Sir George speaks out on Foundation Trusts
7 May 2003
This is the text of the speech Sir George made in the debate on Foundation Trusts:

Sir George Young (North-West Hampshire): Many right hon. and hon. Members were sorry to see the former Leader of the House return to the Labour Back Benches. However, it has enabled us to listen to him speak without the discipline of collective responsibility on a range of issues on which he has always taken an interest. I agree with much of what he said, although I would go slightly further and veer towards the more adventurous approach of the right hon. Member for Copeland (Dr. Cunningham), who thought that the Bill might go a little further.
I agree with the Secretary of State and many others that reform is needed to complement the extra money that is going into the national health service. On the one hand, we all listen to Ministers telling us how much more money is going into the service. On the other hand, I receive letters like this one, dated 28 April, from the chief executive of my local NHS trust. It reads:
"We have around 100 children waiting for therapy and at present children over 5 years old are waiting 27 months to be seen."

That is five-year-olds waiting more than two years just to be seen. The letter goes on to explain that that is

"the rationale behind deciding what cuts to make."
That is why the public are not always convinced by the rhetoric that we hear from the Government that the NHS is getting better.
The problem in my constituency, which neither the Government nor the Bill addresses, is that we get about £84 of NHS money per person, as opposed to the £100 average for England. Sadly, my constituents are not 16 per cent. healthier than average. Until there is recognition that the underlying revenue stream is inadequate and that the formula needs review, changing management structures and giving freedoms on pay and access to capital will make little difference.
I want to caution the Government about the claims that they are making for foundation trusts on bureaucratic freedom, local accountability and access to capital. On freedom, I re-read over the weekend the "Guide to NHS Foundation Trusts", which was published last December. It is peppered with phrases such as "interference from Whitehall" and

"disempowered by top-down control in the NHS."
Yes, under the Bill, the Secretary of State drops out of the picture, but it is not until page 9 that the independent regulator appears. It is like Beethoven's opera "Fidelio", where the hero does not make an appearance until the second act.
The explanatory notes continue the fiction on freedom. In page 2, paragraph 6 states:

"Part 1 of the Bill establishes NHS foundation trusts—a new form of NHS organisation. NHS foundation trusts will not be subject to direction . . . instead, an Independent Regulator will monitor their performance."
There is a certain economy of truth in that statement. We have to read only clause 14(3), for example, to find that the regulator can require—in other words, direct—a foundation hospital to provide goods and services. We have only to read subsection (7) to see how detailed that direction can be. The regulator can direct what services are to be provided, where they are to be provided and for how long they are to be provided. The independent regulator could be every bit as intrusive as the Secretary of State, though I am sure that he would carry out his duties more politely.
The absence of control from Whitehall is balanced by the sentence in paragraph 1.31 of the December document that reads:

"An NHS Foundation Trust will be required to submit reports and information to the Independent Regulator."
If all that happens is that the address on the envelope containing the endless statistics and reports is changed, administrators will not cheer the Secretary of State for releasing them from administrative burdens. There are about 20 different inspectorates, but it is not clear in the Bill how many of them will be removed. A pinch of salt is appropriate on the freedoms that are claimed under the Bill.
That brings me to accountability. In his foreword to the December document, the Secretary of State claims that NHS foundation trusts

"will be able to gear their services more closely to the communities they serve."
However, as we have heard in the debate, the services provided by the foundation trust will continue to be commissioned by the local primary care trust, not by the board of the foundation trust. People reading what the Secretary of State wrote there, and listening to some of his more extravagant claims, might be forgiven for thinking that the board of governors of the trust will decide what services will be provided.
I was reading the Secretary of State's Social Market Foundation speech last week. He said that the trusts will

"give more responsive services and ensure community services are better met."
They will not. The primary care trust will be giving the more responsive services, if, indeed, that is what they do.
It is also absurd to play with words and call one thing "central control" and the other "local accountability". Local control has the potential to be every bit as intrusive or destabilising as central control if it is not done well. What is proposed in the Bill is a leap in the dark. It is a management style that is virtually untried in this country outside the Co-operative movement and Network Rail. It might be better but it could be worse.
It has been argued that the Government are democratising the wrong body: the trust that manages the hospital, rather than the trust that commissions the services. It is as if the Government had said that the management of my local Tesco should be elected locally; but that the product range, quality and price and the frequency of delivery will continue to be dictated by Tesco headquarters. As my right hon. Friend the Member for Charnwood (Mr. Dorrell) said, there is a risk of the trust being pulled two ways—one by the primary care trust and the other by the governing body. The governing body will claim a democratic mandate and try to reorient the hospital to meeting what it sees to be local need. However, the PCT, which has the cash and the contracts, will be governed by national frameworks, targets, ministerial priorities and the regime from Whitehall. There is a real risk of crossed wires under the proposed regime.
Finally, I shall say a few words on financial freedom, which is likely to be far less than the rhetoric has implied. We are told in the document to which I have referred that trusts will be able to access capital

"based on financial performance and not on the basis of national or local capital rationing by the Department of Health or SHAs."
However, there is some economy of truth there. The capital borrowed by foundation trusts has to come out of the total pot available for health investment, so it must inevitably be constrained by national rationing.
I have tried to work out whether my local hospital will be able to borrow more under the new regime than it receives now in capital from the Department. Under what the Department is pleased to call a transparent-ratio-driven-credit ratings methodology using key ratios benchmarked with leading analysts, my hospital could borrow £12 million in year 1, but it could not do that every year. It is by no means clear whether this will be more or less than is available at the moment.
There could be advantages in the regime, but the Chancellor of the Exchequer and other Labour Members would water them down. I fear that what is left will not deliver the step change in NHS performance that we would all like to see.
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Copyright Sir George Young Bt. 2015