NHS FOUNDATION TRUSTS

HC Deb 19 November 2003 vol 413 cc818-57

Lords amendment: No. 1, leave out clause 1.

2.53 pm

The Secretary of State for Health (Dr. John Reid)

I beg to move, That this House disagrees with the Lords in the said amendment.

Madam Deputy Speaker

With this we may take Lords amendments Nos. 2 and 3, Lords amendment No. 4 and the Government motion to disagree thereto and Government amendment (a) to the words restored, Lords amendments Nos. 5 to 55, Lords amendment No. 56 and Government amendment (a) thereto, Lords amendment No. 57 and Government amendment (a) thereto, Lords amendment No. 58, Lords amendments Nos. 60 to 64, Lords amendment No. 161 and the Government motion to disagree thereto and Government amendments (a) to (bb) to the words restored, Lords amendments Nos. 162 to 193 and 227, and the Government motions to disagree to Lords amendments Nos. 5, 26, 28 and 29.

Dr. Reid

Lords amendment No. 1 would leave out clause 1. Let me put it simply: it attempts to wreck the Bill that has been sent from this House.

The Bill represents the next important stage in improving and revitalising our national health service. Let me make it plain right from the start that, to Labour Members, that means a national health service built on the founding principle that everyone in this country should have equal access to health care free at the point of delivery—a principle that will be defended and protected as long as this Government are in power.

Already over the past few years—and, indeed, into the next few years—the Government are making the largest-ever investment and largest-ever injection of finance into the national health service. That is not for one, two or three years, but for five years. Simultaneously, we have improved and will continue to improve and modernise the national health service, reforming the way in which health care is delivered in this country to the benefit of patients. This is already bringing significant results in health care. All the main indicators of waiting times are now lower than they were in 1997, when we inherited an under-invested and impoverished health service from the previous Government.

For instance, deaths from our two biggest killers are down dramatically. Deaths from cancer are down 10 per cent. in the last few years and death from heart disease are down by no less than 19 per cent.—a dramatic and significant reduction in the scandalous figures that we inherited. In addition, what we have already done can be seen by the additional 55,000 nurses and 14,000 doctors and by the largest building programme in the history of the national health service.

Dr. Ian Gibson (Norwich, North)

Does my right hon. Friend agree that the real changes in cancer services have come from the 34 cancer networks that have been involved with patients and right through to doctors, pharmacists and so on? The networks have crossed institutional barriers and they are on their way now. Any interference with that would destroy much of the solidarity that has been built up among many of the work force in the health service.

Dr. Reid

I agree and pay tribute to that. Nothing we are suggesting today would cut across that. My hon. Friend points out the efforts that have been made and the results that the cancer networks have achieved. Without undue immodesty, I think that we are able to claim as a Government that the results are at least partly due to the extra £570 million a year for cancer services and the 30 per cent. increase in the number of consultants since we took office. There are 900 more cancer consultants, so we already bringing about significant benefits to patients. I believe that that is a significant start, but it is not enough. It is not nearly enough to bring the quality of care that those who depend on the national health service should have.

We said in our last manifesto, which we placed before the people of this country, that decentralisation of power to front-line staff is an essential part of the future national health service. It is an integral part of giving patients the power, the information, the quality of service and the degree of choice that they expect from their national health service today and that has hitherto been available only to those rich enough to buy quality, quick access, sensitivity and personal health care outside the national health service.

The Opposition in the other place have completely rejected the principle of handing power in the national health service to front-line staff. In doing so, they have gone far beyond long-established practice. Lords amendment No. 1 and Lords amendment No. 161, which would leave out schedule 1. are not revising amendments; they are wrecking amendments. The Government are proposing to accept the vast majority of the revising amendments agreed in the other place, but the main question before us today is not about sensible scrutiny but about whether the Tories and Liberals, in the main in the upper House, will succeed in overturning the majority will of the House of Commons.

Mr. David Hinchliffe (Wakefield)

My right hon. Friend refers to long-established practice. I have been a member of the Labour party for many years and it has been long-established practice to develop policy within the party—at constituency and conference level—but we have not had that with this issue. We have not had Green Papers, White Papers or any consideration at all. There has been no scrutiny at all of this issue in the Commons. In view of the way in which this matter has been treated in the Commons, is it not unreasonable to suggest that somehow the Lords have behaved unconstitutionally?

Dr. Reid

I am not sure whether my hon. Friend meant this, but I would not, with due respect to the other place, ever draw comparison between our democratic methods inside the Labour party and the inherited privilege vested in the other place. He will have noticed that I voted—[Interruption.] I am sorry, but I voted for abolition. Those on the Opposition Front Bench have got another thing wrong.

I would not draw such an invidious comparison, but the other place has gone totally against the central element in clause 1. It has not refined or amended it, and that central principle has been the subject of debate and controversy and the Commons has decided on the matter after that debate and controversy. If that principle is rejected, it will go far beyond anything that we have been prepared to tolerate, even from an unelected second Chamber.

3 pm

Mr. David Cameron (Witney)

For clarification, will the right hon. Gentleman set out whether there was a specific pledge in the Labour manifesto about foundation hospitals?

Dr. Reid

There was a specific pledge in the Labour party manifesto to decentralise power to the frontline of the national health service. I know that the hon. Gentleman is interested in, and deeply committed to, the process inside the Labour party. We know that the Conservative party has extremely democratic ways of making policy—and choosing leaders, incidentally. The way in which leaders emerge in the Conservative party is paralleled only by the selection of the Chinese leadership.

At least my hon. Friend the Member for Wakefield (Mr. Hinchliffe) has a deep interest in, and commitment to, a democratic discussion of such matters. If he is asking me whether I think, in retrospect, that we could have discussed the process better and more widely, the answer is yes. Therefore, I hope that the fact that our party and Government are about to embark on perhaps the widest consultation that we have ever undertaken is an indication that we have learned some lessons from the process. However, we are judging today not only the process but the merits of the case and the pledge that we made in our manifesto. That is what I am putting to the House today and I hope to receive support from the Government Benches.

Lynne Jones (Birmingham, Selly Oak)

What will be the impact on national patient booking systems, electronic patient records and electronic prescribing if foundation trusts are able to opt out of national NHS information technology systems?

Dr. Reid

There is no indication whatsoever that any hospital with or without foundation status would benefit from doing that. It is possible for people to jump off Tower bridge—all things are theoretically possible—but there is not one shred of evidence that there would be any incentive to opt out of what will be, by any standards, the biggest ever IT project. Indeed, the introduction of the project will mean that for the first time in history patients inside the NHS will not be referred to a hospital by their doctor and told to go home and wait for instructions on when and where to attend, without any consultation with them. The IT system that we are introducing will, from December 2005, not only allow for consultation with patients so that they have an option of which hospital to attend, but allow them to book online. Such a quality service has previously been commandeered only by the rich of this country, but we shall extend it to people who are dependent on the NHS.

Mr. John Redwood (Wokingham)

rose—

Mr. Tim Yeo (South Suffolk)

rose—

Dr. Reid

I shall give way, democratically, to the right hon. Gentleman on the Back Benches first.

Mr. Redwood

Will the right hon. Gentleman tell us which of the freedoms that he will grant to foundation hospitals he thinks they will use, and how will that improve things?

Dr. Reid

Yes, indeed. I was in Birmingham recently, and I commend the authority and the hospital that I visited. It had managed to build two new wards with 80 beds to assist people in that area. The building process took five months from start to finish, but the consultation process to get permission for the building took not five months but 10 times five months. A local national health service will be able to take such a decision locally, thus increasing efficiency and delivering a better quality of service than before.

Mr. Stephen Dorrell (Charnwood)

rose—

Mr. Yeo

rose—

Dr. Reid

I shall go for seniority this time and give way to the Front-Bench spokesman.

Mr. Yeo

I am grateful to the Secretary of State for giving way because my intervention is entirely helpful to him. I appreciate that he has been quite busy recently, so he might not have had time to study in detail the Bill and the proceedings during its passage through both Houses of Parliament. To help him to respond to the question asked by the hon. Member for Birmingham, Selly Oak (Lynne Jones), the Bill does not give foundation trusts the power to opt out of the incoming IT system. The Secretary of State was clearly unaware of that point.

Dr. Reid

I congratulate the hon. Gentleman on his new post, in which he will spend half his time on the national health service. If he thinks that I have difficulty coping with it, it is no doubt a sign of his innate capacity to think about and embrace larger subjects than anyone else that he is able to cope with health and education. It is an illustration of the Conservative party's priorities that it has appointed half a shadow Minister for education and half a shadow Minister for health, but two chairmen have been appointed to sort out the party.

The whole point of passing down power to hospitals with foundation status is to give them greater freedom to respond quickly to the needs and ambitions of today's patients.

Mr. Dorrell

rose—

Dr. Reid

I shall make a little progress before I give way to the right hon. Gentleman because I want to respond to the helpful intervention by the hon. Member for South Suffolk (Mr. Yeo). I fully understand why the Conservatives are opposing our plans. It is not because they want to improve the national health service more than us, because that is one of the great promises—such as, "I will love you all the more for it in the morning", or, "I'm a Conservative and I love the health service more than you do"—that we have come to look at askance. They oppose the plans because they are frightened of the political consequences of the improvements. [Laughter.] I must tell the hon. Gentleman that his predecessor, who has gone on to become one of the two chairmen of the Conservative party, put that in explicit four-letter terms. He said that if we managed to carry out the improvements, the Conservative party's plans to run down the national health service would be flummoxed—I think that that was the word that he used. That is true, so the Tories oppose the measure because they know that as we succeed in improving the NHS, their attempts to undermine and attack it will have less effect. Their policy of cutting investment and attacking equality of access to health services will fail. Just as they opposed the formation of the national health service, they now oppose the reformation of our national health service because it stands for everything in which they do not believe. The reforms stand in the way of their alternative plan: to force people toward the private sector.

Mr. Dorrell

Rather than knocking down paper tigers and talking about why we oppose the Bill, will the Secretary of State return to the question asked by my right hon. Friend the Member for Wokingham (Mr. Redwood)? The Secretary of State cited the example of a hospital that, as a foundation trust hospital with new freedoms, would be allowed greater access to capital so that it could move quickly to build a new facility. Will he confirm that if such a hospital did that under the Bill, given that the capital allocation will be ring-fenced and the Treasury will put a ceiling on it, the money provided for such building would come at the expense of non-foundation trust hospitals?

Dr. Reid

The right hon. Gentleman speaks as if he is making a huge revelation. Of course there is a pot from which hospitals and other elements of the national health service—foundation trusts or otherwise—must take their money. The difference between what is happening under this Government and what happened under 20 years of the last Conservative Government—the right hon. Gentleman was Secretary of State for part of that time—is that we are making the biggest ever increase to the pot of money in the history of the national health service. When people in the NHS want to build, they now know that that is possible. When we came into power, nearly half of the NHS's buildings were older than the NHS itself. Under the plans for capital allocations during this term of government, almost half the buildings will be less than 15 years old by 2010. That is the answer to the right hon. Gentleman's question.

Mr. Michael Weir (Angus)

rose—

Dr. Reid

I want to make progress.

The creation of NHS foundation trusts is part of the process of moving from an NHS controlled from Whitehall to an NHS in which standards and inspections are national, but delivery and accountability are local, with more diverse provision, offering more choice for patients. That agenda will not go away. Decentralisation is a necessary prerequisite of responding more personally and sensitively to the extra power for patients which the Government intend to deliver. It will form a major part of our programme for the next few years.

Clare Short (Birmingham, Ladywood)

Most of us agree that there should be more decentralisation in the health service, as we said in our manifesto, but many of us object to the current proposal because it allows the most privileged hospitals to decentralise. Giving them greater authority and more privileges will lead to growing inequality. Why not decentralise across the system?

Dr. Reid

First, with the greatest respect to my right hon. Friend, she is not exactly correct. The proposal gives the first foundation status opportunities not to the most privileged hospitals but to the best performing hospitals. Some of them are in more socially affluent areas, but others are not. Many good performing hospitals are in relatively underprivileged catchment areas. Secondly, and importantly, even if my right hon. Friend's premise were correct, her conclusion would be wrong because we do not intend to limit the opportunity to the first wave. Within four years we intend to raise every hospital in the country to the level at which we can free them from some of the central restrictions. That is one compromise that we made after discussions with my right hon. and hon. Friends. Our initial intention was to give foundation status to only a few hospitals, but after consultations with colleagues inside and outside the Government we agreed to extend that opportunity to everyone within four years.

