policy was designed to take the freedoms ascribed to NHS trusts beyond what he described as the halfway house established by my right hon. and learned Friend the Member for Rushcliffe (Mr. Clarke) when he was Secretary of State for Health in 1990.

Last May, the Secretary of State said:
"NHS trusts were supposed to guarantee self-governing status. In fact they were at best a half way house and at worst a sham. Trust status promised independence but in practice didn't guarantee it. In reality their legal status—with direct accountability to Ministers—meant that Whitehall continued to hold on to the purse strings … The challenge now must be to genuinely free the very best NHS hospitals from direct Whitehall control."
When I read that, I found myself inwardly cheering, but the problem with the Bill is that it does not follow through the boldness of the Secretary of State's words. The test he established last May was to move the freedom of NHS foundation trusts an order of magnitude beyond the freedoms that were established by the 1990 reforms.

I wholeheartedly agree with the Secretary of State that the lesson of the period between 1990 and 1997, for a large part of which I shared responsibility for the NHS, was that those reforms needed to be taken an order of magnitude beyond the position established by the National Health Service and Community Care Act 1990. The problem with the measures in the Bill is that they do not follow through the logic of what the Secretary of State said last May, nor do they learn the lessons of the history of the period between 1990 and 1997.

It is worth reminding ourselves of the two arguments, both of which I find wholly persuasive, for the words that the Secretary of State used last May. He made clear the first argument in that same speech, when he referred to a visit that he had paid to Spain. He had visited a hospital in Madrid and
"was struck by the fact that the greater independence it enjoyed from the rest of the state run health system had given patients there faster waiting times and improved outcomes despite dealing with a more severe case mix than comparable state run hospitals."
He had been impressed by the benefits for patients, and the clinical outcomes, that resulted from a more diverse, more locally managed model. He was seeking to learn that lesson in health care, and I applaud him for that.

Beyond that—and this is part of the reason that the forces of conservatism are so heavily arrayed on the Labour Benches today—is the fact that this policy is not just about the NHS; it is also, as the Prime Minister has made clear, about a model for reform for public services as a whole. The forces of conservatism have understood the message and are drawing what is, from their point of view, the right conclusion. The Prime Minister has put the Secretary of State for Health in the front line of what he hopes will be a major reform of public services, along the lines of the Secretary of State's speech last May.

I shall quote the words of the Prime Minister in an article published this year entitled "Where the Third Way Goes from Here". It has not gone far yet, but we are always hoping:
"On public services, we need to explore the usefulness of choice and contestability".
The only concession to the right hon. Member for Holborn and St. Pancras is that "competition" is renamed "contestability". The Prime Minister is clear, however. He sees choice and contestability as powerful agents for the modernisation of public services, and goes on to say that
"the principles underlying Alan Milburn's espousal in the UK of community-owned Foundation hospitals need to be applied far more systematically across the public sector."
If the Secretary of State were following through on the power of the ideas that he articulated last May and the hopes that the Prime Minister invests in him, no amount of lines from the Opposition Whips Office would have kept me out of the Secretary of State's Lobby this evening, because that is a great and important cause. I know which side I am on, and it is not the same side as the 100 Labour rebels representing the forces of conservatism. The problem for the Secretary of State is that, unfortunately, the promise of his speech and of the Prime Minister's rhetoric is not followed through in the Bill.

The simplest way to illustrate that problem in a short time is to invite the House to compare the status of a foundation hospital under the Bill with a British university in the time of Lady Thatcher. I know of almost no one who would argue that universities under Lady Thatcher enjoyed unrestrained freedom or that they suffered from too much freedom to get on with their own affairs without constraint from Whitehall. It is surely the case—I certainly believe it to be so—that the last Conservative Government imposed too tight a straitjacket on British universities to allow proper institutional development of higher education in this country. I am pleased to say that my party is learning the lesson of that history and is seeking to support a more liberal regime for universities.

If we compare the freedoms that the universities had in the 1980s with the freedoms that the Secretary of State promises foundation hospitals now, whether it is the freedom—or lack of it—to pay people to do the job that they want to do, the freedom to raise money to develop their institutions for the future, or the freedom to decide their own clinical or educational priorities, we realise that the truth is that universities had greater freedoms in the 1980s than the Secretary of State is promising hospitals now. If this were a first offence for this Government in terms of the gap between rhetoric and reality, I would give them the benefit of the doubt, but they are serial offenders and I do not want to be responsible—

2.55 pm

I rise to support the Second Reading of the Bill and the speech of my right hon. Friend the Secretary of State. I do so based on my experience of the hospital in my constituency, which my right hon. Friend knows very well because he visited it recently, and more generally on the experience of North Cumbria Acute Hospitals NHS trust. Like my right hon. Friend the Member for Holborn and St. Pancras (Mr. Dobson), I want to begin by paying a warm tribute to the hospitals in my constituency, including the ancillary workers, the technicians, the paramedics, the nurses, the doctors and the managers, because every day of their lives those thousands of dedicated people do their very best for all the patients who come into their care.

have had more meetings about the hospital service in my constituency since the general election of 2001 than about any other two issues put together, because, in spite of much excellent work, the huge and considerable improvement, and the massive increases in investment since 1997—initiated courageously, first of all, by my right hon. Friend the Member for Holborn and St. Pancras and carried on by my right hon. Friend the present Secretary of State—we know that all is not well in the hospital service. That is an inescapable conclusion.

We all understand now, if we did not before, that securing better, more consistent high standards of performance in the hospital service requires much more than simply providing enormous increases in cash. Such increases have been provided and will continue to be provided, as the Government have made clear, but that will not be sufficient in itself to get the health service that we are all striving to achieve. Thanks to Government initiatives, we now have a much clearer picture of performance in our hospital service. We know that the present management systems are not delivering consistently within hospital trusts, let alone between trusts. A point that is often missing from these discussions is that the systems' failures not only affect the level of care for patients but inherently prevent hospital staff from giving patients the level of care that they want to provide.

That is why we cannot preside over an inadequate status quo, and this is where I depart from the argument advanced by my right hon. Friend the Member for Holborn and St. Pancras. We know that the best-performing hospitals in our system are excellent; they are outstanding by any international comparison. We also know, however, that there are too few of them, that others struggle, and that some fail to meet the standards that the public, rightly, increasingly demand.

I did not expect in 1997, or again in 2001, that we would be hearing people defend the status quo in a debate about the health service. I am not in the Labour party to defend the status quo, and I am certainly not content with the level of service on offer to many of my constituents at present. It is true that the health service has changed and is changing. I believe that it must continue to change, and those working in it, more so than we in this House, know that, too. They know that, in many cases, they are simply unable to provide the levels of care that they are so dedicated to providing.

There are other reasons for change. We have more knowledge of illness and medicine than ever before, and better medical science, technology and diagnostic systems than ever before. We have increasing numbers of key people in the service, thanks to the policies of this Government. We have the largest hospital building programme in living memory—again, thanks to this Government. All those things are producing sweeping changes in the health service, and the argument that, in the fact of that, management systems can stay exactly as they have been is untenable.

Patients and staff together are rightly demanding better performance and choice. I am afraid that I must tell my hon. Friend the Member for Wakefield (Mr. Hinchliffe), who has long dedicated himself to health policy issues—I commend him for that—that if patients are able to identify a better-performing hospital and choose to go there, who can blame them and say that that is wrong? I would not condemn someone for doing that. That does not undermine the health service: it makes other hospitals perform better and drives up standards. General practitioners and patients should choose the better provision because they are entitled to do so. We need to drive up the performance of hospitals that do not meet the standards, and we are not here to defend them if they do not do so.

There has been much talk of a two-tier system, which would represent a big step forward. I think that we have a four or five-tier system at present. We have some of the best hospitals in the world, but there are some dysfunctional hospital trusts at the other end of the scale, which is simply unacceptable. Staff make the same point. If Labour Members have a fundamental ideological point, it is surely that we demand the best possible care, on the basis of clinical need, that is free for all at the time of use. That is the basic ideological difference between Labour and Conservative Members. The Conservative case descended into confusion and disarray within five minutes of the start of the speech made by the hon. Member for Woodspring (Dr. Fox), although that was not because of anything that we said but because of what his colleagues said about the Tory Opposition's untenable position.

The public do not care how the service is organised and managed. That issue is not fundamental for them, and nor is any ideology. People care passionately about better access, better care and better performance by the hospitals that they rightly admire and love. They rightly believe that all public services should be delivered for the benefit, support and convenience of users, not providers. Some of our managers and trade unions understand that, but, sadly, others do not.

We are told that foundation hospitals will undermine the NHS, but my right hon. Friend the Secretary of State demolished that myth during his speech and support what he said. Several Governments and numerous Secretaries of State for Health have tried to undermine or diminish the national health service in one way or another. It survives and has seen them off and is still here long after they have gone. It is a robust, popular and much-loved Labour creation that is vigorous, durable and more necessary for people today than ever before. We must work to drive up performance for all patients, as many others, including the King's Fund, have made clear. If I have one reservation about the Bill, it is whether the proposals are too modest. My worry is that people in the health service and trade unions will try to frustrate the proposals—

3.3 pm

This has been a rather frustrating debate in lots of ways. It should have been rather interesting with cross-currents and dynamics working within it. Instead, rather oddly, we have heard a Labour party with a centre of gravity that is rather out of sympathy with the principle that underlies the Bill argue for the Bill, while the Liberal Democrats and the Conservative party have argued against it, although their centres of gravity support its direction. That is all very confusing for a simple chap such as me. The Bill is flawed and imperfect, despite the fact that its intentions are good. My hon. Friend the Member for Woodspring (Dr. Fox) made a telling case for how it must be dramatically improved.

I am sorry but I really do not have time.

The Bill will probably not succeed on foundation hospitals because it is too beset by red tape and interference. It will not liberate people in hospitals that achieve foundation status to create the improvements of which I believe that they are capable and that the Secretary of State hopes for. A good idea will end up being damaged by being inadequately effected.

The question of where an institution is accountable has little to do with formal structure and the debate about how the governance structures will affect foundation hospitals is something of a red herring. What matters is where people feel that accountability lies. I was struck by how little difference the creation of supposedly self-governing trusts under Conservative reforms in the 1990s made to accountability in reality. People continued to feel that the system was centrally planned and bureaucratically driven. When I returned from a sabbatical from politics, I was surprised to learn how little the culture of the national health service had changed as a result of the reforms.

There was, however, a dramatic improvement to the accountability of fundholding general practices. Most were small enough and close enough to the patients whom they served to mean that people thought that they were more genuinely accountable. There was no pretence at any democracy, but to echo the vivid way in which the right hon. Member for Copeland (Dr. Cunningham) put it—he would not call it competition but he described something that sounded like Competition—there was a competitive process because general practitioners needed to keep their patients. They responded immediately to what their local patients required.

The Government have drawn the wrong lessons from experiences in the 1990s and the Bill represents a failed opportunity. It contains a good idea that is hamstrung by a lack of faith in it. We have heard about the patients' journey, and the Secretary of State has made a journey in, by and large, the right direction. He talked about that in an article that I found on a website. He said:
"Over these last six years, however, I … have been through a steep learning curve. Whitehall dictat does not and cannot deliver public service improvement"—
that is so right. In the same article, he mentioned his visit to a hospital in Madrid to which my right hon. Friend the Member for Charnwood (Mr. Dorrell) referred. He pointed out how that hospital had delivered dramatic improvements by being given precisely the freedoms that he claims that the Bill will deliver, although we are sceptical of whether that will happen.

There is real gut hostility in the Labour party to the principle that underlies the Bill, and that comes out in the most repellent phrase in the new Labour lexicon: earned autonomy. That phrase is a contradiction in terms because it like saying, "Yes, you can have the key to the door but only if you promise to be back by 10 o'clock every evening and meet only the people who I say you can meet." Earned autonomy is not genuine autonomy because those who have the supposed autonomy will always be on the end of a string that can be twitched at the Secretary of State's diktat, to use his phrase.

My right hon. Friend might not have noticed that while he made his analogy about keys and returning by 10 o'clock, there were many nods of approval among the forces of conservatism on the Labour Benches. Those Labour Members think that the state has a parent-child relationship with the citizen, and that is a telling fact.

