Union warning over NHS shake-up

Plans to free NHS hospitals from Whitehall control will bring a Railtrack-style collapse in the health service, trade unions claimed today.

The warning came as Health Secretary Alan Milburn set out sweeping proposals to turn Britain's best hospitals into not-for-profit trusts with the power to set local rates of pay.

Failing hospitals will be turned around by handing them over to private companies, charities or managers of neighbouring hospitals.

Announcing his plans, Mr Milburn described the NHS as Britain's "last great nationalised industry" and said the reforms are essential for improving patient care.

However, patients' representatives warned that they could lead to a twotier health service. Leaders of public-sector trade unions said the changes could trigger a wave of strikes as staff at neighbouring hospitals compete to win the best pay and conditions.

Downing Street insisted that national minimum pay scales would remain, but conceded that hospitals may be granted the power to set higher rates to suit local conditions.

The Prime Minister's official spokesman said national pay review bodies would continue to operate, but added: "What people do in terms of incentives may be another issue."

He dismissed comparisons with the rail industry, saying: "This is not about splitting up hospitals. It is about giving those hospitals with a proven track record of success the autonomy to build on that success."

However, GMB general secretary John Edmonds said: "This shows that ministers are not prepared to listen to reason and are intent on forcing through backdoor privatisation of the NHS.

"It is staggering that at a time when the failure of rail privatisation is there for all to see, the Government is intent on making the same mistake with our hospitals. The last thing the public wants is to see the NHS turn into a new Railtrack."

Under Mr Milburn's proposals, assessments of hospitals will be based on a "traffic-lights" system, introduced in September, which gave every NHS trust a star rating between nought and three.

The best hospitals will be rewarded with "foundation hospital" status. The centralised NHS will continue to set standards and carry out inspections, but otherwise local managers will be free to run their hospitals how they wished.

Trusts will continue to be funded by the taxpayer with an annual budget, allocated by the Department of Health and fixed according to performance. The proposal for foundation hospitals, which may require legislation, is also likely to be extended to primary care trusts - the GP-led groups set up to take control of 75 per cent of the NHS budget.

Mr Milburn's aides are billing today's speech, to the New Health Network in London, as the most important in his career as Health Secretary.

He said: "I cannot run a millionstrong health service from my office in Whitehall, nor should I."

Tory health spokesman Oliver Heald accused Mr Milburn of "panicking" and said: "This seems to me to be a bit of a back of the envelope job."