NHS foundation trusts will be established as a new form of common ownership—a new public benefit organisation. They will still be part of the NHS family, with the purpose of providing NHS services to NHS patients. The care they provide to NHS patients will be, as I said, delivered on the basis of need, not ability to pay, and will be free at the point of use. The foundation principles and values of the NHS will be protected, but the system by which that is delivered will be decentralised and modernised. They will be locked into public ownership, which is the main thing that Opposition Members oppose. They know that a thriving local hospital, owned by local people in a way in which national services have never been owned before, will defend itself politically against a future Conservative Government's plans to privatise the NHS. That is what Opposition Members do not like about foundation hospitals.

Dr. Desmond Turner (Brighton, Kemptown)

I greatly sympathise with my right hon. Friend's argument that trusts need to be freed of much of the bureaucracy that gets in the way of their effective operation. However, does he agree that as most of those directives on bureaucracy emanate directly from his Department in Whitehall, we do not need an Act of Parliament to deal with it?

Dr. Reid

It does not need an Act of Parliament to deal with all of it; it does need an Act of Parliament to deal with some of it. My hon. Friend is right that our proposals do not go as far as I should like. We have compromised. I have no shame in talking about compromise. We have compromised with colleagues inside and outside the party—people at the front line—to get a balance. The idea that we have not gone as far as the Conservatives would like, so they will vote against our moving in the direction they theoretically want us to go in, is sheer opportunistic hypocrisy.

We agreed, for instance, that all foundation trusts must pledge themselves to the long-time negotiated "Agenda for Change" with the health unions. That compromise benefits all workers inside and outside foundation trusts.

3.15 pm

Mrs. Alice Mahon (Halifax)

Will my right hon. Friend give way?

Dr. Reid

If my hon. Friend lets me make progress, I shall I try to take her intervention later.

I want to illustrate how far we have gone in our discussions on compromise. We will insist on reinserting the statutory limit on the proportion of private patients treated in NHS foundation trusts, removed by the Opposition in another place. We have agreed to limit the borrowing powers, as explained earlier, of NHS foundation trusts through a prudential borrowing code. We have compromised on, and listened to, a number of concerns. Those are just a few examples.

In addition, we have tabled amendments, because people have raised the issue, on the way in which the membership of the trusts will be drawn up—that is, the membership from which the governance will be vested. There are also amendments on the sub-division of the electorates on the board of governors, the safeguarding of patient information and, for English hospitals, the extension of the public constituency to Wales in certain cases where that would be relevant.

Several hon. Members

rose—

Dr. Reid

I will give way to my hon. Friend the Member for Cardiff, Central (Mr. Jones) and try to get around to my other hon. Friends.

Mr. Jon Owen Jones (Cardiff, Central)

I wish my right hon. Friend had not made so many compromises, but I understand why he has done so. Will he remind some of our hon. Friends that the Government, who have invested 70 per cent. more funding in the health service, have produced a better health service? By comparison with the investment made, however, we are making slow progress. Some of our colleagues need to understand that with that investment comes a need to reform; otherwise, we will not make the changes that our electorate so desire.

Dr. Reid

I agree with my hon. Friend. I have no doubt about the sincerity of the commitment of every Labour Member to the NHS. The debate is worth while, but those who believe that increasing capacity and putting more money into the health service will be enough are mistaken. Unless that is accompanied by reform, we will not safeguard the NHS for the next 50 years. For any given level of capacity we need to increase the quality of output, increase the speed of delivery of operations and give patients more information and choice over what they are doing. If we are to do that, we must decentralise the delivery of health care so that the local units, whether they be GPs or hospitals, can respond to the patients themselves when they exercise that new choice. All of that is about defending the NHS from both sociological changes and Opposition Members who would destroy it.

Kate Hoey (Vauxhall)

I take the Secretary of State's point about patient choice and devolved powers, but surely the crux of the matter is that the purse strings are held by the primary care trusts. The manoeuvring and changing is not necessary. If we were to democratise the system, we should have started with the PCTs.

Dr. Reid

My hon. Friend is a little unfair. First, the PCTs are a huge decentralisation of power. Some 75 per cent. of our money goes through them. Secondly, I hope that the PCTs will not stop at the level of decentralisation that they have already achieved, but will involve GPs and others in the primary care sector in planning their health commissioning. Thirdly, patient forums are involved in the PCTs. However, even if we managed to democratise the formalities, giving power to patients is more than formal democracy. It means giving them a real choice. It is hypocrisy to argue that such choice can be provided while cutting the capacity of the NHS or diverting money to subsidise the 5 per cent. who are rich enough to buy their own operations. It is not hypocrisy to ask for a further degree of choice while putting in extra capacity, as we are doing.

Several hon. Members

rose—

Dr. Reid

I genuinely must make some progress. Hon. Members will understand that if I do not, the accusation will be made that I have taken up too much time.

I have illustrated some of the compromises that we have made, but I have an important reassurance for hon. Members. Since I became Secretary of State for Health, some colleagues have specifically asked me to reassure them that we will learn from the experience of the NHS foundation trusts set up in the first waves in 2004. Some colleagues have expressed concern that we will not be in a position to learn from the experience of the first NHS foundation trusts before the rest of the NHS can apply for that status. They have asked me to explain our willingness to review and to learn as we go along. I have listened to those colleagues and I want to make it clear that we will of course review the experience of the first waves. Indeed, we will have particular opportunity to do so in the 12 months between the end of the first waves in the autumn of 2004 and the autumn of 2005. We will be able to carry out just such a review in more detail at that time. I will ask the Commission for Healthcare Audit and Inspection, which is of course accountable to Parliament and not to me, to assist me in that review. Obviously, during that period, I would not pass on any new application for a new NHS foundation trust to the regulator. That is the most forthright, succinct and clear indication that I can give to all hon. Members that we are prepared to learn the lessons—the obstacles as well as the opportunities—of the new foundation status as we go along. I hope that that reassures those colleagues who have asked me about that point.

Ms Joan Walley (Stoke-on-Trent, North)

I accept that my right hon. Friend is looking to find some way to build on the wonderful work that has been done by Labour in the NHS, but why do we not learn the lesson of the resource allocations working party and the inequalities that there have been in health? I am looking for some assurances about "Agenda for Change". In chapter 8 of that document, it says that foundation trusts will be able to pay their staff far more than other hospitals. That will increase health inequalities, not decrease them. What will he do to ensure that the ability of foundation trusts to poach staff will not undermine the good work that the Government have done?

Dr. Reid

With respect, my hon. Friend is misreading chapter 8. "Agenda for Change" was agreed after two years of discussion with all the trade unions involved. It includes a flexibility to pay staff above the minimum agreed levels, but that does not apply only to foundation hospitals. It applies to all hospitals. If my hon. Friend is saying that some hospitals attract staff because they are perceived to be better than other hospitals—because they are teaching hospitals, have a better reputation or are more convenient—that has not been instigated by foundation trust status. It has always been the case. However, for the first time in the NHS we have an agreement worked out in great detail over two years—largely by my right hon. Friend the Minister of State, and I pay tribute to him—that involves 1.3 million people, from porters and cleaners right up through nurses and doctors. It even includes consultants, who for the first time have signed a contract to pledge a significant increase in the amount of face time that they have with NHS patients.

Mr. Andrew Lansley (South Cambridgeshire)

rose—

Dr. Reid

I will give way to the hon. Gentleman because he has long been a supporter of foundation trusts. I trust that he will vote with us tonight.

Mr. Lansley

I will vote as I did on 8 July. The Secretary of State should listen carefully to the hon. Member for Stoke-on-Trent, North (Ms Walley). Addenbrooke's hospital in my constituency will be in the first wave of foundation trusts. It wants to implement "Agenda for Change" and it knows that as a foundation trust it will be an early implementer of the new funding flows. It will get additional money to implement "Agenda for Change" at an early stage.

Dr. Reid

I congratulate the hon. Gentleman on the performance of his local hospital and on the support that he has given it in its quest for foundation status. I am sorry that his promotion means that he is in a straitjacket when it comes to voting tonight for what he believes in. I am sure that my hon. Friends will remark on the discipline that has been imposed in the attempt to inflict a defeat on the Government tonight. Perhaps they will bear that in mind. I am afraid that I have to correct the hon. Gentleman factually. It is not necessarily the case that foundation hospitals will implement "Agenda for Change" prior to everyone else. We are working on the guidelines on that point at present. [Interruption.]

I will try—if I can do so through the noise from Opposition Front Benchers—to sum up our position tonight. We face an important, crucial and controversial—because it is radical—vote in the House.

Mrs. Joan Humble (Blackpool, North and Fleetwood)

Will my right hon. Friend give way on the subject of his important announcement?

Dr. Reid

If it is an announcement that my hon. Friend will support the Government tonight, I will gladly give way.

Mrs. Humble

I thank my right hon. Friend for giving way. Will he clarify the important statement he made a moment ago about reviewing the first waves of foundation hospitals before making progress? He used the plural "waves", so can he clarify how many hospitals will be involved and whether he will come back to the House with a report before making an announcement about more foundation hospitals in the future?

Dr. Reid

It is anticipated that the first waves will start in 2004 and will consist of two parts. One has already been publicly announced and includes 29 hospitals, falling to 25. The second part will include 30 hospitals or fewer, so the round figure is about 50. As for reporting to the House, I have always made it plain that we will review the situation as we go along, because it is the study of modern society that has led us to the conclusions we have reached about the need to give patients better information, quality, power and choice and, therefore, the need to decentralise. It would therefore be wholly contrary to our approach and intuition to say that we shall plough ahead irrespective of any obstacles or difficulties we encounter. We are prepared to review as we go along.

My hon. Friend is right, however. As I said, there is a period of approximately 12 months between autumn 2004 and autumn 2005 in which it would appropriate to carry out a specific review of what is happening. I shall ask CHAI to assist in that review. The commission, which is established under the Bill, is responsible and accountable not to me but to Parliament, so any report it produces will be presented to Parliament. I hope that that answers my hon. Friend's point.

Several hon. Members

rose—

Dr. Reid

In fairness, I shall give way to my hon. Friend the Member for Warrington, North (Helen Jones), who has tried to intervene twice.

3.30 pm

Helen Jones (Warrington, North)

I am grateful to my right hon. Friend. Will he clarify the remit of any such review? Will it include the effects of the change on the whole health community and not be only a review of foundation trusts?

Dr. Reid

My hon. Friend tempts me to hold a review of the workings of the whole system, which is neither what I said, nor what I intend. We are instigating one of the most radical transformations within the NHS, but that is only a part of a much wider agenda. One of our problems all along has been that foundation trust status has not been put in context. When it is seen in the context of the vast increase in capacity and of the reform of the system as a whole—in particular, reversing the NHS engine and navigation system away from central diktat and toward giving patients the sort of power that they have previously had only in the private sector—it is easier to understand why we have to decentralise.

This is a radical move, so we are duty bound to investigate and oversee the changes as we proceed. I have said that, to reassure colleagues, I shall, in the period between autumn 2004 and autumn 2005, call in assistance to examine the difficulties, challenges and experiences of the early foundation trusts, which will be to our benefit and enable us better to drive forward improvements in the NHS. To assist, I shall call in CHAI, which is responsible to Parliament, not to me. I think and hope that that will give a great deal of reassurance to many of our colleagues, who have continually asked us to reassure them that we will not proceed willy-nilly, regardless of experience.

Several hon. Members

rose—

Dr. Reid

If my hon. Friends will forgive me, I really have to draw my remarks to a conclusion. The Minister of State, my right hon. Friend the Member for Barrow and Furness (Mr. Hutton), and I will be more than happy to respond to points raised during the debate. For now, let me take a last few interventions, so that no one is offended.

Mr. Gordon Prentice (Pendle)

I do not think it is right to experiment on so many NHS trusts. It does not satisfy me at all that a huge number of trusts are to be subject to audit. My question is this: given that this is such a radical transformation, why is it not possible to pilot the scheme in a small number of trusts across the country?