That is very revealing. The Bill is a real muddle that will not deliver the benefits that it is designed to deliver, and that also shows why the worries of the Labour rebels who signed the amendment are misplaced: because the Bill will not work. If it did work in the way that is planned, many of their concerns would be justified because it would then remove any pretence of central Government's ability to guarantee equity and the equality of outcome, although that cannot actually be done.

The fact is that if the most highly rated hospitals are given their freedom first, which is what is proposed, and they do much better because of that liberalisation from central control, they will not be catchable-up-with—I think that was the phrase used by the hon. Member for Manchester, Central (Mr. Lloyd) yesterday—by other—hospitals. The aim of the Labour model seems to be to cap the good hospitals to prevent them from getting any better so that the others can catch up, but what sort of outcome is that? It seems that there is something reprehensible about good hospitals getting even better, but I want good hospitals to get much better. We should want all hospitals to improve and genuine freedom will enable that to happen.

One of the Bill's flaws is that the proposal is the wrong way around. If the Secretary of State believes that freedom will liberate and allow improvement, he should liberate the worst hospitals first. That would allow him to appease some of his hon. Friends who are so worried about the Bill, because those hospitals would be able to catch up. The problem is, however, that the Bill will not allow any hospital to do much better. It is a wasted opportunity. If the right hon. Gentleman is to implement his change, he should at least discover the courage of his and the Prime Minister's new convictions and go back to what he said a year or so ago about central diktat not working. What does work is liberating people. If he believes that, let him act on it, because the Bill will not achieve that.

3.11 pm

I am conscious that my last speech in the House was not received with universal welcome on the Government Benches. I rise today in the modest hope that what I am about to say in support of the Bill will be more welcome.

I was the Opposition health spokesman in the 1980s when Lady Thatcher was Prime Minister, which was an immensely rewarding time to be in that role. We used to scour Britain and return to the House with cases of individual patients who had been badly treated and turn them into household names overnight. Now that I am in a more reflective phase of my career, I recognise that although that activity had immense value as a campaigning tool, I am more doubtful about its value as a contribution to national policy.

It is not our job to micro-manage hospital services. Whether we are in Westminster or Whitehall, it is our job to get the structure and funding right and then to provide the maximum local freedom to local NHS units to get on with the job. The nub of the debate is how much local freedom we can provide while recognising—I say this candidly to my hon. Friends—that there will be differences if we give them maximum freedom. We cannot provide local freedom and then deny hospitals the right to be different—not necessarily better, but different.

My right hon. Friends the Secretary of State and the Member for Holborn and St. Pancras (Mr. Dobson) have made immense changes for the better in the NHS. It is remarkable that for the first time in a generation we are experiencing an increase in the number of general acute beds in the NHS, which is dramatically different from the steady decline in the 1980s and 1990s. My right hon. Friend the Member for Holborn and St. Pancras was right to remind us that there have also been major changes of structure. The creation of primary care trusts and the transfer of three quarters of NHS funds into the hands of GPs and community services were particularly strategic changes. They reflect a remarkable shift of power to the people who are most representative of the patient and most commonly in touch with them.

The rational background of the debate is that the NHS is improving and will continue to improve, but can be made better. It is important that we have that background fixed in our minds because nothing makes the staff more demoralised or resentful than the sense that their immense strides of progress are not recognised politically or in public. That background is also important to inform our debate in the House, and in particular, perhaps, on the Labour Benches. What worries some of my hon. Friends is that the rhetoric of reform occasionally appears to imply that the NHS model is failing rather than succeeding. They worry therefore about supporting reform because to do that might be seen as rejecting the basis of the NHS, which they support and to which their electors are greatly attached. I argue, however, that we should support the Bill precisely because the NHS is strong and successful, and the proposals will continue that improvement.

I have every confidence that a public health service free at the point of use will continue to be popular throughout the century. I have to say that I am less confident that any state-run institution will command affection for the rest of the century. The Bill addresses two fundamental issues that the NHS must face if it is to retain that affection. First, we need to give it more local identity and less of a national image, and that is done in the Bill. One of the Bill's most radical elements is that it transfers control and ownership of local hospitals to local bodies that are locally accountable. I do not think that it is fair to argue that that is a step towards privatisation. If any future Government wishes to privatise those hospitals, the first thing that they will have to do is to introduce a Bill to nationalise back the buildings and hospitals. I do not think that it would be politically feasible for any Government to attempt that.

The second issue that the Bill addresses, which is essential to the NHS, is that it provides for local hospitals to exercise more initiative. I read a lot of twaddle in the press in recent years about the superiority of private sector management. The last decade is littered with some spectacular collapses of private sector companies in which the private sector management have appeared to walk away with pay-offs that are in inverse proportion to their success in managing the company. If any one of those scandals had occurred in the public sector, the Government in office would have been swept out of office in a tide of public outrage.

The strength of the NHS is that it has an ethos of professional commitment. It attracts staff by the sense of reward of serving fellow citizens. I am not saying that that ethos is superior to the private sector, but it is valuable. It is worth preserving and should not be reformed out of the system. But the private companies have one strength that we should try to bring to the public service: they have a model that provides the capacity to permit initiative and to promote innovation. The model in the Bill of a public benefit corporation, providing a form of mutual social ownership, is an interesting worthwhile stab at a model that will give local management more room for manoeuvre, wider space for initiative and greater flexibility to reward and encourage innovation by the hospital staff. It is commonplace to complain that there are too many targets in the NHS, but my right hon. and hon. Friends flood the NHS with targets because the only way to get change in a top-down management system is to set national targets. If we want fewer national targets, we have to encourage more local initiatives.

I understand my hon. Friends' concern about the original proposals promoting two-tierism. I encourage them to recognise that they have made progress by getting the commitment to provide more resources and support to underperforming hospitals within five years so that they, too, can become foundation hospitals in that time scale. Frankly, if we want to address the problem of underperforming hospitals, I suggest to my hon. Friends that the best way to get the leverage to do that is to support the Bill. That will force the issue on the Government as a greater political priority and ensure that they tackle underperformance and enable every hospital to have the same chance.

I have spent much of my time—indeed, lately rather more of my time—travelling in Europe visiting our sister parties. I know well the parties of the left in Scandinavia, Germany and the Netherlands. Most of them regard themselves as well to the left of the Labour party, and I leave it to individuals to decide whether that is something to celebrate or regret. But all those parties will be mystified at the idea that handing hospitals over to mutual social ownership is abandoning leftist principles. Most of them have done precisely the same thing. Indeed, I suspect that some of them might welcome such a move as a sign that Blairism is moving to the left, although I would not want to get my right hon. Friend the Secretary of State in trouble by suggesting that that might be true. However, there is nothing in the Bill to cause us trouble by undermining our principles or by being hostile to the values of the NHS.

I want the NHS to be there for the rest of my life. The Bill will give us a better prospect of an NHS that is popular throughout that period and able to fulfil its potential. For that reason, I support the Bill and urge my hon. Friends to do the same.

3.20 pm

Many right hon. and hon. Members were sorry to see the former Leader of the House return to the Labour Back Benches. However, it has enabled us to listen to him speak without the discipline of collective responsibility on a range of issues on which he has always taken an interest. I agree with much of what he said, although I would go slightly further and veer towards the more adventurous approach of the right hon. Member for Copeland (Dr. Cunningham), who thought that the Bill might go a little further.

I agree with the Secretary of State and many others that reform is needed to complement the extra money that is going into the national health service. On the one hand, we all listen to Ministers telling us how much more money is going into the service. On the other hand, I receive letters like this one, dated 28 April, from the chief executive of my local NHS trust. It reads:
"We have around 100 children waiting for therapy and at present children over 5 years old are waiting 27 months to be seen."
That is five-year-olds waiting more than two years just to be seen. The letter goes on to explain that that is
"the rationale behind deciding what cuts to make."
That is why the public are not always convinced by the rhetoric that we hear from the Government that the NHS is getting better.

The problem in my constituency, which neither the Government nor the Bill addresses, is that we get about £84 of NHS money per person, as opposed to the £100 average for England. Sadly, my constituents are not 16 per cent. healthier than average. Until there is recognition that the underlying revenue stream is inadequate and that the formula needs review, changing management structures and giving freedoms on pay and access to capital will make little difference.

I want to caution the Government about the claims that they are making for foundation trusts on bureaucratic freedom, local accountability and access to capital. On freedom, I re-read over the weekend the "Guide to NHS Foundation Trusts", which was published last December. It is peppered with phrases such as "interference from Whitehall" and
"disempowered by top-down control in the NHS."

Yes, under the Bill, the Secretary of State drops out of the picture, but it is not until page 9 that the independent regulator appears. It is like Beethoven's opera "Fidelio", where the hero does not make an appearance until the second act.

The explanatory notes continue the fiction on freedom. In page 2, paragraph 6 states:
"Part 1 of the Bill establishes NHS foundation trusts—a new form of NHS organisation. NHS foundation trusts will not be subject to direction … instead, an Independent Regulator will monitor their performance."
There is a certain economy of truth in that statement. We have only to read clause 14(3), for example, to find that the regulator can require—in other words, direct—a foundation hospital to provide goods and services. We have only to read subsection (7) to see how detailed that direction can be. The regulator can direct what services are to be provided, where they are to be provided and for how long they are to be provided. The independent regulator could be every bit as intrusive as the Secretary of State, though I am sure that he would carry out his duties more politely.

The absence of control from Whitehall is balanced by the sentence in paragraph 1.31 of the December document that reads:
"An NHS Foundation Trust will be required to submit reports and information to the Independent Regulator."
If all that happens is that the address on the envelope containing the endless statistics and reports is changed, administrators will not cheer the Secretary of State for releasing them from administrative burdens. There are about 20 different inspectorates, but it is not clear in the Bill how many of them will be removed. A pinch of salt is appropriate on the freedoms that are claimed under the Bill.

That brings me to accountability. In his foreword to the December document, the Secretary of State claims that NHS foundation trusts
"will be able to gear their services more closely to the communities they serve."
However, as we have heard in the debate, the services provided by the foundation trust will continue to be commissioned by the local primary care trust, not by the board of the foundation trust. People reading what the Secretary of State wrote there, and listening to some of his more extravagant claims, might be forgiven for thinking that the board of governors of the trust will decide what services will be provided.

I was reading the Secretary of State's Social Market Foundation speech last week. He said that the trusts will
"give more responsive services and ensure community services are better met."
They will not. The primary care trust will be giving the more responsive services, if, indeed, that is what they do.

It is also absurd to play with words and call one thing "central control" and the other "local accountability". Local control has the potential to be every bit as intrusive or destabilising as central control if it is not done well. What is proposed in the Bill is a leap in the dark. It is a management style that is virtually untried in this country outside the Co-operative movement and Network Rail. It might be better but it could be worse.

It has been argued that the Government are democratising the wrong body: the trust that manages the hospital, rather than the trust that commissions the services. It is as if the Government had said that the management of my local Tesco should be elected locally; but that the product range, quality and price and the frequency of delivery will continue to be dictated by Tesco headquarters. As my right hon. Friend the Member for Charnwood (Mr. Dorrell) said, there is a risk of the trust being pulled two ways—one by the primary care trust and the other by the governing body. The governing body will claim a democratic mandate and try to reorient the hospital to meeting what it sees to be local need. However, the PCT, which has the cash and the contracts, will be governed by national frameworks, targets, ministerial priorities and the regime from Whitehall. There is a real risk of crossed wires under the proposed regime.

Finally, I shall say a few words on financial freedom, which is likely to be far less than the rhetoric has implied. We are told in the document to which I have referred that trusts will be able to access capital
"based on financial performance and not on the basis of national or local capital rationing by the Department of Health or SHAs."
However, there is some economy of truth there. The capital borrowed by foundation trusts has to come out of the total pot available for health investment, so it must inevitably be constrained by national rationing.

I have tried to work out whether my local hospital will be able to borrow more under the new regime than it receives now in capital from the Department. Under what the Department is pleased to call a transparent-ratio-driven-credit ratings methodology using key ratios benchmarked with leading analysts, my hospital could borrow £12 million in year 1, but it could not do that every year. It is by no means clear whether this will be more or less than is available at the moment.

