Foundation trusts

BMJ 2003; 326 doi: https://doi.org/10.1136/bmj.326.7403.1344 (Published 19 June 2003) Cite this as: BMJ 2003;326:1344
  1. Jennifer Dixon, director (jdixon{at}kingsfund.org.uk)
  1. health policy King's Fund, London W1G 0AN

    Where next?

    Much heat and light have been generated in the media recently as a result of the second reading in the House of Commons of the Health and Social Care Act 2003. The most controversial aspect of the bill was the proposal to allow NHS trusts to become NHS foundation trusts, with extra freedoms to run their affairs compared with other NHS trusts.1 Three main freedoms have been granted. Firstly, foundations can borrow capital, sell assets, and importantly retain in-year surpluses. Secondly, direct control from the Department of Health will be relaxed and greater managerial freedoms granted-for example, to reward staff-and foundation trusts will be accountable to a new independent regulator. Thirdly, more freedoms will exist with respect to how foundation trusts are governed, although they will have to establish a new board of governors elected in part by local communities.

    Freedoms diluted

    The freedoms have been diluted. For example, the borrowing of capital is subject to a “prudential limit” set by the Treasury, and foundation trusts will now have to stick to pay rates for staff set out in a recently accepted policy, Agenda for Change.2 The freedoms were curbed for political as much as pragmatic reasons-to reduce opposition to the policy by rebellious backbenchers and to build confidence that more trusts could achieve foundation status quickly, without too much instability in the NHS. The policy is important, less for what it will achieve in practice in the NHS (in the short term) than for what it symbolises politically. The row in the Commons was effectively a row over two differing political philosophies: one allowing freedom (for individuals or institutions) provided that a decent “floor” or minimum standard remains and improves; the other intervening to promote equity, in which the overall distribution of resources is controlled-the “ceiling” as well as the “floor.” This row is effectively at the centre of debates on reform across the public sector. On his interview on BBC's Newsnight during the last election, Tony Blair made clear his position with regard to income distribution: he said he was not going “to go after” the rich but to ensure that those on the lowest incomes had a better deal-for example, through the use of a minimum wage. There is a parallel with foundation trusts-only those that score highest on performance (using the Department of Health's star rating system) are eligible for freedoms, while extra help is available to more poorly performing NHS trusts to improve.3

    In the end, duty to the prime minister's cause prevailed; only 65 members of parliament rebelled, and the bill passed with a comfortable majority. So what happens next? Of 45 acute trusts eligible to apply for foundation status, 32 expressed an interest and 29 have been accepted to develop their plans further. The final choice will be made this autumn, and the first wave of foundations will operate from April 2004. The criteria for deciding which trusts can move forward are not clear. An overriding political consideration must be to allow as many trusts as possible foundation status, partly to counter the two tier argument used by opponents of the policy-that allowing an elite tier of hospitals more freedoms would lead to greater inequity in ditribution of resources and an unacceptable gulf in performance in a health service founded on the principle of equal access for equal need. In the short term, expect to see many more NHS trusts achieve foundation status, with limited new freedoms. But as local experience and political confidence grow the freedoms are likely to be expanded as individual foundations trusts petition the independent regulator for autonomy in a host of new areas.

    As recent debates and the useful report from the House of Commons Health Select Committee4 have highlighted, many questions remain about the policy on foundation trusts. In particular, how will the regulator operate in practice; how will the benefits and drawbacks of foundation status be identified; how will non-foundation trusts be able to learn from the experience to improve their performance; and will the new mechanisms for involving the public in the governance of foundations be worth the costs? Is foundation status more appropriate for other NHS organisations-for example, primary care trusts-than acute trusts or for elective over chronic care?5

    More change

    Taken together foundation status plus the other theme of government policy to reform the NHS-sharpening market incentives6-could result in significant change. The emerging vision for the NHS is towards a greater role for individual consumers: more choice of provider (NHS or non-NHS) and treatments; better information; more support in making decisions and backed up by a system of financial incentives to institutions7 and professionals8 that give bite to these choices. At the moment policy initiatives are focused mainly on the provider (supply) side, but if change is slow then expect more action on the demand side in the medium term-for example, greater choice between competing commissioners of NHS funded care.5

    As this new and radical landscape opens up, key stakeholders will need to adapt. The clinical professions need to understand much more that the patient is central in decision making.9 Management, whether public or private, will need to understand that the relationship between clinicians and patients is their core business. The government will need to understand the need for independent evaluation of policies to gain support for the way ahead. In the early 1990s, when change in the NHS was no less profound, few funds were made available by government to evaluate even headline policies of the internal market.10 Things should be different now. More research may need to be done to a political timetable-that is, fast. Researchers (and peer reviewed journals) may need to be less sniffy about quicker forms of research. If “what counts is what works” then more enlightenment is needed on all sides.


    • Competing interests None declared.


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