Dr. Reid

First, we would still need legislation to do that. Secondly—I say this with all due respect to my hon. Friend—when it was first suggested that we might carry out a limited number of pilots, we were immediately accused by my hon. Friend of creating a two-tier health system. I accept it as a consolation of my job that, in a sense, we cannot win. If we pilot in a small number of trusts, we are accused of privatisation or creating a two-tier system; if, for the sake of equity, we propose that the entire service be affected, we are told that that is far too radical a plan for a timid beast like the Labour party to contemplate. When we formed the NHS, it was a radical vision of amazing proportions and, of course, it involved risk. There is a degree of risk in everything—I do not deny that for a minute. That is precisely why we shall proceed with a degree of caution and in waves, and why I have reassured my hon. Friends that I shall genuinely examine the experience of the early trusts. However, I am not prepared to go back to the beginning and say we shall allow only 10 foundation trusts to be created, and have all the arguments about equity again.

Several hon. Members

rose—

Dr. Reid

I will give way, first, to my hon. Friend the Member for Birmingham, Northfield (Richard Burden), then to my hon. Friend the Member for Halifax (Mrs. Mahon), who has been trying to intervene for a while. Then, I must conclude.

Richard Burden (Birmingham, Northfield)

May I take my right hon. Friend back to the issue of membership? I am one of those who have doubts about aspects of the proposal without necessarily endorsing some of the more cataclysmic opinions that have been expressed about foundation trusts generally. However, if foundation trusts are to achieve the objectives that he has stated, is it not vital that their membership base be as wide as possible? He says that there will be an amendment that will allow foundation trusts automatically to accept patients and staff as members, unless they opt out. I welcome that, but I am worried by the wording, which is that the trusts may do so. Will he make it clear that, unless people opt out, automatic membership will be expected, and that membership will not be something that they can opt in or out of, as they see fit?

Dr. Reid

I entirely agree with my hon. Friend that there is a problem. There is no doubt about that. That is one of the risks involved. Having listened to my hon. Friend and other colleagues, we have decided that for patients and staff it will be an opt-out procedure. In other words, there will automatically be a reasonably representative basis of staff and patients from the beginning to stop particular groups, political or otherwise, trying to gain control of an asset of the local community and of the nation for their own benefits.

On the question of extending the idea of opt-out to the whole constituency, I am sure that my hon. Friend will understand that there are some places where the local constituency may be huge. Therefore we have not compelled trusts so to do. However, we have said that we would expect them, unless there are very good reasons not to, to follow the same procedures of opt-out as would otherwise be the case. We shall examine carefully whether they have such reasons.

Mrs. Mahon

My right hon. Friend and I were in the House when an experiment was carried out in Scotland to decide whether to impose the poll tax, with disastrous results. He has tried to say today that the opposition is coming from a few Back Benchers and the Tories. However, is it not true that most of the unions, staff organisations, workers, the royal colleges, the Society of Radiographers, physiotherapists, the general public in the latest poll—61 per cent.—pensioners, including Halifax pensioners, and the King's Fund are opposed to the proposed experiment? Has my right hon. Friend ever heard of the expression, "Everybody is out of step except our Johnny"?

Dr. Reid

It is true, to name a few, that the British Medical Association, consultants, the House of Lords, the Tories, the Liberal and Democratic party and some of the royal colleges—[Interruption.] Yes, and some trade unions. It is true also that every group that opposed the formation of the NHS is opposed to the proposal. Incidentally, all of these groups, with the exception of the trade unions—I will come to them in a moment—were opposed to Nye Bevan when he introduced the NHS in the first place. The trade unions, through the Labour party conference and in other ways, have expressed their opposition. That does not necessarily reflect the experience of staff when we are speaking for staff throughout the country. As my right hon. Friend the Prime Minister said the other day, when the trade unions invited him to speak to their political committee, and when I have invited trade union leaders to come with me to talk to staff in hospitals, we have not found rampant opposition to letting staff get on with the job themselves.

When "foundation trust" is understood by the public and the staff—let us be honest, there is often a bemused audience listening to our debates on radio and television about the term "foundation trust"—and once the term is explained to them, the vast majority of them think that it is a good idea, provided that it is part of a bigger system of change, provided that the founding values of the NHS are retained, and provided that they understand that the NHS will embrace within it the foundation trust, which will remain an integral part of the NHS.

I do not accept what my hon. Friend is saying, but I accept that, despite the controversy, some Opposition Members have been so deeply interested in the NHS—incidentally, they can hardly muster two or three questions—that they will be present, every one of them, to vote against the Government this evening. I know that in practice they will be voting against what they say and what in theory they support. The Liberals will be voting against decentralisation. The Conservatives will be voting against choice—real, substantial choice for patients in the NHS. I believe that their position is marked by a degree of opportunism and a degree of hypocrisy. I do not blame the Conservatives for that. I would go so far as to say that it is exactly what I would expect of the Conservatives.

If, however, any Member on the Labour Benches is looking for guidance or inspiration, or a swithering on the vote this evening, I merely ask them to look across the Chamber. Look at the Opposition. Remember what they did to the national health service when they were in power. Think what they will do if they ever get back into power. However sincere Labour Members might be, they should remember what is represented by those with whom they would walk into the Lobby tonight. Whatever position we take, I do not believe that there is any degree of coalescence with the Conservatives. If Labour Members vote against the Government tonight, they will be harming not only the NHS but our Government, by marching into the Lobby with the crowd opposite, who have no commitment to improving the health service. I ask the House to support the Bill and a Government who take pride in the past of our national health service and who have faith in its future.

Mr. Yeo

I draw attention to my entry in the Register of Members' Interests. I am delighted to have this early opportunity to debate such an important aspect of the Government's health policy so soon after taking on my new responsibilities. As it is the first time that I have debated with the Secretary of State, I should like to be as charitable as I can, although he has taken up well over a third of the time available for debate and left unanswered almost as many questions as there were before he stood up 45 minutes ago.

The key to what the Secretary of State thinks about the issue was revealed in the last minute or two, when it was plain to anyone in the Chamber that his concern about how the vote goes this afternoon is not about what that vote will do to patients or the national health service, but about what the vote will do to the Government and his position in it.

The Secretary of State raised a great many issues in his speech, some of which were somewhat tenuously related to the subject of the debate. I shall deal with those on another occasion. He frequently resorted to ludicrous allegations about the intentions of the Conservatives—intentions that we have never had, will never have and do not have now. Let me place on record the fact that I and the whole Conservative party are totally and unequivocally committed to the founding principle of the national health service—that care should be available to all free at the point of delivery, based on patient need and not on ability to pay.

Mr. Jon Owen Jones

Will the hon. Gentleman give way?

Mr. Yeo

In a moment.

I regret that the Secretary of State does not have and never will have the advantage that I and other hon. Members representing English constituencies have. We can see at first hand the results of his Government's policies on our constituents. We can learn from our constituents who are patients worried about their treatment, and from our constituents who are doctors and nurses and who speak to us of their frustrations as a result of the constant interference that they suffer from the Government. It is particularly unfortunate that as a Scottish Member of Parliament, the Secretary of State is trying to impose on England arrangements for hospitals that will not apply in Scotland.

The Secretary of State faces the debate this afternoon because he has failed to convince not just Conservatives and Liberal Democrats, but many in his own party and many people of no party about the merits of the Government's policy.

Andy Burnham (Leigh)

The hon. Gentleman is making a point about members of his party. Does he agree with his Front-Bench colleague, the hon. Member for South Cambridgeshire (Mr. Lansley), who stated last week: It would be perverse to block a step in the right direction"?

Mr. Yeo

I agree absolutely with my hon. Friend. He and I are at one on the matter. If the measure were a step in the right direction—I shall explain in a moment why it is not—we would, of course, support it. If the hon. Gentleman studied what my hon. Friend said at many stages in Committee, he would see that my hon. Friend was pointing out exactly the areas where the policy is going wrong.

3.45 pm

The Secretary of State's failure to persuade people of the merits of the Government's policy has cost his right hon. Friend the Minister for Sport and Tourism a chance to support England's splendid rugger team in Saturday's world cup final in Sydney. [Interruption.] I hope that he is back. For the sake of the taxpayer, I hope that yanking Ministers back from Australia in an attempt to save the Government's bacon in the House of Commons does not become a habit.

Dr. John Reid

First, will the hon. Gentleman confirm that the Conservative party has brought the hon. Member for Bournemouth, East (Mr. Atkinson) back from China? Obviously, he is unaware of that; I am slightly ahead of him. Secondly, will he explain why I cannot be objective about people in the health service, although I visit them constantly and am on their side, whereas he can apparently be objective about old folks and residents in care homes despite the fact that he is a director of care homes?

Mr. Yeo

That is a very obscure intervention. I have not been discussing with my Whips the whereabouts of my hon. Friends, which is not a matter of concern to me. I have been considering the merits of the case that is before us this afternoon, which the Secretary of State seems singularly reluctant to address. The point that I want to make about his position as a Scottish Member of Parliament is that however disastrous the effects of the policies that he may be following are on the national health service, his constituents will not have to face those consequences.

Tony Baldry (Banbury)

Does my hon. Friend accept that I gladly flew through the night from Sierra Leone to vote against the Government today because this is a totally iniquitous proposal? Poor star-rated trusts such as Oxford Radcliffe will never get foundation hospital status. The Bill ensures that unto those who have shall be given, while from those who have not shall be taken away even that which they have. That is the policy on the NHS under this Government.

Mr. Yeo

My hon. Friend eloquently anticipates the point that I was about to make. I am delighted to have his support. I say clearly that the Conservative party is opposed to this group of proposals on grounds of principle. In their present form, their effect will be to damage the national health service, not improve it.

Mr. Weir

The hon. Gentleman said that the policy had no impact in Scotland, but it has an impact in Scotland and Wales as their health service spending is determined by the Barnett formula, which depends on public spending in England. The Bill means that there will effectively be private health spending in England, which will affect Scotland and Wales. That is why we are voting against it.

Mr. Yeo

I think that I shall let the hon. Gentleman pursue that point in his own time.

As the hon. Member for Wakefield (Mr. Hinchliffe) pointed out—I was going to call him my hon. Friend, as he was my shadow counterpart about 10 years ago and we had many happy debates in the Chamber and outside—the proposal has emerged with a minimum of consultation. There was no sign of a White Paper and no mention in an election manifesto. Indeed, when the policy was finally debated at the Secretary of State's party conference this year, it was defeated.

Opposition Members would very much like to be able to support the Bill. In this House and the other place, we have made strenuous efforts to improve the measures that it contains. We have often done so with the cooperation of the Liberal Democrats and other minority parties, and in the House of Lords we did so with the cooperation of many Cross Benchers. During that process, the Government have conceded a number of points, but despite those concessions the House of Lords did not feel able to support clause 1. The fact that it reached that conclusion is not really so surprising because many other people and organisations have expressed their concern. The hon. Member for Halifax (Mrs. Mahon) referred to some of those organisations, which include the King's Fund, the British Medical Association, the Trades Union Congress, the Royal College of Nursing, Unison, the Society of Radiographers, the Transport and General Workers Union, the GMB and many others that the Secretary of State attempted to tarnish by saying that they had all apparently opposed the creation of the NHS 54 years ago.

Hugh Bayley (City of York)

Will the hon. Gentleman give way?

Mr. Yeo

In a moment. The next point concerns the Secretary of State's remarks about his own Back Benchers. On this morning's "Today" programme, he sounded as if he was almost attacking his colleagues for contemplating voting against the Government. The truth is, as he should know, that those Members who are courageously thinking of opposing this clause are standing shoulder to shoulder with their constituents because they can see the damage that the Bill will do to them in its current form. 'Those who put the interests of their constituents first will enjoy the respect of this House, and of those whom they represent here.

We oppose the amendments—reluctantly, as I have said—for two reasons. First, they will harm those hospitals that do not receive foundation trust status. To begin with, that means the vast majority of the hospitals that our constituents use every day. Secondly, the foundation trusts established by the Bill will themselves he heavily burdened by a management structure that is muddled, confusing and expensive; by a star-rating system that distracts doctors and nurses, and sometimes prevents them from treating the patients most in need of their care; and by a regulator that, far from being independent, will be little more than a creature of the Secretary of State, with sweeping powers to direct foundation trusts' activities.