There could be advantages in the regime, but the Chancellor of the Exchequer and other Labour Members would water them down. I fear that what is left will not deliver the step change in NHS performance that we would all like to see.

3.27 pm

This, of course, is a Second Reading debate. As a Minister, I introduced several Bills, including a couple of health Bills. All those Bills proved well capable of amendment and improvement after I had introduced them. I am sure that this Bill will be capable of amendment and improvement. However, on Second Reading, it is important to consider whether the strategy that lies behind the Bill is right.

The question of how to manage the national health service has been present since the inception of the NHS; that is, to manage the immense resources and to manage the staff, who range from some of the most poorly paid but most motivated public servants to some people who, frankly, are largely motivated by money, to some of the most senior and best clinicians in the world, and to professional managers, who often see themselves as professionals in political football. However, it is not simply a managerial challenge. It is also a political challenge.

There have always been those who want the NHS to fail, so as to be able to replace it with a real private insurance market alternative. With the record resources that are going into the NHS today, both the managerial and the political challenges are as alive as ever. If the Government fail to show that the NHS can deliver, despite the extra resources, those who want to bring down the NHS—people who are quite quiet in the public debate—will be back into the debate with a vengeance.

Foundation trusts represent a radical step. It is one that I think is overdue. It follows from what we have already achieved as a Government, but recognises that what has worked since 1997 will not be sufficient to deliver the quality of services that the patient wants.

The NHS that we inherited in 1997 was chaotic and fragmented. Many parts of it had no NHS identity. Strategic planning was being abandoned and the capital building programme had collapsed. The two-tier NHS was a reality, and not only in terms of variations between institutions. Neighbours in the same street with the same condition were receiving different treatment in the same local hospital. That was the situation produced by the previous health reforms.

In theory, it may have been possible to go from what we inherited in 1997 to something like what is being proposed now. One could imagine building on the successes of local commissioning groups of GPs by going straight to primary care trusts, giving them more freedom to concentrate nationally on inspections, high clinical standards and so on. On reflection, I believe that a little more could have been done earlier in that direction. However, the truth is that the NHS, as we inherited it, needed a central shock to get it back on course. As I saw in overseeing the emergence of PCTs, the divisions and suspicions between, for example, fundholding and non-fundholding GPs could not be overcome overnight to bring people together to form primary care-led bodies that could take over commissioning from health authorities—that was bound to take time. We had to be able to challenge a culture in which every piece of poor performance was always blamed on the shortage of resources, no matter what the real reason was, and in which the component parts of the NHS did not work with each other or even accept responsibility for doing so.

The impact of targets and, yes, central direction was needed then to bring about improvements in waiting times and accident and emergency services, to establish NHS Direct and walk-in centres and to develop cardiac and cancer strategies. Only central direction could make public-private partnerships work and give us the largest ever hospital-building programme. That is why, in every part of the NHS, we see a significant improvement in the NHS that we inherited from the Opposition. However, we must recognise that that approach has its limits. While targets can provide focus and direction, ultimately they stifle innovation and distort performance. Central direction can produce change in key areas of service, but it cannot cover all the multiple challenges of a complex service, nor can it fully motivate staff, whether management, support or clinical, who are now required to take the NHS to its next stage. Indeed, I worry, as some clinicians do, that we are getting to the stage where some things, like the collaboratives, that have produced change will begin to lose their impact and impetus because, at the local level, clinicians do not have the freedom to carry out necessary changes.

The next stage of NHS reform must therefore enable trusts to take greater responsibility for their own activities and development, and that is why we should support the Bill. However, the Bill goes further, as it opens up new possibilities in the NHS for greater community ownership and control. There has always been a wing of the Labour party interested in social ownership, social entrepreneurship, decentralisation and co-operation. Many of us were able to pursue that in local government but have not seen a great deal of it in central Government. Now that we have done so, we should seize the opportunity to put it at the heart of a great public service and advance it further.

The Bill does not do everything, and I shall mention briefly three things that it does not tackle. First, it is important that foundation trust status is offered to all hospitals, but the Bill does not deal directly with failing hospitals. I welcome the promise from my right hon.

Friend the Secretary of State of extra money and support for the Modernisation Agency. Both those things will help, but we must still recognise that there is a need to deal with very poor hospitals. I simply remind him and hon. Members on both sides of the House that the Health and Social Care Act 2001 provided powerful mechanisms for dealing with genuinely failing hospitals where encouragement, support and guidance had failed to deliver. We do not need new legislation to deal with that problem—we need to use the legislation that we have when all else has failed.

Secondly, we need to do more on strategic planning. At the moment, no one is entirely responsible when things go wrong. It is not quite the hospital management, the trust board, the PCT, the strategic health authority or the Secretary of State. If we are not careful, we will still have a system in which PCTs plan from the bottom up, and strategic health authorities sort out problems from the top down. There is a lack of clarity about accountability that needs to be thought through. I simply suggest to my right hon. Friend that if he put PCTs collectively in charge of the work of strategic health authorities so that the jobs of planning from the bottom up and sorting out problems from the top down were brought together, a lot of reservations about fragmentation could be dealt with easily and lines of accountability would be clearer than they otherwise would be. However, those are points that can be considered in Committee. The Bill's strategic direction is right, and many Labour Members will regard it not as a shift to the right but as bringing some good, left Labour ideas on to the agenda for the first time in many years.

3.35 pm

Last year, in a reply to me, the Secretary of State said that it is an abiding joy for him that he is

"not responsible for all things Welsh".—[Official Report, 22 January 2002; Vol. 378, c. 739.]
He also said that he does "not do Wales". Well, the Bill does Wales to a certain extent. I welcome its provisions on review and inspection, as they address quality issues. I hope that the provision of service in the medium of Welsh will be considered, as it came up in a recent conference in Cardiff and was certainly an issue for the outgoing Minister for Health and Social Services in the Assembly.

Under the Bill, Wales will have no foundation hospitals—we have that on the authority of no less a personage than Mr. Rhodri Morgan, newly triumphant in the polls, who said that Wales will be a foundation hospital-free zone. Over the weekend, the Prime Minister, promising a "fairer and better Britain", defended the principle of foundation hospitals—presumably, he meant foundation hospitals in Britain. As we know, he wants all hospitals to be foundation hospitals within five years. I would therefore be grateful if, at the end of our debate, the Minister of State would say whether Mr. Morgan is right that Wales will not have foundation hospitals, or whether the Prime Minister is right that we must have them if we are to have a fairer and better Britain? They cannot both be right—or was the Prime Minister merely saying "Britain" while he lay back and thought of England?

Before the recent election in Wales, Mr. Morgan famously said that he would push for "clear red water" between Cardiff and London. The people of Wales deserve an explanation of the exact place of foundation hospitals in the new Labour push for independence for Wales.

Will the hon. Gentleman share with us his thoughts on foundation hospitals? Does he consider it surprising, given the lead that Wales has taken on the water utility and housing stock transfer by adopting mutual models, that there is not greater enthusiasm for them?

I shall refer to that later in my speech. Unfortunately, given the recent election results, my party is scarcely in a position to think in those terms. If the Prime Minister is right and we are to have foundation hospitals in Wales, I do not see how that can be achieved in the face of opposition from the Labour party in Wales and my party.

We might wonder what the red water of independence might mean for Mr. Morgan. No slouch at spin, he made much in Wales in the past few weeks of the value of political congruence between Cardiff and London. Only a Labour Administration in Cardiff, he said, could work properly with a London Labour Government. But with foundation hospitals, we have an apparent split—a parting of the ways, a downside.

If there is to be clear red water between Wales and England on health, let it be properly thought out. Hon. Members may be reminded of Macbeth's speech in the Scottish play when, after he has killed Duncan, he muses whether he should kill again. He says of the red water:
"I am in blood
Stepped in so far that, should I wade no more,
Returning were as tedious as go o'er."
Macbeth gave it some thought, and look what happened to him. Mr. Morgan might give it some thought as well.

Establishing foundation hospitals in England, particularly in the western part of the country, will have a profound effect on the NHS in Wales. Foundation hospitals will be in a much better position to compete with Welsh hospitals. They will be able to offer better conditions and possibly more advanced clinical work. Given the shortage of medical staff, they will no doubt attract staff from Wales, where individual hospitals' freedom of action is constrained.

One obvious example is the Countess of Chester hospital—an excellent hospital which has three stars, and which will no doubt opt for foundation status soon. What effect will that have on the Wrecsam Maelor and ysbyty Glan Clwyd? The hon. Members for Wrexham (Ian Lucas) and for Clwyd, West (Gareth Thomas) may have something to say about that, although they are not present today. A similar process may take place in the south-east of my country.

We in Wales have a shortage of medical staff, and the National Assembly has responded by extending medical training to the north and to the west. Some newly qualified staff will stay in the locality, but others will move over the dyke. That has always happened. Young people in Wales, newly qualified, will go where the work is. It is a process to be welcomed. Producing and training people such as teachers, doctors and nurses who go on to serve elsewhere has been our historical experience in Wales. That is one thing, but it is quite another deliberately to set up a system that will draw doctors and nurses away from Wales, where health is the worst in the UK. Our fear is that the development of foundation hospitals in England will undermine the policy and strategy of the National Assembly in Cardiff.

What of the effect on patients? A critical mass of patients is required to justify new and expensive treatments. If part of the required critical mass is drawn away from Wales, how will hospitals such as ysbyty Gwynedd, ysbyty Bronglais and Withybush justify spending large sums of money on the latest treatments, when many of their potential patients are drawn over the border?

Some hon. Members will probably say, "So what?" People from north Wales have long been used to travelling for medical treatment to Liverpool, Manchester, Clatterbridge and Gobowen. A constituent of mine recently heroically undertook a £400 taxi drive to Scotland to have a pacemaker fixed. It is an historical fact that we have had to travel far to get anything like equality of treatment, but historical fact is no reason to establish a new system that will entrench that historical inequality—at least, not without a policy response from Cardiff, which is sadly lacking.

A reasonable solution might be found to these problems that would allow policy in England and Wales to differ, while sustaining the less advantaged hospitals in Wales. However, I fear that such solutions are going by default. Hon. Members will know that in establishing the NHS, Aneurin Bevan's great slogan was "Freedom from fear"—freedom from fear that the doctor would not call, freedom from fear that the medicine would be too dear, freedom from fear that proper hospital treatment was not for the likes of us. Our NHS has given us freedom from those fears. We now have access to medical treatment.

Establishing foundation hospitals in England, with no policy response from Wales other than saying no, will not destroy the NHS in Wales, but it will endanger a principle that is close to my heart and the heart of our people—the principle of equity of access. That is reason enough for my party to reject the Bill.

3.43 pm

Although the debate has so far focused on the establishment of foundation trust hospitals and will no doubt continue to do so, there are other issues in the Bill that will greatly improve health and social care for my constituents. I shall say something about foundation trusts, but first it is worth mentioning a couple of the other aspects of the Bill, which I hope are overwhelmingly welcomed by hon. Members.

Part 2 deals with the important matter of quality standards and sets up new health care and social care inspectorates. Lifting standards and the quality of care, inspecting and auditing will be the main function of the Commission for Healthcare Audit and Inspection and the Commission for Social Care Inspection. This Government have done more than any other to drive up standards and improve the quality of care, and these measures will continue those improvements.

We all know about the problems with NHS dentistry. The Bill seeks to address those problems by making it the duty of primary care trusts to provide primary dentistry services and promote oral health. The welfare food scheme is somewhat out of date and does not meet the nutritional needs of its beneficiaries. The Bill will broaden the nutritional basis of the scheme to include fruit, vegetables and cereal-based foods in addition to liquid milk, thus ensuring that children from less well-off backgrounds have access to a healthy diet.

The main question in the debate—at least, it is the main question among Labour Members—is about the proposals for foundation hospitals. I was convinced by the arguments that the proposals would create a two-tier health service, pit hospital against hospital and nurse against nurse, and result in some hospitals poaching staff. I believed that patients would have to travel out of area for less lucrative health care, and that the proposals would be the thin end of the wedge leading to privatisation. Before my right hon. Friend the Secretary of State faints on the Front Bench, however, let me add that I had been convinced by those arguments over a decade ago when we were advancing them against the trust status that the Tories introduced.

