The government's proposals for creating foundation hospitals are good as far as they go, but effective reform of our failing NHS will require more dramatic action, according to the final report of the Health Policy Consensus Group. All hospitals should be transferred to the ownership of non-profit community trusts.

The Health Policy Consensus Group, whose members represent all points of the political spectrum, includes senior NHS consultants and prominent Labour party members: Professor Stephen Smith, NHS consultant and long-standing Labour party member; Labour peer, Lord Meghnad Desai; Stephen Pollard, Labour party member and former research director of the Fabian Society; Geraint Day, member of both the Labour party and the Co-operative party and a health policy advisor at the IoD; Paul Ormerod, Labour party member and author of The Death of Economics; Anthony Browne, formerly health editor of the Observer; as well as other distinguished journalists, academics and writers, including Andrew Neil.

According to the group's chairman, Dr David Green, Labour MPs who oppose foundation hospitals do not represent the wider Labour movement:

• "Rank and file opinion in the Labour party has shifted. People used to be committed to public sector provision; now all but a few diehard collectivists realise that access for all is the deeper ideal. Closer contact with European parties of the Left has made a big difference. In France about one-third of hospital beds are private and in Germany about half, but French socialists and German social democrats have never worried about who owned the hospitals - their concern was that no one should ever be denied care because they lack the money to pay."

The Final Report of the Health Policy Consensus Group recommends:

• The Government should not own hospitals and all such institutions currently in the public sector should become independent at the earliest possible date. The simplest method would be to make them all foundation hospitals, whilst ensuring that their assets must be permanently used to provide health care.
• Existing NHS hospitals should not be transferred to the ownership of for-profit institutions.
• However, foundation hospitals as currently proposed are only a small step in the right direction. Hospitals should have complete autonomy from Whitehall. In particular, there should be no specific restrictions (beyond those that apply to all workplaces) on the ability of hospitals to recruit staff or on the conditions of their employment.
• The Government has an important role in ensuring that hospital accident and emergency infrastructure is universally available. In the rare event of a hospital being in financial difficulty, the Government must be able to take appropriate action.
• There should be no restrictions on the establishment of new hospitals, whether they are for-profit or not (as at present).
• Foundation hospitals should be free to raise funds in capital markets which are not counted as part of public borrowing, but to avoid the perception that the taxpayer is the ultimate guarantor of loans, anyone making such loans must legally renounce any future claim on public funds.

Four Models For Hospital Ownership

Options for Hospitals

We do not think the government should be involved in the provision of acute care, and so the first step should be to allow the transfer of hospitals to not-for-profit community trusts. Community trusts should be entirely independent of the government and free to serve consumers as they believe best. They should be obliged to preserve their non-commercial status, although there should be no restrictions on the freedom of new hospitals to emerge as commercial enterprises.

Locks on asset distribution and on asset use.

When NHS Trusts become community trusts, it is desirable that those assets cannot be transferred to private persons or profit making companies and thus permanently lost to the public good. To this we may need to have a lock on public asset distribution.

Do we need a new legal form?

What legal form should community trusts take? There are five possibilities:

Royal Charter model

Hospitals could be given royal charters, like many voluntary hospitals before nationalisation. Universities have the powers given them by the royal charter and cannot change their constitution without the approval of the Privy Council. Like a charity, the assets cannot be privatised and must permanently be used for the public purpose stipulated in the charter - thereby protecting asset use.

Charity model

Before nationalisation many hospitals were registered charities.

Mutual model

Alternatively there could either be a free transfer or sale of assets to newly founded mutual organisations. Mutuals are not explicitly defined in UK statute; rather, the Industrial and Provident Societies Acts and Companies Act regulate them.

For profit privatisation

Companies limited by shares are clearly not appropriate for community trust hospitals, as those organisations (or at least their managers) have a fiduciary duty to private and external shareholders who are the owners of the company and have a right to all profits.

Lease model

Though possible in theory to sell NHS Trust assets to private for profit companies, it would be a massive ideological Rubicon to cross. We think it might be better to rent hospitals to private (for-profit and not-for-profit) organisations - perhaps by establishing a government property agency to handle letting. Organisations could buy a 99-year lease, with the government remaining as the asset owner.

Notes for Journalists

In its first interim report, Options for Funding, the group identified six characteristics of an ideal health system and a number of options for policy makers:

• The primary role of government should be to create the legal and regulatory framework, to ensure that access to a high standard of care is guaranteed to all, and to ensure the supply of essential public health services.
• Patients should have a choice among a range of competing healthcare providers.
• Health insurance should be compulsory.
• Patients should be free to choose from among a range of third party payers so that the allocation of resources follows from patient preferences.
• There should be no compulsory user charges.
• Politicians must not override the professional duty of clinicians to act in the interests of patients.

Publication Details

The Final Report by the Health Policy Consensus Group is published by Civitas, The Mezzanine, Elizabeth House, 39 York Road, London SE1 7NQ.
Web: www.civitas.org.uk

The Final Report and interim reports are also available online at:

Final Report: www.civitas.org.uk/pdf/hpcgFinalFactsheet.pdf

The Supply Side: www.civitas.org.uk/pdf/hpcgHospitals.pdf

Step by Step Reform: www.civitas.org.uk/pdf/hpcgMain.pdf

Options for Funding: www.civitas.org.uk/pdf/hpcgSystems.pdf

Contacts:

For more information call:

Lord Meghnad Desai on 020 7955 6628

Christoph Lees on 020 7401 5470

Robert Whelan on 020 7401 5470

Benedict Irvine on 020 7401 5470

Members of the Health Policy Consensus Group

Professor Nick Bosanquet, Imperial College; Anthony Browne, former health editor of the Observer, now environment editor, The Times; Dr. Adrian Bull, formerly PPP Health Care, now Carillion Health; Geraint Day, Institute of Directors; Professor, Lord Meghnad Desai, London School of Economics and Labour peer; Helen Disney, Civitas; Dr. David G. Green, Civitas (Chairman); Benedict Irvine, Civitas; Ruth Lea, Institute of Directors; Dr. Christoph Lees, NHS Consultant, Addenbrooke's Hospital; Andrew Neil, formerly editor of the Sunday Times, now a broadcaster for the BBC; Paul Ormerod, Volterra Consulting and author of The Death of Economics; Stephen Pollard, journalist and Labour party member, Research Director of the Fabian Society 1992-6, now Senior Fellow, Centre for the New Europe; Professor Stephen Smith, NHS Consultant and University of Cambridge; Matthew Young, Adam Smith Institute.

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