Mr. Stephen McCabe (Birmingham, Hall Green)

Can the hon. Gentleman estimate how many NHS hospitals would be damaged by his policy of siphoning off money and giving it to private practice?

Mr. Yeo

I regret giving way to the hon. Gentleman. Such a tired old allegation is completely irrelevant to the important matters that the House has a limited amount of time to consider this afternoon.

There is no doubt that the clause will create a two-tier health service. The chairman of the British Medical Association council said: I am in little doubt that the establishment of foundation trusts will … exacerbate inequalities in the NHS.

Dr. John Reid

Will the hon. Gentleman give way?

Mr. Yeo

In a moment. Let us be clear: for several years, most of the hospitals that serve our constituents will not have foundation status. Only a handful—25—will qualify in the first instance, and the privileges obtained by them will be paid for by other, less fortunate hospitals.

Dr. Reid

I wanted to intervene because I was so moved by the hon. Gentleman's passion for eradicating inequalities in health care. Now that he has put the onion away, can he explain to the House how taking money out of the national health service and giving it to those who can afford half the private cost of a heart bypass—£10,000—so that they can jump the queue quicker, would increase equity in the health service?

Mr. Yeo

Given the Secretary of State's lamentable performance in defending his own policies this afternoon, I look forward with relish to debating the Conservative party's proposals on the future of the health service at the appropriate time. There is limited time this afternoon to deal with issues that are of great concern to Members on both sides of the House, so I shall address the subject covered by the amendments.

In terms of the two-tier service, the victory that the Treasury scored over the Department of Health last year has particularly damaging consequences, because borrowing by foundation trusts will count against the Department of Health's overall totals. By making investment a zero-sum game, the Secretary of State has ensured that extra investment by foundation trusts will impoverish non-foundation trusts now, and for a considerable time to come. He claimed this morning that all national health service hospitals will gain foundation trust status within four years, but the question arises of whether that claim has been cast into doubt by what he has just said about a review of the first wave's performance at the end of 2005. In any event, four years is a long time for hospitals to languish in the second division. especially as, by definition, it is the weakest hospitals that will do so. Therefore, under the Secretary of State's plan, the hospitals that most need new investment will be the last ones to get it.

Another serious flaw in the clause concerns the nature of the foundation trusts that the Bill will establish, if it is passed. I have a long-standing interest in the role of independent hospitals. [Interruption.] Yes, it is a subject of which I have considerable direct experience having been chairman for eight years of the charitable trust that in 1983 took over the management of a former NHS hospital, Tadworth Court children's hospital.

That hospital, once the country branch of the Hospital for Sick Children, Great Ormond Street, faced closure in 1982. I led a successful campaign to keep it open, at the end of which an independent charitable trust was established to run it. Twenty years later—if the Secretary of State is interested in this rather important example of what a genuinely independent hospital can do—that children's hospital is vibrant, thriving and greatly expanded. I visited it last Friday in preparation for this debate. It is responsive to patients' needs, innovative in the services that it provides and outstanding in the quality of care that is offered by its professional and other staff to many children and their families.

The crucial ingredient in that remarkable success story has been the independence that the doctors, nurses and management have enjoyed—independence that, alas, foundation trusts are not granted by the Bill. Even though a Downing street press notice on 9 October 2002 suggested that foundation hospitals would be fully independent from Whitehall control under the Bill, foundation trusts will be as constrained in almost all respects as existing NHS trusts, prompting the Office for National Statistics to rule: NHS Foundation Trusts will be classified in the public sector as central government bodies. The same classification now applies for NHS Trusts. The ONS concluded: This set up has similarities with the model adopted for Network Rail"— not a happy precedent.

Under the Bill, foundation trusts are burdened with governance arrangements that are complex, confusing, ill defined, expensive and time consuming to operate. As much as £250,000 a year may be spent by each hospital in defining constituencies and running elections. The time and attention of doctors and managers will be diverted from patient care. There is a risk that foundation trusts may fall prey to pressure groups. As the hon. Member for Vauxhall (Kate Hoey) pointed out, it is not clear why the Government have chosen to address their concerns about governance to providers rather than to commissioners.

There are many other reasons for opposing the Bill but, in the interests of allowing other hon. Members to take part in the debate, I make one final point. Some people have suggested that, because certain features of foundation trusts proposed by the Government have a resemblance to our policies, we should not oppose the Bill but let it pass in its flawed state, with the intention of correcting those flaws as soon as we have the power to do so. That is a superficially tempting argument but it does not wash for two reasons.

First, as I have said, the Bill in its present form is a step in the wrong direction. It makes matters worse, not better. Secondly, the health service has been through many reorganisations in recent years. The Government now propose another upheaval. For us to encourage or even to condone that in the certain knowledge that, two years from now, we would have to impose yet more change to put right what Labour is doing would be grossly irresponsible.

The Bill does not provide reforms that will improve the NHS. It does not give hospitals the freedoms that they deserve. It creates a dog-eat-dog culture in the NHS. It is opposed by a formidable array of professional and other bodies. This debate and the vote that will follow it is almost certainly the last chance to block a proposal that, in their hearts, a majority of hon. Members on both sides know is wrong. Rejecting clause I will give the Government a chance to reconsider and to listen to the many voices pleading for change. They could then return to Parliament in the new Session with a Bill that does not divide the haves from the have-nots, and that gives foundation trusts genuine freedoms for the benefit of patients and their families. I urge the House to vote against the motion.

Several hon. Members

rose—

4 pm

Mr. Deputy Speaker (Sir Michael Lord)

Order. Before I call the next speaker, 1 remind the House that Mr. Speaker has placed an eight-minute limit on speeches by Back-Bench Members. That applies from now on. I call Mr. David Hinchliffe.

Mr. Hinchliffe

This is the first debate to which I have contributed since my right hon. Friend became Secretary of State for Health, and I wish him well, genuinely and sincerely, despite the somewhat unfortunate circumstances. I praise him for some of the steps that he has taken. He has made positive progress in the short time that he has been Secretary of State.

I also extend greetings to the hon. Member for South Suffolk (Mr. Yeo) and his new team. We tangled many moons ago, and I wish him well in his work. I am sure that his background and experience means that we will have some excellent debates. I also extend good wishes to the hon. Member for Sutton and Cheam (Mr. Burstow), the new Liberal Democrat spokesman. He, too, has a good track record on health issues.

I begin with an apology to my right hon. Friend the Minister for Sport and Tourism, who has had to return from the rugby union world cup. I am pleased to say that he is in the Chamber. Having seen the quality of some of the matches, some of us think that we have done him a great favour in getting him back. He is well aware that Great Britain meets Australia in the third rugby league test on Saturday. At least the players in that code can string three passes together without dropping the ball, and they can also score the odd try.

In the limited time available to me, I want to make a few brief points about my concerns, and to repeat what I said when I intervened on my right hon. Friend in respect of the constitutional aspects of the handling of this matter. I think that he conceded that lessons should be learned from the way that the House has been bounced into a policy which, as everyone can see, has not been thought through properly. I welcome that.

I have been a member of the Labour party for almost 40 years—I know that I do not look that old. I have always been proud that the party has had democratic processes for policy development. Policies were discussed at branch and constituency level, and at conference. However, this policy was discussed at conference only this year, when a pretty clear decision was taken. I understand why the Lords should have some grievances about the way that the matter has been handled, as there has been no proper scrutiny in this House. No Green Paper or White Paper was published, and hon. Members have had no way to monitor the policy's likely effects apart from a brief inquiry conducted by the Health Committee.

I do not want to labour the point, but a number of Labour Members are aggrieved that the Bill has been able to pass through this House thanks only to the votes of hon. Members whose constituents will not be affected by foundation status. That concerns a lot of people, both in the House and outside it.

I want to repeat my key objections to the policy. I believe that it represents a return to a market ethos and to competition. We do not need to have this review; if we turn the clock back a few years, we can see exactly what happened under the internal market introduced by the Conservative Government. The same processes will be apparent and they will lead to there being winners and losers. Some Labour Members will support the Government's policy because they have hospitals that will apply for foundation status in their constituencies. They are not looking beyond their immediate areas and they are not considering the policy's effect on the wider NHS in their part of the world. That worries me.

The policy is a departure from the Government's previous aim—that the NHS should be primary care led. That policy direction was very successful. A weakness evident since the inception of the NHS is that we have allowed it to be dominated by the hospital sector, and by hospital consultants in particular. The Government were brave to move towards primary care trusts. If they were going to consider an innovation in respect of governance such as is set out in the Bill, the obvious place to start should have been at the level of PCTs. My hon. Friend the Member for Vauxhall (Kate Hoey) has made that point on several occasions. I am sorry that the Government have not done that.

I do not think that the governance elements have been thought through. I understand from questions that the Health Committee put to the Secretary of State and his officials a couple of weeks ago that the Government anticipate that the average trust will have about 10,000 members. I calculate that those 10,000 members will represent about one fiftieth of the patients within the remit of individual trusts. I do not regard that as democracy.

Siobhain McDonagh (Mitcham and Morden)

Will my hon. Friend give way?

Mr. Hinchliffe

With the greatest respect, given the time that I have got—[Interruption.] Okay, my hon. Friend has persuaded me to give way.

Siobhain McDonagh

I thank my hon. Friend for giving way. He castigates the Government for a system of hospital democracy that includes one fiftieth of people in an area. What would he say to me about the fact that nobody in my constituency is on the boards of St. Helier hospital, St. George's hospital or any other hospital or primary care trust that represents them?

Mr. Hinchliffe

I would say what I have said on many occasions, which is that every patient—[Interruption.] My hon. Friend has asked a question and she is going to listen to me. Every patient ought to have a right to a vote in their local health service. What the Bill proposes is tokenistic; it is not thought through.

I have spent much of the last few days in my local hospital. I spent Saturday night and Sunday morning in the local casualty department with a member of my family. We are talking about spending £100,000 per trust just to start going in the direction of foundation trusts but, having spent several days this week in the NHS, I must say that there are a lot of other things that I would be spending that money on before that. There will be £100,000 for each foundation trust—£2.5 million for the first 25—and £2.3 million will be the cost of the regulator for one year, so £5 million of scarce NHS money that should have been spent on more doctors and nurses, and on treating people and hip operations—on the kinds of things that are raised in our constituency surgeries week after week—is being wasted on a half-baked idea.

I hope that Labour Members will listen to the Labour party conference—the decision was clear—to their constituents, to their PCTs, and to the voice of local people, and that they will vote against the Government this evening.

Mr. Paul Burstow (Sutton and Cheam)

While listening to the Secretary of State's opening speech, it occurred to me that he was having to rely on some of the more basic tactics to try to ensure that Labour Members stick with him tonight. Pressing the class button and suggesting that the House of Lords not agreeing with this House should be a sufficient argument for this House to overturn the House of Lords does not provide a sufficient case that we should not listen to what the Lords have had to say. It is important to bear it in mind that in the debates in the other place it was not just Liberal Democrat, Conservative or Cross-Bench peers who expressed concern about this legislation; it was Labour peers as well. It is important for those who have concerns to keep that in mind when they pass through the Lobby.

The Liberal Democrats do not have an argument with the Government about their underlying analysis and the case for devolution in the NHS. Central control, targets and tick boxes stifle innovation and initiative in the NHS, and one size certainly does not fit the needs of every community and every individual who uses the NHS. However, we do not believe that the foundation trust proposals go anywhere near lifting the dead hand of control from the NHS.

The freedoms that come with this Bill—they are not many, and some of them are illusory when the Bill is studied closely—are earned at a price. It is a high price: it is about hitting Whitehall targets, achieving the star rating, and going through the hoops that Ministers set. There is still control, but it is slightly less clear where that control exists. In truth, freedom is granted at the pleasure of the Secretary of State. That theme runs throughout this Bill, because it applies to both the Commission for Healthcare Audit and Inspection and the Commission for Social Care Inspection. In each and every case, there are powers of direction and control that the Secretary of State may use to make clear what he wants to happen.

Indeed, the Secretary of State looms large in part 1, standing behind the regulator, armed with powers of direction, the final arbiter when deciding whether a trust may proceed to foundation status. We already know that not all trusts will be able to progress at the same rate. The best that the Secretary of State can offer is that it will be four years before all trusts have that status.