I want to tell the House what has happened to health services in Doncaster since those changes were introduced more than a decade ago. They have improved out of all recognition. The Doncaster royal infirmary has changed from what was not a very good hospital to one of the best in the country, achieving three-star status and continuing to improve. I pay tribute to its doctors and nurses—and yes, to the management, too—for taking forward those improvements and delivering a better health service for the people of Doncaster.

The arguments were wrong more than a decade ago, and they are out of date, tired and wrong now. This time I shall not campaign against the changes; I shall support a bid from the Doncaster royal infirmary to become a foundation trust hospital. Having seen the improvements in Doncaster over the past decade, I want to ensure that my constituents continue to enjoy the best health care possible, and foundation status should lift the standard and quality of care to yet new heights.

Set within the national framework of standards, but responding to local needs, foundation trust status will help to tackle the inequalities in South Yorkshire. Freedom from Whitehall control should mean freedom to deliver and develop services in the way that best suits patient needs in Doncaster. I have every confidence that the three primary care trusts in Doncaster, in partnership with the Doncaster royal infirmary as a foundation trust, will drive the local agenda forward and respond to local needs more directly and positively.

Social ownership of local hospitals, with direct elections involving local people, will ensure that local decisions are more responsive to community and individual patients' needs. Doncaster's doctors and nurses will be able to use their talents to innovate and develop new locally based health care services—the services that they know local people require.

I can sit down in my local travel agent and book, months in advance, not only a hotel in just about any country in the world and a flight to get me there, but a taxi to take me from the airport to the hotel. Why, then, can I not sit in my GP's surgery and book an appointment at my local hospital for elective surgery at a time that suits both the health care team at the hospital and me?

The freedom given by foundation status should be able to drive us towards that goal and release our NHS staff down an ever more innovative road. Foundation status is not a recipe for a two-tier service, nor will it lead to privatisation. It is a plan that should take our health care system to a higher level—a level that our constituents demand, and surely deserve. My right hon. Friend the Secretary of State can look forward to my presence in the Lobby supporting him tonight.

3.50 pm

It is a great pleasure to follow the hon. Member for Doncaster, North (Mr. Hughes) and to have witnessed his conversion to consumerism. I am sure that most hon. Members who have the interests of their constituents at heart will welcome many aspects of the Bill in its drive to improve standards. It is often important to realise that the NHS is not an ideological tool, but is there for one purpose and one purpose only—to deliver services for constituents. I hope very much that aspects of the Bill will move us in that direction. None the less, this is an atherosclerotic sort of Bill. It appeared to start well, but somewhere between No. 10 and No. 11, it managed to become furred up. I hope that we will be able in Committee to unclog a great deal of the Bill and turn it into something vaguely useful.

Last week, I had personal experience of the national health service as a patient. I attended for a minor procedure at the district general hospital serving my constituency and was faced with a monumental form. It was a consent form that had been dreamt up by some bright spark in Richmond house, it ran into two sides of A4 and it brought home to me what we must do as we try to work towards a 21st-century national health service—unclog the NHS of much of the bureaucracy that has acted as a dead hand, a great deal of which comes from the centre. The form was presented to me by the consultant concerned, who also gave me a copy of the previous consent form that he had drawn up in his department. It was considerably shorter, and he told me rather sadly that as a result of the new form that had been presented to him from the centre and Richmond house, he had had to cut the number of patients whom he was seeing. The form was so bureaucratic that he had had to reduce from 10 to nine the number of patients whom he saw every morning. Given that the sessions cost £700,000 a year, that form alone had cost £70,000. That is a salutary example of what we need to do in the national health service to drive up standards—reduce bureaucracy. If the Bill goes some way towards achieving that, I for one will be very pleased.

The intentions of the Secretary of State, however, have been shown to be in stark contrast to his actions in the Health Act 1999 and the Health and Social Care Act 2001, in which he increased the number of directions and his direction-giving powers for NHS trusts. Here is a Secretary of State who says he has at heart the reduction of central control of the national health service, but is inherently inclining towards an increase in the number of directions that he issues from the centre.

I have a parochial concern—the Royal United hospital, Bath. The Minister of State, Department of Health, the right hon. Member for Barrow and Furness (Mr. Hutton), has described the RUH Bath as his No. 1 headache. It has certainly caused politicians locally and nationally much headache in recent months and I fear that it lurches from crisis to crisis. Despite that, it continues to give a first-rate clinical service to my constituents, which I welcome both as a patient and as a local representative.

It is very difficult to see how the Bill will act in the interests of my constituents, given that foundation hospitals will borrow against departmental expenditure limits. It is difficult to see how the capacity of hospitals such as the RUH and others to dig themselves out of the financial morass in which they currently find themselves will be improved, bearing in mind the increased powers that hospitals selected as foundation hospitals will be given to borrow against that departmental expenditure limit. I have to say, therefore, that the message from my constituents is that the Bill is unlikely to serve them particularly well.

Although I welcome the £200 million that the Secretary of State announced to encourage no-star and low-star hospitals to work towards foundation status, it is woefully inadequate and has to be set against historic debt—in the case of the RUH, a debt of some £20 million. Without addressing that, I am afraid that the RUH will not move on at all.

I welcome the Secretary of State's proposal to roll out "Agenda for Change" across the national health service, but I have a concern—again, perhaps parochial—that the piecemeal roll-out of foundation hospitals will lead to the migration of staff from low-star and no-star hospitals to those that are three-star and have an expectation of becoming foundation hospitals. The NHS is nothing if it is not the staff who work within it. Members such as me who represent areas served by low-star and no-star hospitals fear that hospitals that are rated fairly low on the criteria set by the Secretary of State may start to do even worse. We live in a funny old world in which Ministers focus first and foremost on hospitals that are apparently doing extremely well, anointing them as foundation hospitals, without first concentrating on hospitals that are flagging. It is a great pity that they do not focus more heavily—first and foremost—on hospitals that have been identified as performing less well. In my area, I would particularly identify the Royal United hospital, Bath.

The Local Government Association has sent right hon. and hon. Members some information that I hope Ministers will take into account. The LGA has huge experience in the running of elections, and it is extremely concerned about the hotch-potch of elections that could be created under the Bill and what might happen subsequently. At the moment, we have a robust set-up for electing district councils—many of us have been through that procedure recently—and it is a great pity that we cannot work on that to create constituencies around primary care trusts. I firmly believe that we need to build on the good work that the Government have done in promoting primary care by focusing heavily on primary care trusts and being less exercised by acute trusts. That would ease some of the difficulties that I am sure will emerge in Committee about the democratic accountability of the new structures, and rescue the Government from the mess that they will get themselves into by trying to elect bodies to run acute hospitals. I urge Ministers—

3.58 pm

I speak as the chair of the parliamentary group of Co-operative MPs, but I want to preface my remarks with some points from my constituency. People are three times more likely to die from circulatory diseases before the age of 75 in the inner-city wards of Plymouth than in its leafy suburbs, and twice as likely to die from cancer. For me, therefore, any change in the health system must add real value.

I enthusiastically supported the Government's programme to get more money and capacity into the health service. That is certainly delivering in Plymouth, where we have 700 more nurses in the former South and West Devon health authority area than in 1997. We have several new cardiac theatres, which are treating more than 2,000 patients a year, compared with some 500 patients in 1997. The buildings for the new Peninsula medical school are going up as we speak, and more than 200 of the 1,000-plus extra doctors in training nationally will be there by this September.

In addition to more money, people, buildings, beds and equipment, we have for the first time the means to compare our local hospitals' performance. We also have sure start, healthy living centres and the new deal for communities, which help to tackle inequalities. They are underpinned by the significant shift that the new primary care trust framework provides. It will be patient and doctor led, but with other stakeholder involvement, and PCTs will soon spend 75 per cent. of the health care budget on our behalf. Such measures give us the means to identify and close the gap in what is not a two-tier but, as other hon. Members pointed out, a multi-tiered health service. Step by step, they are changing what many of us believed was an ill health service into a genuine health service.

The atmosphere in our acute hospitals, however, continues to feel like that of a pressure cooker. Sometimes it appears as though the pressure has been turned up rather than down—ironically, as a result of some of the changes that I mentioned. Most staff work their socks off and give of their best—often more than can reasonably be asked—to the hospitals. As other hon. Friends have said, up to a point targets have their place in achieving that, but their shelf life is limited.

Top-down plans and targets can dampen the enthusiasm, energy and experience of staff. We emphasised the targets in the early years of our determination to rescue our health service from the Tory legacy of underfunding and lack of ambition and commitment. The freedoms and flexibilities for foundation hospitals have the potential to build up the spirit of public enterprise to harness what existing structures do not fully realise in new and, more important, sustainable ways.

Those who claim that the plans will lead to privatisation are simply wrong. Public interest companies, which are run along mutual lines, have nothing to do with the private sector. They are the natural territory of the centre left, as some hon. Friends have said. They empower people rather than deflate them with top-down, state-knows-best, one-size-fits-all approaches.

Local public interest companies are the essence of the way in which we can achieve more through the strength of common endeavour than alone. Lively debate has already improved the Bill and I hope that my hon. Friends will continue to talk to the Co-operative movement and draw on its experience of good governance for co-operative and mutual frameworks that work rather than fail, although some co-operatives fail. It would be good to place a legal duty on every trust to promote the recruitment of members from all sections of the local communities and communicate with its members and the wider community to specified standards.

I should like a choice of the most appropriate mutual and co-operative model. Such models include public benefit corporations, industrial and provident societies and community interest companies. I look forward to that debate in Committee. I should like the hallmark of successful co-operative ventures—education—to be properly resourced to empower stakeholders in the health community to seek election to the new boards and be accountable in robustly democratic ways. Again, a commitment to that in the primary legislation or attendant regulations would be good.

The foundation hospital proposal is a vital piece of the NHS reform jigsaw. It is a piece that, once identified and put in the right place, enables the rest of the picture to form a whole. However, it is a piece that is difficult to place. If it is viewed in the wrong way and put in the wrong place, it will make the puzzle look and feel wrong.

I ask hon. Friends who are uncertain about the overall picture to give the Bill a Second Reading. It would be short-sighted to strangle or delay a measure that could unlock the public service dividend of our national health service in new ways. Achieving hospitals need the means to advance further now. They need to be free to pioneer ways of releasing an even greater public service dividend for those who are working hard to emulate them.

The commitment to a timetable that allows all to use such a framework is welcome. It would be lacking in vision to deny debate about the way in which the proposal could get traditional NHS values to survive and thrive in the challenging modern setting of the 21st century. It would be to forgo the opportunity of forging a unique British model that might just have greater relevance to others, including underdeveloped countries trying to grapple with ways of organising their health care in the future. Denying the chance of debating that model could rob them and us of a robust 21st-century alternative to the harsh privatised reality of the American-style system under which millions of people lose out.

Labour Members tempted to discard or delay the placing of this piece of the 21st-century NHS jigsaw put our constituents at a greater, not a lesser, risk: the risk that a future Tory Government—were there to be such a thing—intent on privatisation, with all its horrible consequences, might succeed.

In an article on foundation hospitals that appeared in The Guardian earlier this year, my right hon. Friend the Member for Makerfield (Mr. McCartney) said, with his usual panache and enthusiasm,
"Keep your nerve: this is the rebirth of popular socialism".
That should certainly give pause for thought to Labour Members who see foundation status in a different light. I urge my hon. Friends to heed my right hon. Friend and, while scrutinising the detail of the Bill, improve it. I urge them not to think they know so much about it at this stage that those of us and of our constituents who can make a contribution to innovate and help us to achieve—

4.6 pm

I am privileged to be called so early in this important debate. I am happy to agree with several things said by Members on both sides of the House. The right hon. Member for North-West Hampshire (Sir George Young) emphasised the need for reform; the right hon. Member for Charnwood (Mr. Dorrell) emphasised that greater freedom for NHS trusts was the correct policy; but the right hon. Member for Holborn and St. Pancras (Mr. Dobson) and the hon. Member for Wakefield (Mr. Hinchliffe) said that this was not the right time for another upheaval. As the hon. Member for Wakefield pointed out, NHS staff have been hit by 17 reorganisations since 1982. Surely primary care trusts are due a certain amount of time to get used to their new role before having to contend with another new organisation in the form of foundation trusts.

