Milburn says foundation hospitals will not produce a two-tier NHS

Alan Milburn tried to heal Labour wounds on the NHS yesterday when he rejected claims that controversial legislation to introduce foundation hospitals would create a two- tier health service.

He told a packed House of Commons that moves to give NHS trusts freedom to raise finance and manage their affairs would not reinvent the internal market in the health service and set hospital against hospital.

Mr Milburn told MPs: "This is a policy for all and not just for some. It is not about elitism or two-tierism. It is about levelling up, not levelling down. It is about raising standards in every NHS hospital so that no NHS hospital is left behind."

The Health Secretary, flanked by Tony Blair, was repeatedly questioned by Labour critics as he opened a debate lasting six and a half hours on the Health and Social Care (Community Health and Standards Bill), which will allow high-performing hospitals to employ their own staff and control their assets.

David Hinchliffe, Labour chairman of the Commons Health Select Committee, led the rebels, warning that foundation hospitals would "resurrect" the competition within the NHS that the Government was elected to remove.

Frank Dobson, a former health secretary, and another high-profile opponent of the Bill, added that the reforms would produce a culture of "dog eat dog" in the NHS.

But a series of heavyweight former frontbenchers, including the former foreign secretary Robin Cook, the former health and home office minister John Denham,and the former transport secretary Stephen Byers swung behind the Government's plans.

Sixty Labour MPs signed a rebel amendment warning that the Bill would increase bureaucracy and breed inequalities in the NHS, while 124 Labour backbenchers signed a Commons motion attacking the proposals for creating a two-tier NHS.

Mr Milburn told MPs reform was essential to prevent patients abandoning the National Health Service.

He said: "My great fear is this: without these reforms, more and more people will simply walk away, with consequences for universalism and social cohesion that might be welcomed by some on the [opposition] side of the house but which are abhorrent to all of us on this side."

He was challenged by a string of MPs expressing concern at the changes. Jean Corston, Labour MP for Bristol East and chairman of the Parliamentary Labour Party, asked what the Bill would do for her constituents, while Joan Walley, Labour MP for Stoke-on-Trent North, asked Mr Milburn: "Why can't you still convince me that foundation hospitals are the right model to go forward with?"

Mr Hinchliffe, sponsor of the rebel amendment, warned: "Just like the internal market we will have winners and we will have losers and that is not the direction I expected from my Labour Government."

Mr Dobson said foundation hospitals would be "a cuckoo in the local health nest." He said: "With more funds they would be able in the Government's own words to offer new rewards and incentives to staff and thus attract from non- foundation hospitals staff who are valuable to those hospitals, thus getting better at the expense of their neighbours."

Angela Eagle, a former home office minister, warned: "I have a major problem with the reintroduction of competition and marketisation."

Liam Fox, the shadow Health Secretary, waited until the last minute to reveal that the Conservatives would not support the Bill in the division lobby. He said the Bill would lead to infighting between hospitals and create "a bureaucratic nightmare".

The Bill was a "wasted opportunity" to introduce still more radical reform. Dr Fox said: "This is not the programme of a bold, reforming Prime Minister, but a timid and pale imitation of what works elsewhere, watered down to pacify the Government's internal critics.

"This is no reforming lion but the mouse that roared."

Evan Harris, the Liberal Democrat health spokesman, also lambasted the Bill as "sham democratisation". Dr Harris said: "Yes, we want to see a mixed market in providers. But we want to see that without the false elitism that is inherent in the Government's proposals and without the beggar-thy- neighbour approach that is also inherent in the foundation hospitals proposal."

But Mr Cook backed the Bill: "You cannot provide local freedom and then deny the right of local hospitals to be different.

"We should support the Bill precisely because the NHS is strong, is successful, and can improve and can be continued by the provisions in the Bill."

Mr Byers told MPs: "There are times when change needs to be embraced. The measures ... don't represent a revolution in the National Health Service. This is a sensible and pragmatic set of proposals. They don't betray our core beliefs as a political party. I believe they reflect them in a modern setting."