The Bill says little about the role of the regulator and how he will exercise his duties, yet decisions taken by foundation trusts will have profound effects on the balance of the local health economy. They will have real effects on the services that people need. In an intervention on the Secretary of State, the hon. Member for Norwich, North (Dr. Gibson) referred to cancer networks. I hope that he was not satisfied with the response that he received, as it gave us no confidence that foundation trusts will do anything but call into question the effective operation of such networks in future.

Will foundation trusts really see themselves as team players in the local health system? Will they be on the side of patients to ensure that cancer services are properly delivered? That is why my noble Friends want to amend the Bill so that it includes a requirement for the regulator to act in a way that is consistent with the National Health Service Act 1977. Lords amendment No. 4 would ensure that there is no ambiguity: the regulator would have to act in a way that ensures equity and safeguards universality of provision in health care services.

It is not good enough for Ministers in the other place and in the Chamber today simply to assert that foundation trusts will use their freedom in conformity with the key NHS principles and that they will not undermine the ability of other NHS providers in the local health economy to meet their obligations. Just putting something on the record in this place is not sufficient assurance. When legislation affecting patient-public involvement was being discussed in the House, Ministers gave numerous assurances that were not honoured subsequently.

It is important that Ministers confirm today that foundation trusts will never undermine other NHS hospitals and that they will never make predatory plans that would take business from another trust and cause it to lose activity. It is important to determine whether we are talking about competition or co-operation in the NHS. If foundation trusts secure freedom to act, it is hard to see how that freedom will not disadvantage the hospitals that are left behind.

Let us consider, for example, the borrowing rules—leaving to one side the question whether private finance initiative projects should count, although I think they should be included in the equation. Foundation trusts will have easier access to capital, but we have heard today that the Treasury has put a cap on the total amount available. The trusts will have to bid for the money in the pot that the Treasury makes available to the NHS. If they are allowed greater flexibility and freedom to dip into that pot, they will disadvantage everyone else. What will be the gains for those involved in the early part of the process compared with those who come later? As we reach the final wave of foundation trusts—although I hope that we do not—when everyone has that freedom, there will be no difference in terms of access to capital funds but there certainly will be a difference during the early phases.

There are questions about staffing. The Secretary of State says that foundation trusts will adhere to "Agenda for Change", but for how long? Nothing in the Bill would prevent foundation trusts from varying their pay and conditions over time so that they can expand their activities.

Tom Levitt (High Peak)

Like me, the hon. Member for Cheadle (Mrs. Calton), who is sitting with the hon. Gentleman on the Liberal Democrat Front Bench, supports the application of Stepping Hill hospital in Stockport for foundation status. Does the hon. Gentleman support his hon. Friend's campaign, which I share, for that hospital better to serve the citizens of Stockport and High Peak?

Mr. Burstow

I thought that interventions should pick up on a specific point that a Member was making. That is an interesting point—

Mr. George Stevenson (Stoke-on-Trent, South)

rose—

Mr. Burstow

Let me deal with the first intervention first.

At this point, there is a Bill before the House. My position and that of my party is opposition to the principle of foundation trusts. The measure has not yet completed all its stages; until it does, I certainly do not support applications for foundation status. That is my position and the position of my party.

4.15 pm

Mr. Stevenson

While the hon. Gentleman is trying to find a way out of the question, will he confront the issue that concerns everyone I have talked to in my constituency in north Staffordshire? They are asking, if the Stockport application goes ahead, and the other application, too, what effect it will have on North Staffordshire hospital, which will not go ahead. Is he as concerned as my constituents about that issue?

Mr. Burstow

The hon. Gentleman makes a fair point, which is that as we have a series of waves of foundation trust applications, those that get left behind can be washed up and really lose out as a result of the process, particularly when it comes to the ability to bid for capital resources. Those that have the freedom early on will be able to get money out of the pot. Once everyone has the freedom, there is really no difference in terms of the access to that money. The Government tell us, "We have a bigger pot of capital funds available, so don't worry about it." The reality is that this system will allow two tiers to emerge. Whether it is only for a few years or not, that will damage equity within the national health service, which is why we are raising our concerns and will vote against the Government's proposals tonight.

I was talking about staffing within the NHS and the way in which the Government are trying to—

Hugh Bayley

rose—

Mr. Burstow

If the hon. Gentleman will let me develop this point, I will give way to him.

The Government have said that they will stick to "Agenda for Change", but the point is that in a health care system where trained staff are, and are likely to remain, a scarce resource, the ability to compete on pay and conditions will be a boon to foundation trusts at the expense of patients treated anywhere else in the national health service, and it is not possible for the Government to argue that the other freedoms that will enable them to generate additional activity and additional resources will not be used to enable them to compete more effectively in the labour market locally, to attract staff from other trusts that are not foundation trusts. How can that not be the case? That is not just my view; in the other place Lord Warner, the Under-Secretary of State, said that NHS foundation trusts will be able to invest more easily in the delivery of new services, manage more flexibly, reward their staff in a way that is more appropriate to local circumstances and have access to a wider range of options for capital funding.—[Official Report, House of Lords, 6 November 2003; Vol. 654, c. 936.]

What can that be other than an ability to act differently from those that do not have foundation trust status? The seeds of a two-tier NHS on capital and staffing are being sown tonight by this legislation.

Kate Hoey

I very much agree with what the hon. Gentleman said in his last few sentences. Does he agree that a more dangerous issue is the fact that chief executives have already been discussing in national health trusts how they would be able to increase their own salary to some very large figure? They will now have the freedom to do that as well.

Mr. Burstow

That is true, but what is really an insult to the House and to the House of Lords is the fact that the Government are driving through their first wave of foundation applications before the ink is even dry on the Royal Assent to the Bill. It seems to me that we should have waited for this matter to be concluded before thousands of pounds and hundreds of hours were invested in taking these proposals to the stage that they have already reached for many applications. That is why, in response to the intervention by the hon. Member for High Peak (Tom Levitt), I do not support this at this stage, and I think it is right for many hon. Members to take that view.

It does not end there. The Secretary of State has said that the Government will reinstate the cap on the ability of NHS foundation trusts to pay more. The Bill as drafted leaves it up to the regulator to decide whether he will place any limitation on the amount of private work a foundation trust can do. It is a power, not a duty, a question of may rather than must, and Labour Members must look at the Bill and be certain what it says. This is a discretion for the regulator. It is not guaranteed that NHS foundation trusts might not do substantially more private work than they are doing now, because the regulator does not have to impose any such limitation.

The Minister of State, Department of Health (Mr. John Hutton)

I am very reluctant to intervene on the hon. Gentleman, because I am following closely what he is saying. but I want to make it absolutely clear to the House that he is wrong in the point that he just made. There is no doubt whatever that the Bill requires the regulator to impose a patient cap.

Mr. Burstow

The Bills says "may", not "must". The wording is very clear, and I am sure that, if the Minister gets the chance later, he will take the House through the text and we will see how clear it is. I urge other hon. Members to take a view for themselves and to read the Bill.

At the very least, I hope that the Government will concede that foundation trusts should clearly state in their accounts the costs and income attributable to private activity, because that will also not be covered. That is what Lords amendment No. 29 is all about, and I hope that Labour Members will vote in favour of that as well.

The Government's proposed arrangements offer the prospect of costly sham democracy, which could have unintended consequences. Some of the most powerful speeches on foundation trusts in the other House were made by Labour peers. For example, Lord Lipsey warned that the governance arrangements would embed politics in the management of our hospitals. We should take that point into account.

I started by saying that Liberal Democrats agree with the need to free the NHS from the dead hand of ministerial interference, but the proposals will not achieve that. We need much more local control over the NHS, but we need to focus on PCTs and the commissioning side. Those who commission health care must be responsive to local needs. The commissioners should be democratically accountable. That is why we believe that the argument should be about democratic health care commissioning. I refer, in particular, to the remarks of the Labour peer Lord Harris, who said: I believe that a fundamental question must be answered first: why is the emphasis on membership and boards of governors applied to provider trusts—in particular hospitals—rather than to the bodies charged with commissioning, in particular the PCTs? Is there not a serious danger that the new governance arrangements will reinforce, if not fossilise, the traditional provider domination of the NHS, when what we should be encouraging in a modern health service is a more flexible approach to how services are delivered, led by local needs determined by commissioning bodies devoted to improving public health and reducing inequalities in outcomes?"—[Official Report, House of. Lords, 8 September 2003: Vol. 652, c. 84.] Lord Harris was absolutely right to raise that concern about how the Government's proposals could fossilise the traditional domination of providers in the NHS. That is why we on the Liberal Democrat Benches argue the case for democratic local government, not anyone else, to be involved in the control of commissioning.

Hugh Bayley

Earlier in the hon. Gentleman's speech, he made the important point about the need to achieve equity in the NHS, but does he not recognise that there is gross inequity at the moment, with some hospitals operating on four times as many patients per doctor as others? If he rejects market forces, rejects national standards and regulation, and rejects patient and public empowerment as ways to get the poorer performing trusts to perform better, what method would the Liberal Democrats use to drive up standards in the poorer performing hospitals?

Mr. Burstow

The hon. Gentleman seems to have made a speech, and I commend him for taking that opportunity. [Interruption.] I want to finish my speech, as I should have thought that one or two other hon. Members want the opportunity to make theirs.

I just want to end with this: it has been made very clear, time and again, in the other place, that there is a strong case for saying no to the foundation trusts proposals. I urge hon. Members to go through the Lobby against the Government tonight. The proposals are the bathtub musings of a former Secretary of State, and they now appear in the form of half-baked legislation. This is the wrong way to try to decentralise and devolve in the NHS, and I hope that hon. Members on both sides of the House who still have doubts about the Bill and foundation trusts will take the opportunity tonight to send a message to the Government. That message is very simple: think again.

Mr. Stephen McCabe (Birmingham, Hall Green)

I will endeavour to be brief, because I understand that many other hon. Members would like to speak.

I want to make it clear that I am a passionate supporter of the NHS. I have no private health insurance, and I receive no money from private health organisations. I came here quite simply in 1997 to defend the NHS and to see it rebuilt, but I have reached the conclusion that it has to be modernised; it cannot creak along on the 1948 model. I want it to reflect the needs of the people who use it. That is what is really important. Over a period, a tendency has developed whereby the health service has begun to reflect too much the needs of those who work in it. Important though those needs are, it cannot merely serve those interests—it must serve the interests of the people who need to use it. That is the first thing that I want to happen.

I understand that many of my colleagues have legitimate concerns and anxieties, and I respect the views that they hold. There is a tendency, however, to exaggerate some of those concerns. I had the benefit of serving on the Committee that scrutinised the Bill, and my slight concern is that if we overplay those anxieties we will set our face against any modernisation of the health service, which plays right into the hands of the Opposition. We know that a precondition of their plans is that they must portray the health service as creaking, moribund and useless. If we overdo our criticism of any modest proposals for change, we play into their hands. That is what I am worried about.

What is being proposed tonight, with all the qualifications attached and compromises offered by the Secretary of State, is a little bit more autonomy for local hospitals—a lot less than we happily give to chief constables—

Kate Hoey

We didn't need an Act to do that.

Mr. McCabe

I hear my hon. Friend, and I have had the benefit of her running commentary for the past hour and a half. I hope that everyone else will get to hear at least some of her views in the course of the debate.

The Bill will give local people, patients, staff and partnership organisations a real chance to have a say in the setting and the direction of the trust. That seems to me the right thing to do. It is a small step, in my judgment, towards a less bureaucratic, costly and centralised health service, which is the right thing for us to do. Contrary to the views of the hon. Member for Sutton and Cheam (Mr. Burstow), the proposals, for the very first time, put a cap on private work.

I recognise that there are concerns and that people are anxious. My point, however, is that we do not have a uniform health service now—anyone who believes that we do is kidding themselves. What we are trying to do is provide a little bit of autonomy as an attempt to move forward. We are building in safeguards: the Bill demands safeguards on partnership and sets out a duty of co-operation. The fears that some people have are exaggerated. My fear is simply this: every Labour Member who goes through the Lobby with the Leader of the Opposition tonight is pandering to the Conservatives. Every ex-Minister on the Labour Benches who demanded loyalty and support when they were holding their ministerial portfolio should think about why it is so difficult for them to show some loyalty in return tonight.