I have to examine my conscience. If there were still a hospital trust in my constituency, I could well be speaking on the other side of the argument. The trust that was in my constituency was a high-performing trust, which would have seen the undoubted advantages of foundation status. I do not have to examine my conscience very hard, however, because if the hospital trust were still in my constituency I would not be here: I would be on one of the gorgeous Worcestershire wildlife trust reserves, observing the first two avocets that are attempting to raise a family on an English lake.

Let me return to the matter in hand. An eminent consultant who favours the change has already been quoted. An equally eminent consultant wrote to The Times—the letter was published only yesterday:
"Foundation hospitals may be a manager's dream but, if ever established, they will be the clinician's nightmare. The main flaw in the concept is that they will prevent sensible planning of health services for a community."
Why do the Government think introducing the Bill is so tremendously urgent, given their own admission that primary care trusts would not be ready to take on foundation status themselves?

One must admit that the Government have achieved tremendous improvements in the NHS already. The Secretary of State talked about the falling waiting lists for cardiac surgery, and the establishment of the National Institute for Clinical Excellence is most exciting. Tomorrow and the day after, NICE will host the second meeting of its citizens council, a pioneering effort to see whether ordinary citizens can influence decisions in the health service.

As I said, the Government have devolved powers to PCTs, and that is crucial. They have made it possible for overview and scrutiny to be conducted by local authorities. They have even produced a document about reconfiguring hospital services—another innovation that would mean that I did not need to be here as a Member of Parliament. However, instead of rushing the Bill through, the Government should concentrate on supporting the existing initiatives, improving morale, management and the relations between managers and clinicians, and taking overview and scrutiny forward.

The Bill is wide ranging. Much has been said about the formation of foundation trusts, but little about other aspects of the proposals. I shall say a few words about chapter 2 of part 2, which deals with quality in health care. I feel very strongly about the matter, as there is a big gap in the assessment of patient perception of quality of care. Some hon. Members have touched already on the fact that clinical outcomes are not measured adequately.

The present performance ratings are based on nine key targets—waiting times, cancellations, cleanliness, financial position, and so on—which decide a hospital's star status. The patient focus is supposed to be taken into account by a weird thing called the balanced scorecard approach. Very few people seem able to explain it, but the results of the in-patient survey across a wide range of trusts bear looking at. The in-patient survey contains six elements, each of which can score a maximum of five points. For the six items in the survey, therefore, the maximum score is 30.

Trusts with three-star status scored nine to 26 points out of the possible 30-point maximum. One-star and no-star trusts scored between seven and 24 points out of 30. To me, and to the other hon. Members who have remarked on the matter, that shows that the present performance ratings do not really appear sufficiently reliable when it comes to taking into account clinical outcomes, and the considerations of the patient. The ratings are not the best basis for selecting which hospitals should benefit from the tremendous changes being proposed.

The guide to good hospitals prepared by Dr. Foster for The Sunday Times is also rather odd. The paradox with the list is that the hospital with the worst mortality rate is also one of the three-star trusts. Measurements of quality leave much to be desired, and that is another argument in favour of delaying the introduction of foundation trusts. I am waiting to see whether the Commission for Health Improvement places more emphasis this time around on the assessment of patients' idea of quality.

Finally, the Medical Protection Society is very worried about the health care complaints proposals in chapter 9. It says that clause 109(2)(e) leaves the way open for the introduction of secondary legislation that would link complaints to compensation. The society says that that could cost the NHS vast sums of money.

I hope that we will be able to ask the Government to delay the implementation of the proposals in the Bill.

4.14 pm

Introducing change to the NHS has never been an easy task for the Labour party, as today's debate demonstrates. However, that should come as no great surprise. The Labour party created the NHS, which is perhaps the greatest achievement of Labour in office. Any change is bound to be difficult and will lead to the sort of conflict and debate that we have seen this afternoon and in preceding weeks. Most importantly, the national health service makes real and underpins the values of the Labour party—care and concern for the most vulnerable members of our society, and the belief that we can achieve far more by working collectively than as isolated individuals. The NHS is based on contributions from all and on securing the well-being of each of us. That is what the NHS is all about, and those values are as relevant today as they were in 1948, when the NHS was formed.

There is nothing in the Bill that undermines those values, and the fact that Conservative Members will vote against Second Reading demonstrates that point well. However, the NHS cannot remain in aspic; it has to move with the times. People have different aspirations and new demands are being made on the service. Renewal and modernisation of the NHS is not therefore a betrayal, but essential if the NHS is to remain the popular provision that my right hon. Friend the Member for Holborn and St. Pancras (Mr. Dobson) mentioned.

Change is needed and should be viewed as a bringer of opportunity, not a threat. Money alone will not secure the significant necessary improvements. Incremental changes will come from the additional moneys being made available, but that will not be enough. When people pay more taxation, they will not want only incremental changes to their national health service or other public services, but radical and fundamental improvements. Reform must be underpinned by consistent values and principles and I believe that foundation trusts fully reflect those values and principles.

My right hon. and hon. Friends have articulated concerns this afternoon, particularly about the danger of creating a two-tier system. We must recognise that not all hospitals are the same. They do not all provide the high-quality service that we should expect. However, we cannot improve standards in underperforming hospitals by holding back the best. Rather, we should intervene with support and assistance, and the Secretary of State's announcement this week of an extra £200 million to assist underperforming hospitals is surely the right way forward. The Secretary of State is proposing a twin-track approach, not the creation of two tiers. He wants new freedoms for the best hospitals, but, equally, intervention, support and assistance to raise standards in those that need to improve.

One of the great strengths of foundation trusts will be their ability to allow more decisions to be delegated to front-line staff, based on the recognition that they are in the best position to meet the needs of local people. It is no longer a one-size-fits-all approach but the introduction of choice and diversity, based on recognition of the fact that the needs of my constituents in Tyneside, North are different from those of constituents in north Surrey and north London.

Yesterday the Prime Minister said:
"For those who believe in public services, reform is fundamental to their future. To turn our backs on it would be a collective mistake of absolutely historic proportions."
My colleagues will not be surprised to hear that I believe that he was absolutely right, but for the electorate, it is actions—not words—that really matter. To achieve significant improvements in our public services, some difficult and tough decisions will have to be taken. If they are avoided in the face of hostility and cries of betrayal, by the time of the next election, the Government will not face the accusation that they have implemented too much reform, modernisation and renewal. On the contrary, the charge will be that the Government have done too little, and that they have been too timid and too cautious in their approach to public service reform. Let there be no doubt: time is running out for the Government. The public are already paying more in national insurance to increase spending on the national health service. People want to see a return on their investment through improved services. If the Government fail to deliver that, they will pay a heavy political price, and rightly so.

I therefore say to my right hon. and hon. Friends that while the status quo can appear to be an attractive option, it would be a mistake. There are times when change needs to be embraced. The measures before the House this evening do not represent a revolution in the national health service. This is a sensible and pragmatic set of proposals. They do not betray our core beliefs as a political party—I believe that they reflect them in a modern setting, devolving power away from state central control to local public ownership. That is what a community-based Labour party should be all about. That is made real in the Bill before the House this evening, which puts the interests of patients first. It is a measure that renews and refreshes the national health service.

If we care about that service, we must move with the times, which is exactly what these proposals do. There are occasions when we need to be bold, but not just for the sake of it. We need to look at how we can update the way in which we do things to reflect our core beliefs, values and principles as a political party and as a Government. This Bill does precisely that. That is why I will support it this evening, and I urge my hon. Friends to do likewise.

4.22 pm

This Bill marks the beginning of the end for this dreadful Government. The reason that I say that is that the Chancellor of the Exchequer and the Prime Minister have clearly fallen out big time. Were I to look back on the Conservative years in government, I would reflect that things were never quite the same when our Prime Minister and our Chancellor fell out. As I watched presidential questions on the monitor in my room in the House of Commons, it was interesting to observe the body language between the Prime Minister and the Chancellor of the Exchequer when foundation hospitals were mentioned. It was clear that the Chancellor did not want anything whatever to do with the proposals.

Of course, what we are seeing today is a complete charade—the Labour party is split from top to bottom and it has only itself to blame. Having observed closely its 18 years in opposition, it was clear that all that it used to do was to use the health service as a political football. As soon as an adverse outcome occurred, it would blame the Conservatives. Of course, Labour Members of Parliament were past masters at spreading poison. We heard that from a speech a little while ago when the word "privatisation" was mentioned. What absolute hypocrisy. If Labour Members are worried about voting for this Bill because they think that it is privatisation, they do not know the first thing about privatisation. There is no doubt about it: the Government have got themselves into this mess because of the way that they behaved during 18 years in opposition.

The star ratings system for hospitals, as the Secretary of State knows only too well, is a complete fiasco. It is one of the biggest Government fiddles that I have ever seen. I have absolute proof of that from managers: how is it possible for a hospital to achieve a three-star rating when the same consultants work at other hospitals that are given one or two-star ratings? The system is absolutely meaningless.

Of course, this dreadful Government are completely obsessed with targets. It is a pity that the Secretary of State did not set himself a target for what he has done since he took over from the right hon. Member for Holborn and St. Pancras (Mr. Dobson), who made a very interesting speech. When the right hon. Member for Holborn and St. Pancras spoke, Labour Members fell quiet. They seem to remain quiet when one of their number makes a speech that is anti-Government but when a Conservative does so there is some noise—[Interruption.]

The proposals are completely watered down, and the reason is that the Secretary of State has spent all his time in little meetings with his colleagues, listening to their concerns and trying to find out how to buy off the 124 Members who signed the early-day motion. The result will be interesting. The Bill will do nothing to improve patient care.

I am proud to be a member of the Select Committee on Health. Our excellent Chairman, the hon. Member for Wakefield (Mr. Hinchliffe) is not in the Chamber at the moment. The Secretary of State's evidence to the Committee on 4 March was wholly inadequate. When I challenged the right hon. Gentleman on NHS staff, he dismissed the point as though all was well. I mentioned that "Agenda for Change" specified that
"while zero and one star trusts will be limited to any extra recruitment and retention premiums they are able to pay staff and two and three stars will not be limited but will have to consult other local trusts, foundation trusts will not be subject to any of these safeguards."
I asked him how poorer-performing trusts would be able improve when the balance was tipped so firmly against them. With the disarming technique that the right hon. Gentleman employs when he comes before the Select Committee, we got between 10 and 15 minutes of soft soap but absolutely no answer. I am still waiting for the Secretary of State to write to me, as is my hon. Friend the Member for Woodspring (Dr. Fox), who posed the right hon. Gentleman several questions during the debate on 9 January. My hon. Friend has tabled 50 parliamentary questions, many of which have not yet been dealt with.

Earlier, the hon. Member for Wakefield mentioned four points from the Health Committee's report. If hon. Members do not have time to read the whole report, there is a one-page summary. The whole all-party Committee agreed the report and our concern about the outcome of the Government's proposals was obvious.

We all applaud the national health service, but the idea that the Labour party invented and continues to sustain the NHS—[Interruption.]

Order. The House must do the hon. Gentleman the courtesy of listening to him.

The idea that only the Labour party supports the NHS is completely disingenuous. Labour Members should be absolutely ashamed of their behaviour over many years. Of course, the challenges are enormous, but the Government came into power suggesting, "Vote Labour and you'll save the national health service". They have signally failed to do that. Members will have read the castigatory briefing from the Royal College of Nursing, which criticised the Bill, especially the fact that the regulator will not be independent.

As usual, we hold our debates in the House and pat one another on the back for our speeches supporting the Government or otherwise. However, last Thursday, we had the local government election results. In Essex, we went Conservative. Labour was thrown out in Castle Point and in Basildon, and the Liberals were thrown out in Chelmsford. People no longer trust this—

On a point of order, Mr. Deputy Speaker. I wonder whether you could interpret the relevance of these comments to the subject under debate.