Mrs. Mahon

The hon. Gentleman voted a different way from me on the war in Iraq, and he went through the Lobby shoulder to shoulder with Conservative Members.

Mr. McCabe

My hon. Friend is absolutely right. On the issue of Iraq, I was not aware that we were actually discussing the future of the health service. On the issue of Iraq, there were cross-party positions in the House. My point is that there is a clear Conservative agenda to run down and denigrate the health service and to prevent modernisation and reform, because that is a precondition of the Opposition's policies.

Dr. Desmond Turner

May I remind my hon. Friend that there is also a very clear Labour agenda on the national health service? It was expressed by our party conference, and it is not foundation hospitals.

4.30 pm

Mr. McCabe

I should point out to my hon. Friend that I was also at the conference and I remember the constituency vote.

Mr. Jon Owen Jones

On the subject of marching shoulder to shoulder with the Tory party, I for one did not vote with Opposition Members on Iraq. However, I think that they have learned a lesson. Had they behaved on the issue of war with Iraq in the way that they are doing now, they would have defeated this side. They have learned that lesson, and they are putting it into practice now.

Mr. McCabe

Most people will recognise that that is absolutely the case. I simply make the point that there are people here who rightly expected loyalty when they held ministerial portfolios. I respect people's views and I accept that some people hold different views from me.

Clare Short

Will my hon. Friend give way?

Mr. McCabe

How could I refuse?

Clare Short

Labour has a big majority in the House of Commons, and I never asked anyone in our party for blind loyalty. I wanted to listen to them and for us to act together according to our values. That is what we should do today.

Mr. McCabe

I should make it clear that I have enormous personal respect for my right hon. Friend. If she has changed her view on this matter, I respect that. However, on the last vote, she did not vote for the policy because she was confused about the time of the vote, not because she was against the policy. That is the position, and I have to make it clear to her.

Clare Short

On a point of order, Mr. Deputy Speaker. I am sure that my hon. Friend would not want to mislead the House. I voted against this matter when it was last before the House.

Mr. Deputy Speaker

That is, no doubt, a matter of record for the House.

Mr. McCabe

I am very grateful for that correction. I was simply referring to my right hon. Friend's quotation in the newspaper. I might have the wrong quotation, but I recollect that we voted once on the matter on Second Reading, but there we go.

My point is that we have a choice, but if we go through the Lobby with the Leader of the Opposition, we shall be doing so with a man who has described the NHS and the people who work in it as a Stalinist creation. That is what he thinks about it; that is what the Conservatives believe in. I do not want any part of that.

Mr. Kenneth Clarke (Rushcliffe)

I must admit that I had some hopes of the new Secretary of State when he took over his responsibilities. I thought that he would continue in the direction of reform and modernisation that has just been welcomed by the hon. Member for Birmingham, Hall Green (Mr. McCabe). Since the Labour party first came to office—after a rather regrettable two years of reaction under the right hon. Member for Holborn and St. Pancras (Mr. Dobson), of which he is proud—it has moved steadily in the direction of combining finance for the health service with radical reform. I thought that the Secretary of State might take that forward.

It is therefore a matter of considerable regret that, at a comparatively early stage in the Secretary of State's period of office, he has got himself into a terrible mess on the agenda of reform. He finds himself in a difficult debate before the House, defending a dog's breakfast that seems to have brought against it an amazing combination of opponents. It is not often that the hon. Member for Wakefield (Mr. Hinchliffe) and myself are on the same side in a health debate, but we both think that what the Secretary of State has produced is nonsense and that he should go away and think about it again.

Let me assure the Secretary of State and the hon. Member for Wakefield that I remain totally committed to the idea of a free national health service that is based on equal access to treatment for all patients and financed largely out of taxation, and I will not waiver from that. For more than 20 years, I have been accused, as has my party, of having a secret agenda to undermine that, but our entire period of office demonstrated that we never moved one iota in that direction. I will be bitterly opposed to any suggestion that we should move in that direction now. I do not believe that we will.

The principles underlying reform should unite certainly those on both Front Benches in this House. We all now profess a belief in patient choice. Far be it from us to dwell on the bitter opposition to that proposition that the Labour party used to evince. We all propound the benefits of diversity of provision of health care from the public, private and voluntary sectors. I echo what my hon. Friend the Member for South Suffolk (Mr. Yeo) said, as I was the Minister of State who saved Tadworth Court and allowed it to go the private trust. It is a demonstration of how what was described as a failed hospital has now become a beacon of excellence because of the way in which an independent trust was able to develop it. We actually believe that with properly directed patient choice, a certain amount of competition among providers will lead to improvements to the quality and efficiency of the service.

Foundation hospitals could have marked a considerable step forward, and at times I thought that they would. I regret that I have not looked up my voting record but I think that I abstained when the measure came before the House in July. I shall not speak for my hon. Friend the Member for South Cambridgeshire (Mr. Lansley), who I am glad to say is our new shadow spokesman on health, but I suspect that he would have been considerably embarrassed if the Government had introduced measures to give effect to the local independence, liberalisation of the service and decentralisation that the Secretary of State said formed such a key part of his proposals. In fact, however, the Government have not persuaded people who believe in those things.

Many Members of the House of Lords would have moved in favour of the Government if they had delivered on what appeared to be the objectives of foundation hospitals. They would lose many Conservative opponents today—they might lose the lot of us—if they introduced genuine decentralisation for foundation hospitals, because we would support them. However, they have made half-baked concessions to the Labour Members who have been intervening on speeches for the past two hours, so they have wound up with the worst of all possible worlds. The Bill will not create an important new type of institution with the ability to exercise more local control in the service. It will create a body with a strange construction that will be even sillier than Network Rail, which is a precedent for the non-profit-making and accountable bodies to which the Labour party seems to be converted. The Government have not satisfied the dinosaurs who want to go back to the old NHS, and they certainly have not satisfied sensible reformers here, in another place, or in bodies such as the King's Fund, which is totally non-political and would certainly support any sensible modernising agenda.

Other hon. Members want to speak and share my frustration, so let me say why the Government have failed to win support and why I am convinced that the measure must be opposed. We must consider the role of the regulator. The Bill is covered with the regulator's constraints over the powers of new foundation hospitals. The regulator will have considerable control over their borrowing. I have some sympathy with the previous Secretary of State, the right hon. Member for Darlington (Mr. Milburn), who first introduced proposals for foundation hospitals. He lost the same battle with the Treasury that I lost when I was planning the precursors of NHS trusts. I wanted the most successful parts of the service to have the freedom to borrow and raise capital so that they could respond to rising demand. The Treasury turned me down. When I got to the Treasury, as Chancellor, I found that the Government were so battered over reform that no one wanted to change the system any more, so I was not able to reverse the decision. [Interruption.] The Labour party was accusing us of privatisation at the time, so my successor as Secretary of State for Health did not dare say that hospitals should be allowed to go to the private markets, because the present Secretary of State would have been in the vanguard with the hon. Member for Wakefield saying how dreadful it would be to privatise the service in such a way if that had happened.

The right hon. Member for Darlington had a go, but he failed. If hon. Members look at the way in which the new foundation hospitals will be constrained when raising capital, they will see that the situation is a complete nonsense that is made worse by the fact that when they get approval to borrow and make capital investment, it will be at the expense of the rest of the national health service. That point has been repeated by hon. Members on both sides of the Chamber, but the Secretary of State has not responded to it.

The cap on income from private practice is reminiscent of Barbara Castle. I cannot understand why on earth NHS hospitals should not be allowed to raise more income by attracting private practice and why doctors who carry out such practice should not do that in the NHS hospitals in which they work—it is a ridiculous constraint.

After listening to the debate, I do not understand quite how constrained the hospitals will be by national pay agreements. It seems that if a left-wing Member makes an intervention, the House is assured that hospitals will be bound by "Agenda for Change" and national pay terms and conditions, but if a Conservative or Liberal Member makes an intervention, there is a suggestion that they may move away from that a little. The NHS should not be in a straitjacket of national terms for pay and conditions regardless of regional and local needs. The management of the service would be improved if foundation hospitals had more discretion.

I do not have time to deal in detail with the elected boards of governors, but they are an appalling idea. With a membership that has yet to be defined, they will be elected on a tiny turnout. They may be dominated by the trade unions, or the membership will vote for local party politicians or various special interest groups, such as pro-life groups. That is not democracy. It is a ridiculous way to establish a system of governance for a local service.

I agree with those who say that we are too obsessed with hospital management. The commissioning side of the service—

Mr. Deputy Speaker: Order. The right hon. and learned Gentleman has had his time.

Mr. Frank Dobson (Holborn and St. Pancras)

Unlike the Conservatives and the Liberal Democrats, many Labour Members have been against the foundation hospital proposal from the outset. We believe that it will be damaging and divisive, not just for the NHS, but for the Labour party as well. Events have borne out what we have said from the start. Nothing significant has changed since foundation hospitals were announced. My right hon. Friend the Secretary of State's proposal to revert to the original proposition of 25 foundation hospitals followed by another 30 without extending that opportunity to every hospital automatically within four years is a withdrawal of what was originally announced as a concession to those of us who were against the proposal.

A review has been announced, but we should not need it because if the first round of hospitals is not a success, surely no sensible Government will proceed with the second round. It has always worried us that the review will consider only the impact of change on the foundation hospitals, not the possible adverse impact on the hospitals nearby.

The principal objection to foundation hospitals is that they are intended to reintroduce competition into the NHS, setting hospital against hospital, as the Tories did under the right hon. and learned Member for Rushcliffe (Mr. Clarke). That proved immensely expensive and damaging for patients. If anyone doubts whether it was damaging, the one academic study on the subject concluded in relation to recovery rates from heart attacks that competition is associated with higher death rates. Nothing is worse for patients than higher death rates.

Foundation hospitals will clearly have more money, which will allow them to poach staff from hospitals that do not have enough money. Ministers have said that foundation hospitals will be bound by the "Agenda for Change" document, chapter 7 of which sets out additional freedoms for NHS trusts to negotiate local arrangements, to have special bonus schemes and benefits, and to award recruitment and retention premiums above 30 per cent. of basic pay. They can do all of that without referring to anyone else. Ministers have said that other hospitals may be able to do that, but it would be possible only with someone else's permission. That is the substantial difference.

Foundation hospitals will be given the power to determine their priorities and strategies. No longer will they have to reflect the priorities and strategies that we have said should be laid down by primary care trusts. They will, indeed, become cuckoos in the nest, which will be very damaging. That is why most Labour MPs, the Labour party conference, most people who work in the NHS and the organisations representing them have rejected the concept of foundation hospitals. The major trade unions have rejected it, as have most of the professional bodies, including the British Medical Association, the National Health Service Consultants Association and the Royal College of General Practitioners. Ministers tell us to ignore them because they are, they say with disdain, "producers". That reminds me of Kipling's poem on Tommy Atkins, his paean of praise for common soldiers and his despising of the people who criticised them when they were not fighting. I would adjust it to say, "Then it's producer this, an' producer that, an producer 'ow's yer soul? But they all turn into heroes when the ambulances roll." Those are the people we are talking about—ambulance staff, nurses, midwives, cleaners, catering staff, doctors, radiographers and therapists. They are all opposed to foundation hospitals. Even the Tories never achieved such unanimity against any of their proposals.

4.45 pm

Mr. Adrian Bailey (West Bromwich, West)

Will my right hon. Friend give way?

Mr. Dobson

No, I am sorry, but I do not have time.

We are rejecting the views of the very people who do the work in the NHS and who have always stuck up for the NHS. Many hon. Members will remember that in late April 1997, 53 doctors wrote a letter to the Daily Mirror saying that we had 24 hours to save the NHS. A survey of them has found that nine out of 10 reject the idea of foundation hospitals, and a random sample of NHS consultants shows that they do not like the idea. No patient organisation has come out in favour of the idea.

Who is for foundation hospitals, apart from the Government? It is a few academics and a few think-tanks, which appear to be more tank than think. A few extremely ambitious NHS managers are in favour of foundation hospitals, but even the NHS managers' body has said that 65 per cent. think that it will be more difficult for people in the NHS to co-operate with one another in future because of the introduction of foundation hospitals. Ministers say that they want to appeal over the heads of the producers and the Labour party to the public, but all the opinion polls show that at least 60 per cent. of the public reject the idea.

I know that the Whips and many other hon. Members are concerned about the impact of defeating the Government on this issue today, because it might be damaging to the Labour party, but I say to all my right hon. and hon. Friends that, until now, the arguments have been conducted at a national level. If this goes through, there will be rowing, trouble-making and bother for people in the Labour party all over the country. Labour MPs without foundation trusts will face their Tory opponents saying that they are useless because they did not manage to get their hospitals made into foundation trusts. When the first doctor or nurse moves from a non-foundation trust hospital to the nearest foundation trust, there will be a huge row in the local papers and Labour will be blamed.

We have a brilliant record in putting more money into the NHS, with more new hospitals than ever. We have increased the number of beds and the number of staff—including those in training—and people who work in the NHS want just to be left alone to get on with their day jobs of looking after patients.

Mr. Dorrell

It is absurd, given the importance of this Bill, that we should be debating our response to a Lords amendment against a two-hour guillotine. The Secretary of State alone took up 48 minutes. The idea that we can hear full contributions from the Opposition or from Government Back Benchers within two hours is absurd.

In the limited time left to me, I want to point out that the Secretary of State began his speech with two points. First, he said that there was no dispute on his side of the House—I would say on either side of the House—about the importance of the principle that the NHS was established as the means for delivery of health care on the basis of clinical need and without regard to ability to pay. That principle is supported by both sides of the House and by the overwhelming majority of the British people. I acknowledge that that principle is accepted by Labour Back Benchers and he should acknowledge that it is also supported on this side of the House.

The Secretary of State's second point was that in this day and age the best way to deliver that public policy objective is to follow a decentralisation policy in NHS management, trusting professionals and allowing those who deliver health care greater opportunity to match the service they deliver to the needs of their patients. If the Bill could be conceived of as a means of delivering that policy objective, I have no doubt that all my hon. Friends and I would support the Secretary of State. The problem is that the Bill does not deliver what he claims it will. It does not decentralise within the health service—in fact, it does something that, until I read the Bill, I thought was impossible: it succeeds in making power in the NHS even more centralised and bureaucratic than it is now. In that more centralised and more bureaucratic health service, the Secretary of State gives foundation trust hospitals an entirely unfair advantage over all other institutions. His Bill does not deliver his objective, but does real damage to the management of the health service.

Let me give two important examples to demonstrate the truth of that statement. The Secretary of State was kind enough to allow me to intervene during his speech, but he did not respond to the point that I made. My point was that under the capital allocation procedures that he is to introduce, foundation trust hospitals will get priority, favoured access to capital from a cash-limited sum, the practical effect of which will be that those hospitals that are not foundation trust hospitals will come second in the queue and have less advantageous access to capital than they currently have.

Dr. John Reid

rose—

Mr. Dorrell

No, I will not give way to the Secretary of State during my five minutes, because I know what his answer to my point will be. I did not try to intervene again during his speech, but I shall now respond to his answer.

The right hon. Gentleman said that the capital budget has increased; therefore there are no choices to be made. No Member of Parliament believes that any Government will ever create a world in which there are no choices to be made in capital allocations. The Secretary of State has created a world in which foundation trust hospitals will be at an entirely unfair advantage in terms of access to a cash-limited sum.

The second point that the right hon. Gentleman did not answer during his speech relates to employment terms. As my right hon. and learned Friend the Member for Rushcliffe (Mr. Clarke) said, Labour Back Benchers are told not to worry—"Agenda for Change" is an entirely rigid straitjacket from which no element of the NHS will be able to depart. Opposition Members are told that the proposals are flexible and that all hospitals in the health service will be able to evolve local employment terms. The truth is that what the Secretary of State has delivered—

It being two hours after the commencement of proceedings, MR. DEPUTY SPEAKER put the Question already proposed from the Chair, pursuant to Order [this day].

Question put, That this House disagrees with the Lords in the said amendment:—

The House divided: Ayes 302, Noes 285.

Division No. 381] [4.53 pm

AYES
Adams, Irene (Paisley N)	Anderson, Janet (Rossendale &
Ainger, Nick	Darwen)
Ainsworth, Bob (Cov'try NE)	Armstrong, rh Ms Hilary
Alexander, Douglas	Atherton, Ms Candy
Allen, Graham	Atkins, Charlotte
Anderson, rh Donald (Swansea E)	Bailey, Adrian

Baird, Vera	Denham, rh John
Banks, Tony	Dhanda, Parmjit
Barren, rh Kevin	Dismore, Andrew
Battle, John	Donohoe, Brian H.
Bayley, Hugh	Doran, Frank
Beard, Nigel	Dowd, Jim (Lewisham W)
Beckett, rh Margaret	Drew, David (Stroud)
Begg, Miss Anne	Eagle, Maria (L'pool Garston)
Bell, Stuart	Ennis, Jeff (Barnsley E)
Benn, rh Hilary	Fitzpatrick, Jim
Benton, Joe (Bootle)	Fitzsimons, Mrs Lorna
Betts, Clive	Flint, Caroline
Blackman, Liz	Follett, Barbara
Blair, rh Tony	Foster, rh Derek
Blears, Ms Hazel	Foster, Michael (Worcester)
Blizzard, Bob	Foster, Michael Jabez (Hastings
Blunkett, rh David	& Rye)
Boateng, rh Paul	Foulkes, rh George
Borrow, David	Francis, Dr. Hywel
Bradley, rh Keith (Withington)	Gapes, Mike (IlfordS)
Bradley, Peter (The Wrekin)	Gardiner, Barry
Bradshaw, Ben	George, rh Bruce (Walsall S)
Brennan, Kevin	Goggins, Paul
Brown, rh Gordon (Dunfermline	Griffiths, Jane (Reading E)
E)	Griffiths, Nigel (Edinburgh S)
Brown, rh Nicholas (Newcastle E	Grogan, John
Wallsend)	Hain, rh Peter
Brown, Russell (Dumfries)	Hall, Mike (Weaver Vale)
Browne, Desmond	Hall, Patrick (Bedford)
Bryant, Chris	Hamilton, Fabian (Leeds NE)
Buck, Ms Karen	Hanson, David
Burden, Richard	Harman, rh Ms Harriet
Burnham, Andy	Harris, Tom (Glasgow Cathcart)
Byers, rh Stephen	Healey, John
Caborn, rh Richard	Henderson, Ivan (Harwich)
Cairns, David	Hendrick, Mark
Campbell, Alan (Tynemouth)	Hepburn, Stephen
Campbell, Mrs Anne (C'bridge)	Heppell, John
Campbell, Ronnie (Blyth V)	Hesford, Stephen
Caplin, Ivor	Hewitt, rh Ms Patricia
Casale, Roger	Hill, Keith (Streatham)
Cawsey, Ian (Brigg)	Hodge, Margaret
Challen, Colin	Hoon, rh Geoffrey
Chapman, Ben (Wirral S)	Hope, Phil (Corby)
Chaytor, David	Howarth, rh Alan (Newport E)
Clark, Mrs Helen (Peterborough)	Howarth, George (Knowsley N & Sefton E)
Clark, Dr. Lynda (Edinburgh Pentlands)	Howells, Dr. Kim
Clark, Paul (Gillingham)	Hughes, Beverley (Stretford &
Clarke, rh Charles (Norwich S)	Urmston)
Clarke, rh Tom (Coatbridge &	Hughes, Kevin (Doncaster N)
Chryston)	Hurst, Alan (Braintree)
Clwyd, Ann (Cynon V)	Hutton, rh John
Coaker, Vernon	Iddon, Dr. Brian
Coffey, Ms Ann	Ingram, rh Adam
Cohen, Harry	Irranca-Davies, Huw
Colman, Tony	Jackson, Helen (Hillsborough)
Cook, rh Robin (Livingston)	Jamieson, David
Cooper, Yvette	Jenkins, Brian
Corston, Jean	Johnson, Alan (Hull W)
Cousins, Jim	Johnson, Miss Melanie (Welwyn
Cranston, Ross	Hatfield)
Crausby, David	Jones, Jon Owen (Cardiff C)
Cruddas, Jon	Jones, Martyn (ClwydS)
Cryer, Ann (Keighley)	Jowell, rh Tessa
Cummings, John	Joyce, Eric (Falkirk W)
Cunningham, rh Dr. Jack	Kaufman, rh Gerald
(Copeland)	Keeble, Ms Sally
Cunningham, Jim (Coventry S)	Keen, Ann (Brentford)
Cunningham, Tony (Workington)	Kelly, Ruth (Bolton W)
>Curtis-Thomas, Mrs Claire	Kennedy, Jane (Wavertree)
Darling, rh Alistair	Khabra, Piara S.
David, Wayne	Kidney, David
Davies, rh Denzil (Llanelli)	King, Ms Oona (Bethnal Green & Bow)
Davies, Geraint (Croydon C)
Dawson, Hilton	Knight, Jim (S Dorset)

Kumar, Dr. Ashok	Purnell, James
Ladyman, Dr. Stephen	Quinn, Lawrie
Lammy, David	Rammell, Bill
Lawrence, Mrs Jackie	Rapson, Syd (Portsmouth N)
Laxton, Bob (Derby N)	Raynsford, rh Nick
Lazarowicz, Mark	Reid, rh Dr. John (Hamilton N &
Lepper, David	Bellshill)
Leslie, Christopher	Robertson, John (Glasgow
Levitt, Tom (High Peak)	Anniesland)
Lewis, Ivan (Bury S)	Robinson, Geoffrey (Coventry
Liddell, rh Mrs Helen	NW)
Linton, Martin	Roche, Mrs Barbara
Love, Andrew	Rooney, Terry
Lucas, Ian (Wrexham)	Ross, Ernie (Dundee W)
Luke, lain (Dundee E)	Roy, Frank (Motherwell)
McAvoy, Thomas	Ruane, Chris
McCabe, Stephen	Ruddock, Joan
McCartney, rh Ian	Russell, Ms Christine (City of
McDonagh, Siobhain	Chester)
MacDonald, Calum	Ryan, Joan (Enfield N)
MacDougall, John	Salter, Martin
McFall, John	Sarwar, Mohammad
McGuire, Mrs Anne	Shaw, Jonathan
McIsaac, Shona	Sheerman, Barry
McKechin, Ann	Sheridan, Jim
McKenna, Rosemary	Simon, Siôn (B'ham Erdington)
McNamara, Kevin	Singh, Marsha
McNulty, Tony	Smith, rh Andrew (Oxford E)
MacShane, Denis	Smith, Angela (Basildon)
Mactaggart, Fiona	Smith, rh Chris (Islington S &
McWalter, Tony	Finsbury)
McWilliam, John	Smith, Jacqui (Redditch)
Mahmood, Khalid	Smith, John (Glamorgan)
Mallaber, Judy	Soley, Clive
Mandelson, rh Peter	Southworth, Helen
Mann, John (Bassetlaw)	Spellar, rh John
Marsden, Gordon (Blackpool S)	Squire, Rachel
Marshall, David (Glasgow	Starkey, Dr. Phyllis
Shettleston)	Stewart, David (Inverness E &
Marshall, Jim (Leicester S)	Lochaber)
Martlew, Eric	Stewart, Ian (Eccles)
Merron, Gillian	Stinchcombe, Paul
Michael, rh Alun	Stoate, Dr. Howard
Milburn, rh Alan	Strang, rh Dr. Gavin
Miliband, David	Straw, rh Jack
Miller, Andrew	Stringer, Graham
Mitchell, Austin (Gt Grimsby)	Stuart, Ms Gisela
Moffatt, Laura	Sutcliffe, Gerry
Mole, Chris	Tami, Mark (Alyn)
Moran, Margaret	Taylor, rh Ann (Dewsbury)
Morley, Elliot	Taylor, Dari (Stockton S)
Morris, rh Estelle	Taylor, David (NW Leics)
Mountford, Kali	Thomas, Gareth (Clwyd W)
Mullin, Chris	Thomas, Gareth (Harrow W)
Munn, Ms Meg	Timms, Stephen
Murphy, Denis (Wansbeck)	Tipping, Paddy
Murphy, Jim (Eastwood)	Todd, Mark (S Derbyshire)
Murphy, rh Paul (Torfaen)	Touhig, Don (Islwyn)
Norris, Dan (Wansdyke)	Turner, Dennis (Wolverh'ton SE)
O'Brien, Mike (N Warks)	Turner, Neil (Wigan)
Olner, Bill	Twigg, Derek (Halton)
O'Neill, Martin	Twigg, Stephen (Enfield)
Organ, Diana	Tynan, Bill (Hamilton S)
Osborne, Sandra (Ayr)	Vaz, Keith (Leicester E)
Palmer, Dr. Nick	Ward, Claire
Pearson, Ian	Watson, Tom (WBromwich E)
Pickthall, Colin	Watts, David
Pike, Peter (Burnley)	White, Brian
Plaskitt, James	Whitehead, Dr. Alan
Pollard, Kerry	Wicks, Malcolm
Pond, Chris (Gravesham)	Wills, Michael
Pope, Greg (Hyndburn)	Wilson, Brian
Pound, Stephen	Winnick, David
Prescott, rh John	Winterton, Ms Rosie (Doncaster
Primarolo, rh Dawn	C)
Prosser, Gwyn	Woodward, Shaun