People no longer trust this Government. Yes, socialism was defeated in 1992, but the third way has been well and truly rumbled by the British people. This is a rotten Bill and I hope that the House will vote against it.

4.30 pm

I should begin by placing on the record my concern about what may, I suppose, be a quite inadvertent campaign of misinformation, some of which has been repeated here this afternoon. It has been said that those of us who support the amendment in the name of my hon. Friend the Member for Wakefield (Mr. Hinchliffe) and others are somehow in favour of the status quo and against reform. However, anyone who looks at the record of those of us who have enthusiastically supported the Government in their tremendous NHS reforms would begin to be sorry if they made such statements. I want to make it abundantly clear that, in the eight minutes available to me, I shall not argue for the status quo. I want more reform in the health service, and better services for my constituents and throughout the country. The question is, will the foundation hospitals proposal provide that? Like many of my hon. Friends, I am seriously concerned about whether it will, and I should like to highlight some of our worries.

There are those who say that the foundation hospitals proposal is a natural progression of the Government's modernisation agenda. On asking about the intellectual rigour of this proposal, I have been told, "It is part of modernisation," to which I have replied, "Fine, but you'll have to be more specific than that if you're going to get my support for what I believe to be a very important and profound change." There are also those who worry that this proposal questions the very ethos of the health service, which we on the Labour Benches hold so very dear.

At best, this proposal is a dangerous distraction; at worst, it will fragment the health service even further and add to existing inequalities. When I tried to intervene on my right hon. Friend the Secretary of State, he said that he hoped that I would be generous to him when called to speak. I will, and I shall also be generous to my right hon. Friend the Member for Holborn and St. Pancras (Mr. Dobson). I want to congratulate the Government: a wonderful job is being done in the health service because their focus to date has been absolutely right. They have focused on primary care, and tried to ensure that the top-down health service that has existed since 1948 becomes bottom up. That is why I, along with many others, supported the primary care trusts proposal; but we also need to ensure a laser-like focus on those areas of the health service that are not performing as we would like them to do.

I have profound doubts about the view of those who argue, whether from the Government or the Opposition Benches, that by allowing the so-called best hospitals to float away and become free-standing corporations—on reading it carefully, that is what this Bill is about—the standards of everything else in the health service will be raised through some magical, trickle-down effect. I do not believe that for a moment. I did not believe in trickle-down when it was the Thatcherite economic principle, and I do not believe the argument that if we make the best better, standards will be raised, through some magical formula, throughout the entire health service.

This is a profound measure, because it shifts the Government's focus away from where it has been and should be—on ensuring that our health service provides the best for all our citizens—and turns it towards those few hospitals that, in their view, are the best and should therefore be given advantages.

I am all in favour of embracing, applauding and supporting the best, but I am equally in favour of ensuring that the best is available to all our citizens through the NHS, so there is a fatal flaw in this proposal. What are we really being asked to agree? What is the basic objective of foundation hospitals? It is more freedom for the best performers.

My right hon. Friend the Secretary of State referred to equity. That is a very important word in my constituency and area of the world in north Staffordshire, because my constituents are not interested in structures; they are interested in equity of access to services. They wonder why they have to wait for services rather longer than they thought, and they are looking to the Government to improve that.

I congratulate all those in the health service and the health family in north Staffordshire on doing a tremendous job in ensuring that the NHS will be improved, but, unfortunately, I cannot find the word "equity" anywhere in the Bill. I see that the general duty of a foundation trust is to
"exercise its functions effectively, efficiently and economically."
I do not see the word "equity" there at all. That speaks volumes. The inequities in the NHS are more likely to be exacerbated than reduced by the Bill.

I am not against changes or reform—it is wrong that we should argue about that—but making all hospitals foundation trusts in five years recognises the strength of the argument of those of us who say that the proposal will increase the inequalities. We will have to wait five years before those inequalities are faced up to. That is not acceptable, because tremendous advantages will be built up during those five years.

Foundation hospital trusts will recreate competition at the expense of progress and co-ordination and will not enhance accountability. If accountability and mutuality are to be enhanced, it should be done through primary care trusts. Why do we not address those issues where it really matters, given that 75 per cent. of health service expenditure will be exercised by PCTs? The Government have got this entirely the wrong way round. Indeed, the powerful regulator will be the antithesis of accountability. Foundation hospital trusts will not be accountable to the Secretary of State or to their local communities; they will have their eyes on the regulator. They will keep the regulator happy, not the people whom they are there to serve.

The Government should ensure that all our NHS services are raised to the best possible standards, and not be distracted by an irrelevant and damaging distraction.

4.38 pm

Although I have concerns about my party's stand on this issue, I also have reservations about foundation trusts themselves. One is that foundation trusts simply will not address the real management problems in the NHS but are an extension of the 1990 policy that put in place the NHS trusts. The proposal is based on the notion of localism: that making state-run organisations more and more accountable to some amorphous group of local representatives will somehow make them better managed and more responsive to local needs. All parties seem to have latched on to that notion in desperation at any other attempt by politicians to reform the public services.

In my view, that notion is profoundly wrong. It confuses two separate and distinct principles, the first of which is about giving local managers the freedom, discretion and responsibility to manage. That is a good principle, and it works. It motivates and enables managers to innovate. It is a clear tenet of modern management methods in the private sector and elsewhere. Managers' performance is monitored, but they are allowed to get on with their jobs, and those managers are accountable on a range of measures to more senior managers further up the line and, ultimately, to those at the very top of the organisation.

Policy makers have confused that principle with the notion of local accountability, which is entirely different. We do not need local accountability to give a local manager discretion and the freedom to manage. Under the notion of local accountability, the manager will be responsible not to a more experienced manager but to a local group of representatives. The idea behind foundation trusts is that they will somehow free the manager from the avalanche of targets and directives from the Secretary of State, while making him more accountable to the local board for his performance. The management will, of course, still be subject to the independent regulator, to the new inspectorate and to the Commission for Health Improvement, and will still have to co-operate with other NHS bodies and consult the public on their plans. The membership of the public interest body will have their own views on the direction of policy, as will the board of governors.

I do not believe that foundation trusts will work, because the manager will still be hamstrung by such interference. More fundamentally, however, they will not work because, in essence, they perpetuate the same dispersed structure that is one of the prime causes of our poorly performing public services. Since its inception, the NHS has always had layers of local accountability, in the form of area boards, regional boards, health authorities, and trusts. It is currently made up of more than 600 different organisations, each with its own board and chief executive. Because of this structure, it is impossible for the NHS to adopt modern management methods that are centralised in structure but which would give the local manager genuine discretion and the responsibility to manage.

Recent generations of politicians have been frustrated that their attempts to reform the NHS have not resulted in better management. Health policy experts believe that there is a 20 per cent. productivity gap in the NHS, which means that one fifth of spending is wasted. Frustrated by not having any direct means of reform, Secretary of State after Secretary of State has had to use indirect methods to implement change, including a plethora of ever more demanding and conflicting targets, the invisible hand of the internal market, whole lever-arch files of guidelines that managers have to read, and 20-odd different inspectorates. Management by target is no way to manage. That inundation by bureaucratic and wasteful intervention from Whitehall is not caused by the NHS being over-centralised but is a consequence of it being a dispersed group of more than 600 separate semi-autonomous organisations. One of the prime reasons for people's disillusionment with politicians is their failure to deliver the reforms that they promise, but it is often the very structure of our public services that makes it impossible for them to deliver.

Another key reason for people's disillusionment with politicians is that politicians sometimes treat politics as a game. Although I have my own reservations about foundation trusts, I had thought that my own party's position on this matter was quite clear. The Conservative consultation document, "Setting the NHS Free", was published in March this year. It states:
"Foundation Hospitals are among a number of building blocks we will use to create a more diverse provision of health care … Where Labour breaks new ground in this area, they will receive our support, so long as they move in our preferred direction of greater pluralism."
I understand the point made by my hon. Friend the Member for Woodspring (Dr. Fox) that many of the freedoms have been removed from the Bill, but the principle still remains, as does the structure, and it would remain open to an incoming Conservative Government to add those freedoms to the structure already in place.

My fear is that the reason for my party's opposing the Bill this evening is to try to score political points against Labour, and possibly even to inflict a defeat or at least damage its majority. This is really about being oppositionist, and showing that we can bash Labour after having given so much support to the Government during the war. It is this culture of opposition for opposition's sake that so dismays the public and adds to the cynicism and disillusionment with politics. Indeed, this culture will have been a contributing factor to the very dilution of the Bill that so many of my hon. Friends are dismayed about. During the last Parliament, we were whipped to vote against the privatisation of the air traffic control service for much the same reason. I promised myself then that I would never again vote in that way for those kinds of reasons. That is why, despite my own reservations about foundation trusts, I shall abstain rather than follow my hon. Friends into the No Lobby.

4.45 pm

I am delighted to be called to speak in one of the most important debates of the whole Parliament. I shall support the Government tonight because the Bill goes right to the heart of the reform—a strange word—of the public service. The debate is crucial to how the Labour party will improve performance across the whole spectrum of the public service over the next few years.

I want to say a brief word on accusations that we might create a two-tier service, although they have already been pretty well demolished by the arguments to which I have listened. In the pursuit of excellence, every hospital approaches excellence at a different pace. Indeed, every hospital department approaches excellence at a different pace. I rather agree with my right hon. Friend the Member for Copeland (Dr. Cunningham), who jokingly said that a two-tier service would be a vast improvement on what we have now. We need not give that much more consideration.

The only reason why I would be persuaded to vote against the Government tonight is that as I get older, I become less enthusiastic about reorganisation. Productivity drops for two years before a reorganisation, and two years are needed after a reorganisation to allow it to bed in, which means that productivity remains low. If the public service underperforms—I do not accept the argument that it does—one reason could be politicians' and administrators' penchant for perpetually reorganising. I do not approach the Bill with any enthusiasm for reorganisation. Reorganisation titillates politicians and administrators because it produces the semblance of action. If nothing can be done, reorganisation can make it look as though something is being achieved.

The reorganisation suggested by the Bill is fundamental because it is unusual for Whitehall to relinquish power easily—it is pretty well unprecedented in my experience. Why have the Government concluded that it should happen? I believe that it is because the Secretary of State and others like him have reached the view that we have explored the concept that change can be micro-managed from the centre almost to self-destruction. That argument has been won, and the argument on the Labour Benches is about how we should decentralise and devolve, not whether we should do it.

I have always had a horror of being among the forces of conservatism, which is why I am delighted to support the Government. I am inclined to agree with the view of my right hon. Friend the Member for Southampton, Itchen (Mr. Denham) that the Bill shifts the Government's centre of gravity nicely to the left by decentralising and devolving to local organisations, which I support.

I shall turn briefly to the economic context of the debate. The Government have delivered low inflation while simultaneously delivering low unemployment, continuous economic growth for six years and unprecedented investment in the public service. No Labour Government in the history of our movement have achieved that. Indeed, I argue that no Government for the past 100 years have achieved all those things simultaneously. However, the political context of the debate is that the ground is shifting beneath us. The taxpayer is becoming less and less tolerant of paying more taxes without perceiving that he is getting value for money. In other words, the taxpayer requires more bang for his bucks or an increasing improvement in outcomes per unit of input. That is a demanding requirement for any organisation to meet.

The Government were right to make it a priority to have evidence of reform before investment could continue to go into the public service. Part of our difficulty is what we understand by the word "reform", and the Government have been inconsistent on that over the years. From time to time, they seemed to want to go in the direction of privatisation, which is rightly an anathema to Labour Members. I do not think that the reform in the Bill is about privatisation. It will not make privatisation easier for an incoming Tory Government to achieve. If it did, I would not support it. Reform should be about delivering far better performance. If that cannot be achieved by targets and micro-management, it ought to be achieved by setting people free—by liberating them from the dead hand of bureaucracy—to produce better outcomes at the sharp end.

I once witnessed a remarkable example of a company in the private sector that had managed to liberate the creativity of the work force to achieve far better performance. The managing director explained it by saying that the company discovered that with every pair of hands came a free brain. I see no evidence that micro-management from the centre has discovered the brain power at the sharp end. I am talking not about the brain power related to specific specialisms, but about the brain power of those people who work at the sharp end and who know best how to improve the service to the patient. The patients have not featured large in the debate, but they, the staff and the citizen as taxpayer need to drive the reform of the public service.

4.53 pm

I am glad to have the opportunity to contribute, albeit briefly, to the debate. Along with some of my right hon. and hon. Friends, I spoke in the debate initiated by the hon. Member for South Swindon (Ms Drown) on 7 January and in the Opposition day debate on 8 January, when I commented on the nature of foundation hospital status. Time does not allow me to reiterate those remarks today.

Some of the points on the inappropriateness of local accountability delivered through foundation hospital status as distinct from other options, such as locality commissioning that the hon. Member for Stockton, South (Ms Taylor) mentioned, are interesting and relevant to how we vote. The hon. Member for Leigh (Andy Burnham) made similar remarks in the same debate. My right hon. Friend the Member for Charnwood (Mr. Dorrell) made it clear on 8 January that introducing mutualisation status for primary care trusts might be a more appropriate mechanism to influence the service patterns of the NHS in an area than by doing that initially through foundation hospital status. I agreed with him then, and I agree with him again today.

What is interesting in that context is whether Conservative Members—I cannot speak for Labour Members—should accept the rhetorical direction that the Secretary of State occasionally offers on the Bill and simply vote for it as an empty shell into which good intentions will be poured in Committee and thereafter. I do not think that we should. The good intentions, if they exist, could have been set out in the Bill over the past four months. Time has allowed—I accept that the process has been quite quick since publication in December of the "Guide to NHS Foundation Trusts"— for some of the specifics to be set out in the Bill, and for some of them to be published alongside the Bill so that potential NHS foundation trusts, and we as legislators, would know what we were voting for.

I do not agree with the principle of the Opposition voting in favour of Government legislation when we cannot see what they intend to do. If I could examine their intentions, that would be fine. All I see now is that the signs above the Addenbrooke's and the Papworth NHS trusts in my constituency will be taken down and replaced by signs saying "NHS foundation trust". I knew that they were both excellent hospitals before they were given three stars. I do not yet know whether that will mean in practice that the managers of the trusts will have greater freedom to deliver what they want to achieve. If I vote for the Bill and the Government do not deliver that, I will have been party to a misrepresentation to those who work in the trusts and try to deliver a higher performance within them.

I do not know whether the Bill will genuinely deliver local accountability. It is an important and valid issue. If, a few years down the line, my constituents want to influence whether the Papworth NHS trust continues in its present location or shifts to a location alongside Addenbrooke's—that is a major investment issue involving large capital expenditure—they may conclude that because they are members of those NHS trusts, they can determine the issue. However, if we examine the proposed structure—the service level agreements with the primary care trusts as commissioners and the role of the strategic health authority—it is clear that it will not be susceptible to the control of the local population as members of the NHS foundation trusts. For some of them, perhaps the most important decision that they may take about the design of local NHS services is one over which they have no control. That is completely contrary to the Government's rhetorical ambitions.

Is not that paradox most perfect? The population of Leicestershire and Rutland is about 1 million. There are three acute hospitals at the centre of the geographical county. Six primary care trusts cover about the same population. Those PCTs have no effective influence over the one large trust that embraces the three hospitals, the University hospital trust. Will they not be calling the shots? Will not the priorities be those of the managers and medics, and not of the people within the PCTs?

I will not comment on the hon. Gentleman's local circumstances. It is true that in Cambridgeshire, Addenbrooke's is so pre-eminent a hospital that it is important that it be the subject of local accountability. There is a tense and difficult relationship with primary care trusts, not on a personal level but institutionally. There are about 27 commissioning bodies and one dominant hospital. That is precisely why I asked the Secretary of State earlier whether we could look towards foundation status being available not to Addenbrooke's in isolation, but with some of the other hospitals that form part of its network, such as West Suffolk or Hinchingbrooke. The network of hospitals would thus be more susceptible to local accountability because they would be involved in service reconfiguration between different sites.

That does not mean that I do not believe that the principles underlying the Bill are right. I want to achieve managerial freedom in hospitals, as providers, and I want to generate responsiveness to patients through the NHS. In terms of local services, that could be done through primary care trusts becoming essentially foundation trusts. That would be the first move to make, rather than the establishment of foundation trusts as in the current proposals.

Some of the steps that the Government are taking will inhibit that transition. For example, the payment-by-results proposals—reforming financial flows and case-mix adjusted commissioning—seem to be an improvement until we realise that NHS trusts will not be able to vary their price according to their relative efficiency. The proposals will not necessarily stimulate the transfer of activity to meet unused capacity. In addition, it will not provide the necessary incentive for the best-performing trusts to increase their capacity by drawing more of the activity to them by virtue of lower prices or by being able to adjust for higher quality. The key issue about expanding the capacity of the NHS may therefore be undermined by the limitations of the Government's proposals on commissioning and the price mechanism in health care transactions. I am afraid that the Government must convince me—they have not yet done so—that the Bill will deliver their rhetoric on localisation and managerial freedom. I do not believe that we should simply vote for it now and then, in a few weeks, after the Bill has been amended in Committee and on Report, decide whether to vote for it on Third Reading. The Government may try to meet the concerns of Opposition Members, but I suspect that for political reasons of their own they will spend more time trying to meet the concerns of those not least on their own Benches who want to retain uniformity in the NHS.

The hon. Member for Stoke-on-Trent, South (Mr. Stevenson) talked about equity, but I think that he meant uniformity. I am not in favour of uniformity; I am in favour of excellence and standards, which should be raised through greater diversity and the ability to respond to patient choice. That is the direction that we should take. Patient choice has been limited in recent years, but it is time that we had more of it in the system. Although there should be managerial freedom to respond to such choice, and PCTs should have local accountability and commissioning power, simply hoping that the Government will include such provisions in the Bill is not the way to proceed. We should deny the Government our support this evening. By doing so, we will make it more likely that they will make concrete their intentions in the Bill so that we can vote for it later as a realistic measure of managerial freedom in the NHS and local accountability to the public and patients.

5.2 pm

I wish to concentrate on part 1, which creates foundation hospitals, and explain why I have put my name to the amendment.

At the last election, Labour rightly put the renewal of our public services at the heart of our agenda, and we have subsequently backed that up with substantial amounts of public money, which is extremely welcome after 25 years of starvation rations. Net public investment as a percentage of GDP fell from 5.9 per cent. between 1963 and 1976 to figures as low as 0.6 per cent. and 0.9 per cent., and remained at that level for 25 years. With that level of financial support, it is hard for any public service to thrive. I agree with Ministers that reform must accompany our welcome investment, but the debate is about what shape that reform should take and what principles should underpin our efforts. The Bill includes some good principles—democratisation and decentralisatio—and some bad ones, particularly the reintroduction of competition and market forces. I believe that the Bill is not about privatisation, but about reintroducing market mechanisms in health care, where they do not belong—hence the spectacle of Tory Back Benchers scrambling to support the Bill, despite the decision of their Front-Bench spokesmen to oppose it. There is a little revolt brewing on their sparsely populated Benches.

We are at a fork in the road. We can develop an approach to public sector reform that works with the grain and ethos of an integrated, egalitarian provision and is both empowering and decentralising, or we can fall back on a default option that introduces market mechanisms in the vain hope that they will lead to improvement. Unfortunately for the health of the acute sector, the Bill chooses the market route. We have had a great deal of experience of marketisation in our public services in the past 20 years. It has led to fragmentation and wasteful duplication, often giving rise to inflated salaries and reward packages for those at the top and a severe deterioration in pay and conditions for everyone else, with few discernible benefits for users.

Foundation hospitals are a cul-de-sac on the road to reform. At worst, there is a danger that they will exacerbate the waste inherent in the purchaser-provider split, and add nothing to the effectiveness of the system or value for money. The ongoing costs of the establishment, regulation and monitoring of the system should not be underestimated. That expenditure might not be productive, but it could be very high. The costs of holding elections in local authority areas annually approach £50 million, and some of the election mechanisms suggested in the Bill are more complex than those in local democracy.

Despite all the warm words about the duty to co-operate, the model of free-agent hospitals implies competitive rather than co-operative behaviour, especially as one of the key freedoms is staff remuneration. In the context of a scarcity that will persist for some time yet, that can only mean poaching staff at the expense of non-foundation parts of the NHS. Thus, improvement in the foundation trusts may be achieved at the expense of non-foundation trusts and may destabilise their progress. That is a dynamic that the Bill introduces, which cannot be prevented by a duty to co-operate or by a regulator.

The first foundation hospitals might also seek to cherry-pick the treatments that they offer, or the patients whom they wish to treat, leaving the unglamorous and unpopular parts to their non-foundation neighbours. The Bill allows that to happen, and it is the regulator who will decide which treatment or provision any applicant for foundation trust status will be allowed to offer. I also fail to understand why control by a regulator is superior to control by a Secretary of State. It could be worse and more bureaucratic.

Clause 34 requires that foundation trusts be run effectively, efficiently and economically, but unfortunately it says nothing about equity. That is a worrying omission, as equity always suffers in marketised systems, yet it is a key principle of the NHS—not uniformity, but equity: fairness of access to services. Some have argued that the Labour Government must do as the Bill provides, or the Tories will do it for us. That argument is so staggeringly pessimistic and defensive of Labour's values that it takes the breath away. It implies that there is no distinctive Labour path to reform, merely a watered-down, blue-rinse solution that sooner or later we all have to adopt.

I would argue that the electorate has given us a second landslide victory and a mandate to reform the public services in line with our values. Some aspects of the Bill indeed do that, particularly as regards democratisation and decentralisation, but I have major trouble with the reintroduction of competition and marketisation. We must renew collective public provision for the next 50 years without introducing markets or quasi-markets. We need to create a new transparency and accountability for the users of our 21st-century public service, and we need to value and empower the staff who have committed themselves to service in the public sector. We need to raise standards throughout the NHS, and I do not believe that we will do that by fragmenting the service, reintroducing competition or letting the few pull ahead of the many.

I am listening to the hon. Lady's speech with close interest and attention. Given that she acknowledges that the huge increase in expenditure on the national health service has not yet been matched by a commensurate rise in clinical activity, and that she says that she supports reform, albeit not the principal feature of the Bill, what does she think will be the driving mechanism that will close the productivity gap?

The hon. Gentleman should be a little more patient. After many, many years of under-investment, the money is only just going in. I believe that there are great improvements coming. I have suggested creating what I call a monetary policy committee for the NHS, which would ask hospitals to maintain a weighted index of output, rather than creating little balkanised hospitals that behave competitively within the system as a whole.

After two landslide victories, we ought to be much more confident about our values, and we should be creating a legacy of renewal and reform that stands the test of time, as Nye Bevan's original creation did. I do not believe that fragmenting the system and unleashing competitive forces will deliver the transformation that we wish for. Having the confidence to stick to our principles and banish competition from the NHS will create a stable situation in which reforms can go ahead.

At the next general election, when we have to be judged on our NHS reforms, progress will have been achieved not by the results of foundation hospitals, which will be in their infancy, but by extra money, by the commitment and hard work of staff and managers, and by the day-to-day hard graft of improvement, which is going on all around us. We should let that process go on. We should decentralise and democratise, but we must say once and for all that there is no place for competition or fragmentation in our NHS.

5.10 pm

The eight-minute limit on speeches, like the prospect of being hanged in the morning, concentrates the mind wonderfully—and like so many of my right hon. and hon. Friends, I would like to concentrate on the fate of Britain's last nationalised industry.

My right hon. Friend the Member for Holborn and St. Pancras (Mr. Dobson) was right to say that the national health service is the most popular institution in the country. He cited Gallup polls in evidence of his assertion, but he could have gone on to say that those polls also show that support, although very high, is falling, so we cannot take for granted that that level of support will remain.

My hon. Friend the Member for Wyre Forest (Dr. Taylor), who spoke earlier, left me flabbergasted. I call him my hon. Friend because he is, in a sense, a sign of the new politics. He is showing Labour Members that taxpayers are now well able to bite the hand that takes money from them. At the general election, he, like a Member who was elected to the Scottish Parliament last week, showed us that health is one of those issues that surmount parties and get people thrown out.