Woolas, Phil	Wright, David (Telford) Wright, Tony (Cannock)
Wray, James (Glasgow Baillieston)	Tellers for the Ayes:
Wright, Anthony D. (Gt	Mr. Fraser Kemp and
Yarmouth)	Ms Bridget Prentice

NOES
Abbott, Ms Diane	Davies, Quentin (Grantham &
Ainsworth, Peter (E Surrey)	Stamford)
Allan, Richard	Davis, rh David (Haltemprice &
Amess, David	Howden)
Ancram, rh Michael	Djanogly, Jonathan
Arbuthnot, rh James	Dobbin, Jim (Heywood)
Atkinson, David (Bour'mth E)	Dobson, rh Frank
Austin, John	Dorrell, rh Stephen
Bacon, Richard	Doughty, Sue
Baker, Norman	Drown, Ms Julia
Baldry, Tony	Duncan, Alan (Rutland)
Barker, Gregory	Duncan Smith, rh Iain
Barnes, Harry	Dunwoody, Mrs Gwyneth
Baron, John (Billericay)	Efford. clive
Barrett, John	Evans, Nigel
Beggs, Roy (E Antrim)	Ewing, Annabelle
Beith, rh A. J.	Fabricant, Michael
Bellingham, Henry	Fallon. Michael
Bennett, Andrew	Field, rh Frank (Birkenhead)
Bercow John	Field, Mark (Cities of London &
Beresford, Sir Paul	Westminster)
Berry, Roger	Fisher, Mark
Best Harold	Flight, Howard
Blunt, Crispin	Flook, Adrian
Boswell, Tim	Flynn, Paul (Newport W)
Bottomley, Peter (Worthing W)	Forth, rh Eric
Bottomley, rh Virginia (SW	Foster, Don (Bath)
Surrey)	Fox, Dr. Liam
Brady, Graham	Francois, Mark
Brake, Tom (Carshalton)	Gale, Roger (N Thanet)
Brazier, Julian	Galloway, George
Breed, Colin	Garnier, Edward
Brooke, Mrs Annette L.	George, Andrew (St Ives)
Bruce, Malcolm	Gerrard, Neil
Burgon Colin	Gibb, Nick (Bognor Regis)
Burnett, John	Gibson, Dr. Ian
Burns, Simon	Gidley, Sandra
Burstow, Paul	Gillan Mrs Cheryl
Burt, Alistair	Godsiff, Roger
Butterfill, John	Goodman, Paul
Cable, Dr. Vincent	Gray, James (N Wilts)
Calton, Mrs Patsy	Grayling, Chris
Cameron David	Green, Damian(Ashford)
Campbell, rh Menzies (NE Fife)	Green Matthew (Ludlow)
	Greenway, John
Carmichael Alistair	Grieve, Dominic
Cash, William	Gummer, rh John
Caton, Martin	Hague, rh William
Chapman, Sir Sydney (Chipping	Hammond Philip
Barnet)	Hancock, Mike
Chidgey, David	Harris Dr Evan (Oxford w &
Chope, Christopher	Abingdon)
Clapham, Michael	Harvey, Nick
Clappison, James	Havard, Dai (Merthyr Tydfil &
Clarke, rh Kenneth (Rushcliffe)	Rhymney)
Clarke, Tony (Northampton S)	Hawkins, Nick
Clifton-Brown, Geoffrey	Hayes, John (S Holland)
Coleman, Iain	Heald, Oliver
Collins, Tim	Heath, David
Conway, Derek	Heathcoat-Amory, rh David
Cook, Frank (Stockton N)	Henderson, Doug (Newcastle N)
Corbyn, Jeremy	Hendry, Charles
Cormack, Sir Patrick	Hinchliffe, David
Cotter, Brian	Hoban, Mark (Fareham)
Cran, James (Beverley)	Hoey, Kate (Vauxhall)
Curry, rh David	Hogg, rh Douglas
Davey, Edward (Kingston)	Holmes, Paul
Davidson, Ian	Hopkins, Kelvin

Horam, John (Orpington)	Prisk, Mark (Hertford)
Howard, rh Michael	Pugh, Dr. John
Howarth, Gerald (Aldershot)	Purchase, Ken
Hughes, Simon (Southwark N)	Quin, rh Joyce
Illsley, Eric	Randall, John
Jack, rh Michael	Redwood, rh John
Jackson, Glenda (Hampstead &	Rendel, David
Highgate)	Robathan, Andrew
Jenkin, Bernard	Robertson, Angus (Moray)
Johnson, Boris (Henley)	Robertson, Hugh (Faversham &
Jones, Helen (Warrington N)	M-Kent)
Jones, Kevan (N Durham)	Robertson, Laurence (Tewk'b'ry)
Jones, Lynne (Selly Oak)	Robinson, Mrs Iris (Strangford)
Jones, Nigel (Cheltenham)	Robinson, Peter (Belfast E)
Keetch, Paul	Roe, Mrs Marion
Kennedy, rh Charles (Ross Skye &	Rosindell, Andrew
Inverness)	Ruffley, David
Key, Robert (Salisbury)	Russell, Bob (Colchester)
Kilfoyle, Peter	Salmond, Alex
King, Andy (Rugby)	Sanders, Adrian
Kirkbride, Miss Julie	Sayeed, Jonathan
Kirkwood, Sir Archy	Sedgemore, Brian
Knight, rh Greg (E Yorkshire)	Selous, Andrew
Laing, Mrs Eleanor	Shephard, rh Mrs Gillian
Lait, Mrs Jacqui	Shepherd, Richard
Lamb, Norman	Short, rh Clare
Lansley, Andrew	Simmonds, Mark
Laws, David (Yeovil)	Simpson, Alan (Nottingham S)
Leigh, Edward	Simpson, Keith (M-Norfolk)
Letwin, rh Oliver	Skinner, Dennis
Lewis, Dr. Julian (New Forest E)	Smith, Sir Robert (W Ab'd'ns &
Liddell-Grainger, Ian	Kincardine)
Lidington, David	Smyth, Rev. Martin (Belfast S)
Lilley, rh Peter	Soames, Nicholas
Lloyd, Tony (Manchester C)	Spelman, Mrs Caroline
Llwyd, Elfyn	Spicer, Sir Michael
Loughton, Tim	Spink, Bob (Castle Point)
McCafferty, Chris	Spring, Richard
McDonnell, John	Stanley, rh Sir John
McIntosh, Miss Anne	Steen, Anthony
Mackay, rh Andrew	Steinberg, Gerry
Maclean, rh David	Stevenson, George
McLoughlin, Patrick	Streeter, Gary
Mahon, Mrs Alice	Stunell, Andrew
Malins, Humfrey	Swire, Hugo (E Devon)
Maples, John	Syms, Robert
Marsden, Paul (Shrewsbury &	Tapsell, Sir Peter
Atcham)	Taylor, David (NW Leics)
Marshall-Andrews, Robert	Taylor, Ian (Esher)
Mates, Michael	Taylor, John (Solihull)
Maude, rh Francis	Taylor, Matthew (Truro)
Mawhinney, rh Sir Brian	Taylor, Dr. Richard (Wyre F)
May, Mrs Theresa	Taylor, Sir Teddy
Mitchell, Andrew (Sutton	Teather, Sarah
Coldfield)	Thomas, Simon (Ceredigion)
Moore, Michael	Thurso, John
Moss, Malcolm	Tonge, Dr. Jenny
Mudie, George	Tredinnick, David
Murrison, Dr. Andrew	Trend, Michael
Naysmith, Dr. Doug	Trickett, Jon
Norman, Archie	Trimble, rh David
Oaten, Mark (Winchester)	Turner, Andrew (Isle of Wight)
O'Brien, Stephen (Eddisbury)	Turner, Dr. Desmond (Brighton
Öpik, Lembit	Kemptown)
Osborne, George (Tatton)	Tyler, Paul (N Cornwall)
Ottaway, Richard	Tyrie, Andrew
Owen, Albert	Viggers, Peter
Page, Richard	Walley, Ms Joan
Paice, James	Walter, Robert
Paisley, Rev. Ian	Wareing, Robert N.
Paterson, Owen	Waterson, Nigel
Picking, Anne	Watkinson, Angela
Pickles, Eric	Weir, Michael
Prentice, Gordon (Pendle)	Whittingdale, John
Price, Adam (E Carmarthen &	Widdecombe, rh Miss Ann
Dinefwr)	Wiggin, Bill

Wilkinson, John	Wishart, Pete
Willetts, David	Wood, Mike (Batley)
Williams, Betty (Conwy)	Yeo, Tim (S Suffolk)
Williams, Hywel (Caernarfon)	Young, rh Sir George
Williams, Roger (Brecon)	Younger-Ross, Richard
Willis, Phil
Winterton, Ann (Congleton)	Tellers for the Noes:
Winterton, Sir Nicholas	Mr. Peter Luff and
(Macclesfield)	Mr. David Wilshire

Question accordingly agreed to.

Lords amendment disagreed to.

Mr. Yeo

On a point of order, Mr. Deputy Speaker. The House has just approved a measure the impact of which will be felt exclusively in England. The Government's greatly reduced majority has been obtained through Scottish Members of Parliament—[Interruption.] What advice do you have for those of us whose constituents will regard this as a constitutional outrage? Will you now allow the Secretary of State to make a statement, and to consider my offer to him to enter into immediate talks on how the Bill can be improved, so that its passage through both Houses can be guaranteed? [Interruption.]

Mr. Deputy Speaker (Sir Alan Haselhurst)

I had some difficulty in hearing the hon. Gentleman's point of order, but I think that I got its gist. He will know that this is not a matter in which the Chair can interfere. He has put his point on the record, and if there is to be any development or discussion, it is entirely a matter for the usual channels, and not for the occupant of the Chair.

Dr. John Reid

Further to that point of order, Mr. Deputy Speaker. The expression "pathetically bad losers" springs to mind. Will you confirm to the Conservative spokesman, who is so concerned about where the representatives of this House were elected, that a House in which none of the Tories were elected sought to take the clause out of the Bill?

Mr. Deputy Speaker

Neither of those matters are points of order for the Chair.

Mr. Alex Salmond (Banff and Buchan)

On a point of order, Mr. Deputy Speaker—

Mr. Deputy Speaker

Order. I hope that the hon. Gentleman understands that I have not heard a genuine point of order so far, so I hope he is going to provide one.

Mr. Salmond

Is it in order to point out that Scottish Labour MPs have imposed on England a measure that is not only unpopular in England, but is to the detriment of the Scottish health service?

Mr. Deputy Speaker

I feared as much. There is nothing that I can say on that.

Mr. Frank Field (Birkenhead)

On a genuine point of order, Mr. Deputy Speaker. [HON. MEMBERS: "Hooray!"] Had there been a free vote, the Government would probably have mustered only 50 votes, so do you expect their Lordships to send the measure back to us again?

Mr. Deputy Speaker

Sometimes, the occupant of the Chair has difficulty in understanding all that goes on in this House; he certainly has no power at all over what goes on in the other place. Let us move on.

MR. DEPUTY SPEAKERthen proceeded to put the Questions necessary for the disposal of the business to be concluded at that hour, pursuant to Order [this day].

Lords amendments Nos. 2 and 3 agreed to.