We are moving in new and difficult territory. As my hon. Friend the Member for Wallasey (Angela Eagle) rightly stressed, the Government have put huge sums of taxpayers' money at the disposal of the national health service. In doing that, however, we also open up the NHS to the new politics, for in the past its great defence—for despite its many achievements, there were also failings—was that we all put our warm overcoats on, shuffled around and said, "Well, you can't expect much more; the NHS doesn't have the funds." That excuse no longer holds, and it is in that new situation that the Government are trying to direct us in the Bill.

The Prime Minister exaggerated just a little when he suggested that the foundation hospitals issue was similar to that of council house sales, but there was much truth in what he said. I was pleased that he said that council house sales were a Labour party issue; I must say that it did not feel like that at the time. That idea, like the present debate about who owns the health service, leads to the question of whether we are going to be on the side of taxpayers and consumers, or whether we are going to be backward-looking and defend the past—above all, whether we are going to defend a producer co-operative.

This is a new era of consumer choice, and it is within that context that we need to consider the Bill. I think that the formation of foundation hospitals will be seen as the most important measure that a Labour Government have laid before the House of Commons to ensure the survival of the NHS as we know it. Quite where that will take us, and where the journey will end, we do not know.

When I listened to my right hon. Friends the Members for Copeland (Dr. Cunningham) and for Livingston (Mr. Cook), I was reminded of the fact that once we begin to set consumers free, we do not know where the journey will lead, although we can try to guide that journey. My father was a factory worker for the whole of his life. If somebody had said at the beginning of the time that he spent in the Morgan Crucible factory in Battersea that during his life he would own properties and spend holidays abroad, he would have called for somebody with a straitjacket to ensure that that person was calmly and quietly put aside. That is how working people responded when they had the chance to exercise their choice.

Of course, on foundation hospitals, there is some part of the past to guide us, but nobody has dared mention it; so far, we have all been too polite. None the less, the debate that we are having today is the one that the Attlee Government had in 1948—a debate between those who believed that our hospitals should continue to be owned by local authorities or mutual societies and those who believed that they should be nationalised. I am sad to say that Herbert Morrison lost that debate and Nye Bevan won it. When we lived in the age of ration-book politics, perhaps it did not matter that that was the outcome, but we no longer live in that age, so a ration-book health service is clearly vulnerable.

If we look to the debates that nationalised our hospitals, which we are now trying to re-establish, we see that one of the charges for why hospitals failed and needed to be nationalised was their pathetic performance in raising funds. Let me remind the House of the amount of funds raised locally in comparison with what came from insurance schemes, which had existed since 1911. The charge against the London hospitals was that they raised only two thirds of their budgets from their local communities. For those of us who represent constituencies outside London, I point out that our areas managed to put up only 40 per cent.

While we cannot be sure where setting the consumer free within the NHS model will take us, I would put most of my money on one of the outcomes—huge sums will be raised by our constituents once they feel that the hospitals are theirs rather than part of a nationalised concern. If we live in an age of consumer politics, those of us who support the Bill are answering one of the most crucial questions of this debate: if it is not only money that is necessary to win reforms, what are the mechanisms of success? That question has already been raised, and we who support the Government are giving a clear answer. We believe that people who are set free by owning their own hospitals and the ability to make choices will help the Government to drive through the changes that they wish to see.

I wish to encourage the Government further along those lines. Some of us see patient choice not as the end of the process, but as the most crucial ingredient in ensuring that the reforms that the Government are setting before us win through. While there were small experiments with allowing patients to go abroad or bringing foreign teams here, there was a little reticence on the part of the Government—

5.18 pm

For reasons that I shall outline, I think that the proposals for foundation trusts need significant additional thought. They are not about privatisation or destroying the fundamentals of the NHS, but about asking the House of Commons to legislate for two different structures in the NHS with two different financial regimes, as was the case in respect of GP fundholders.

I am not against reform and I want to see more power given to patients forums and a larger role given to pharmacists, midwives, occupational therapists and physiotherapists so that they can better meet patients' needs. I want us to tackle the powers of the medical establishment and to do more to bring health and social care together. I want best practice to spread across the health service so that managers and patients can tackle performance that is not as it should be and ensure that those genuine, front-line patient services that are so important to our constituents get better and are of top quality across the country.

I want to concentrate on what foundation trusts will really mean. The Government rightly say that they want more local freedoms and innovations and for enterprise to flourish, but the one-star or no-star trusts will have to wait until they have three stars—only then can they apply for those freedoms and innovations. We have heard no talk of there being fewer Government targets—all the same ones will be in place. We have heard that foundation trusts will not be subject to central directives, but when I asked on 29 January how many directives had been issued to NHS trusts in the past three months, the answer came back: none. When I asked on 30 January when was the last time a directive had been issued to a trust, I was not given an answer, and I still have not received one.

For three months the Department of Health has failed to say when it last used a directive of the kind that it says is about to be withdrawn from foundation trusts. NHS foundation trusts will have the freedom to use their capital and to spend their surpluses. However, many people who are concerned about how the NHS should move forward say that investment is most needed at the so-called choke points of the NHS: the places where the development of patient care is not moving forward. No work has been done to suggest that those choke points occur at hospitals that want to be foundation trusts. We should be concentrating on giving the most freedoms to areas where they will best help to deliver the best patient care.

The Government have said that foundation trusts will not be able to engage in unfair competition in relation to different staff rules, pay and conditions, so perhaps that is not a big issue. But what about the wider freedoms? When people talk about freedoms it sounds marvellous, but what are they? I raised a number of possibilities in my recent Adjournment debate. I asked:
"Will foundation trusts have to adopt policies such as family-friendly policies and zero tolerance of violence towards staff? Will maternity services have to provide women with the ability to choose where to give birth, and will the collection of maternity data have to be improved? Will the foundation trusts have to adopt catering standards such as providing halal meat, or comply with safety directives such as on the use of disposable instruments?"—[Official Report, Westminster Hall, 7 January 2003; Vol. 397, c. 5WH.]

The answer that I received from Ministers is that those potential freedoms will still have to be adhered to by NHS foundation trusts. For example, data on maternity services may have to be part of service agreements with PCTs, but possibly not. If maternity data is not to be kept centrally, that raises serious questions for us as Members of Parliament about how we analyse the health service in future.

I was told that meeting catering standards would be part of good practice guidance. The Government have made it clear that foundation trusts will not have modern matrons, yet only a month ago they introduced modern matrons into accident and emergency departments. Which way are we going? Are there to be more central directives, or not? If foundation trusts will riot have modern matrons, will they have the £10,000 to spend alongside that? Answering some of those more detailed questions will help us to understand whether this is truly the right way forward.

On the claims regarding two-tierism, I accept that services vary around the country, but we are legislating for two different structures, which has not happened before. Ministers say that the system will be fair and that all trusts will still be there in five years. However, given that there is the same limited NHS capital pot, to say that foundation trusts can effectively have first call on capital borrowing is to say that they have the first chance, which necessarily means that the others will have less. The same applies to surpluses. Professor David Kerr has been quoted a couple of times. He has done excellent work in developing Cancer Network. Having listened to him on two occasions, it seems to me that he wants more patient involvement. He says, for example, that patient forums have not worked, but they have not been up and running for long enough to judge whether that is so. He says that, for him, democracy does not mean electing a few people to represent patients on the board but genuine patient involvement. He should therefore support patient involvement. He says that the star system on which the Government's policy is based is duff and unstable. He also says that he wants the money to be spent on the choke points in the NHS.

Many hon. Members have mentioned the star system and it is worrying that almost half the acute three-star trusts lost that status in one year. If the policy of patient involvement and empowerment is to work, it must be implemented across the board. Perhaps we should pilot it in a geographical area, and in trusts that are perceived to perform well as well as those that are not.

I am worried about creating separate legal bodies in the NHS. One of the people who talked to the Health Committee said that they would welcome NHS contracts being put on a legal footing. The idea of both sides spending NHS money on dragging a contract through the courts is shocking. It would be money for lawyers, not patient care.

The Government are doing good things in the NHS. In Swindon, we have a new hospital, NHS dentistry is back and waiting times are reducing. I am not complacent; I know that much remains to be done. I support the election of non-executives but we should consider that for PCTs. We do not need foundation trusts to do that. I am not sure about restricting voting to only some of my constituents; I should like them all to have a say. In January, the Secretary of State did not rule that out, but it appears that he has done so now.

I want more freedom for all hospitals and throughout the NHS, including community services, which are as important as the acute hospitals. I do not want my constituents to have to wait five years to have the same access to capital resources as others. We should have freedom for the many, not the few.

5.26 pm

I shall confine my remarks to foundation hospitals. It is important to acknowledge the context of the debate: the biggest sustained increase in resources in the history of the national health service. In Bedfordshire, that means that there is a genuine prospect of substantial increases in capacity, about which the strategic health authority is currently consulting the public. That could transform the service that my constituents need.

However, we are considering not only capital investment or increasing capacity, but recruiting more staff, retaining existing staff and trying to persuade those who have left the service to return. None of those goals can be achieved quickly or easily, but it is absolutely clear to me that the Government are committed to the national health service and have strong ambitions for its future health. I therefore do not regard the Bill with the same suspicion as some hon. Members.

I reject the notion that the Government have an agenda—hidden or otherwise—to weaken, fragment or erode the NHS. However, they have a clear agenda to improve it. It is perfectly reasonable for that agenda to include, in addition to money, capacity and staffing, examining the culture of the NHS, its operation and the way in which it needs to operate in future. That drives the proposal for foundation status.

Of course, it is right to question and scrutinise the Government's proposals. After all, that is why we are here. However, I do not object to foundation status in principle and I shall vote to give the Bill a Second Reading and look to make or support change to the detail on Report, when I hope that we shall deal with some of the many matters that my hon. Friends rightly raised.

Given the limited time available, I want to make only three points. First, let us consider the injection of local democracy through the board of governors. In principle, it is an excellent idea, but we need to ensure that the membership truly reflects the community, including the section of society that needs the NHS most but participates in organised democracy least.

Surely, too, staff on the board must include those members of the care team who are sometimes forgotten in the romanticised "doctors and nurses" view of hospitals.

Secondly, we should consider the relationship between foundation hospitals and the new system of public and patient involvement. I have raised this matter with my right hon. Friend the Secretary of State before. Community health councils will be abolished on 1 September. The replacement system has not got off the ground yet, but the Commission for Patient and Public Involvement in Health is working hard to get it going. Abolishing CHCs was a controversial proposal, but the Government have made the case strongly that the new system must and will be better. Many of us, including people involved with CHCs up and down the land, are engaged in preparations to ensure that that happens.

If we are to have a better system involving the public and the patient in the NHS—a system rooted in local communities throughout the country—it is surprising to say the least, and I am very disappointed, that the Government's proposals for foundation hospitals ignore the need for those hospitals to establish a patients forum. Given the logic of the proposals—that the whole NHS should acquire foundation status at some point—that is hardly an encouraging message to send the Commission for Patient and Public Involvement in Health.

Thirdly, let us consider the culture of the national health service. I do not believe that this is just a question of administrative Whitehall centralisation; I think that consideration should include a bold look at the 55-yearold consultants' contract, and the somewhat loose relationship between NHS management and many clinicians that has resulted from it.

Under the current contract, the deal is that consultants are paid a good salary to undertake their contracted hours. Most are then paid another and better salary to undertake private practice. The majority of consultants have opted for what is called "maximum part-time": they are paid for 10 of a possible 11 working sessions per week. I understand that most undertake six or seven fixed sessions, which include operating on patients. The remaining paid sessions are flexible, and are for administration, research and teaching. Those things are important, and most consultants do a very good job for patients and the NHS, but it is at least suspected in the NHS—I am choosing my words carefully—that some consultants do private work during some of their flexible NHS-paid time. NHS management has problems in holding them to account—problems that private hospital managers, ironically, do not encounter.

One change in the NHS culture that would have beneficial implications for capacity and waiting times for patients is a new, transparent consultants' contract. Unfortunately the Government have walked away from that idea so far, but I am hopeful that the new foundation trusts will enable the NHS and the Government to return to this neglected but crucial matter with more confidence and determination.

5.34 pm

Hugh Bayley
(City of York)