Statement on Foundation Hospitals 2010

The Socialist Health Association is a membership organisation which promotes health and well-being and the eradication of inequalities through the application of socialist principles to society and government. We have an extensive membership base which provides a wealth of information, knowledge and experience of the care system, both academic and practical.  This includes members, governors, executive and non-executive directors, staff and patients of Foundation Trusts.

This paper deals with one aspect of a complex situation which also involves ideas around marketisation and involvement which are expanded on in other papers.  We oppose the current drive to increase the use of market mechanisms in the NHS, which includes a major expansion of the use of Foundation Trusts as the main organisational model for service provision.

  • Local NHS facilities should remain publicly owned and Foundation Trusts should be a model for community multi stakeholder ownership.
  • The governance structures within which Foundation Trusts operate are flawed and are insufficiently undemocratic and must be extensively reformed.
  • Both purchasers and providers should be responsive to their local community and commissioning of services should be under proper democratic control
  • Whilst we accept that there will be a major increase in the number and scale of Foundation Trusts we do not accept denationalisation. Foundation Trusts must remain clearly part of the NHS family with a duty of partnership with both commissioners and other NHS partners. There must be explicit restrictions on sale and use of assets, on varying terms and conditions of employment and on non NHS income.

The White Paper Model

The system model currently proposed is where commissioning and provision are fully separated; all providers would be regulated and would be a mixture of, Foundation Trusts, tier one local authorities, private sector, or 3rd sector. The quasi market levers, like choice, tariff and PBR, would operate and “market” mechanisms would be in place to deal with failing providers, through merger or acquisition. There would be no traditional NHS providers. Foundation Trusts would own their own assets, be free to expand without restriction into non NHS provision, free to set their own terms and conditions of employment; and within limits they could adapt their governance structures.  This is part of a de-nationalisation strategy.

A commercial business/profit maximising model does not make much sense where the money available for health care is more or less fixed. We do want to see healthcare provided as efficiently as possible, and we accept that some form of competition may be appropriate in some services. However efficiency requires agreement about measurable outcomes. Financial outcomes are easy to measure, but in healthcare the real outcomes for patients are much more difficult to pin down. The experience of Stafford Hospital reminds us that it is not difficult, at least in a small provincial hospital, to meet all your financial targets by reducing the numbers of qualified staff to unsafe levels, and to ignore protests from patients and their families. It showed that external regulators are also impervious to such protests.


The FT model has departed from the initial aspirations but it does currently allow some freedoms, for example around access to and use of capital. The appointment and accountability of executive directors is much clearer in an FT and the Board does have a genuine role unlike in a Primary Care Trust or Strategic Health Authority where  decisions are largely based on top down instruction. Performance management by the SHA is replaced for Foundation Trusts by regulation by Monitor plus indirect performance management by the SHA operating through the commissioners.

New forms of FT are being discussed with different governance arrangements and some new Foundation Trusts will be small and will not have been through the rigorous (but still flawed) Monitor accreditation process which has so far authorised 130 Trusts, both acute and mental health (roughly 50%).

Foundation Trusts can, in theory, establish their own terms and condition of employment but so far only one has done so. In general Foundation Trusts are still bound into the same NHS constitution, operating frameworks with the same targets and funding flows – scope for other income being strictly restricted. The overheads from having to run the FT model are significant and there is no additional funding for this. Some very well known large acute trusts are not close to becoming Foundation Trusts and it is wholly unclear what and when any action will be taken about the stragglers – every deadline so far has just been ignored.

Proposals have been made to give Foundation Trusts greater freedoms, to remove any limitation in their ability to secure private income, and to transfer state owned assets (like hospitals) to them. There will be no performance management only regulation.


The weakest part of the FT model is membership and governance. The idea was that the Trust would belong to its Members (the moral owners) and would have Governors who would represent the local community. For most Trusts the effect has been more freedom for the Chief Executive.

A small number of the longer established Foundation Trusts have made attempts to improve on the basic model but many Foundation Trusts see the Governors as biddable individuals who can be sent out into the community as ambassadors for the hospital – an ornamental part of the constitution. They see Members are an extension of the League of Friends.

Governors often have little experience and no support. They only know what they are told by the management and they only do what they are told to do by the management.

The idea that the Board are answerable to the Governors is generally a myth. Regulators and some FT Boards regard Governors as irrelevant or no more than a necessary nuisance. Many governors never even get to see the minutes of board meetings. There is no mechanism for Governors to be answerable to the members. They don’t know who the members are and have no means of communicating with them, other than through the Trust staff.

As far as members are concerned membership is almost completely passive, limited to the receipt of a couple of newsletters each year with pictures of visiting royalty, shiny new kit, pretty nurses and heroic doctors. Members do not get any hard information about the working of the organisation of which they are supposedly the owner.

The relationship between the Board and the Governors is complex and mediated almost entirely through the Chair, who chairs both the Board and the Governing Body (Council of Governors). Chairs interact far more frequently with Board members than with Governors, and the idea that they are accountable to the Governors, who are much less involved and knowledgeable, is a difficult one which needs external reinforcement.

Trusts are under pressure to increase the size of their membership. When it comes to membership size is not important. What matters is what you do with it.

The experience of democracies is that political parties are necessary to make democracy work. In the absence of an organised group who can articulate common ideas democracy, as seen in Foundation Trusts, becomes a beauty contest. If voting doesn’t change anything people stop doing it.


For the Socialist Health Association the FT model has to fit into a vision where the main characteristic is of a community owned organisation, responsive to the needs of local communities and with some degree of autonomy from diktats from above; but still firmly within the traditional NHS family with the values that implies. If we are serious about local ownership and accountability then there has to be an element of trust and an acceptance that there might be aberrations, unintended consequences and even failures.

We propose a series of measures which might improve the Foundation Trust governance model but unless there is a genuine will to transfer power then the model is fatally flawed. (We accept that some Foundation Trusts will already have implemented some of these.)

  1. Most important – more independence. We should strengthen the idea that the members own the hospital and the Governors are their elected representatives. The Secretary of State, Monitor or any other regulator (apart from CQC on issues of patient safety) should only be able to intervene through the Governors.  If Governors represent the owners of the Trust and are there to hold the Board to account then any external regulation must involve them.
  2. As well as approving the annual plan the Council of Governors should have to formally approve all major transactions and all major changes to service delivery, including any closure of facilities, any changes to the limit on private patient income and any Trust wide changes in staff terms and conditions.
  3. The power to appoint or remove the Chair or Non executive directors should only be exercised by the Council of Governors in special session. (We do not support direct elections for NEDs and Chair as this undermines the representative role of Governors.)
  4. The targets for recruiting more members should be scrapped. Instead there should be measures of the effectiveness of their involvement.
  5. Governors meetings should be open to the public.
  6. It should be possible for members or the public to contact Governors without going through the staff of the Trust, and Governors need to be able to communicate with members without interference from the staff. The Trust should at least supply a public email address for each Governor.
  7. Governors should be entitled to:
    1. ask questions about any aspect of the Trust’s business and have their questions answered;
    2. membership of any senior Trust committees;
    3. observe and contribute (without a vote) at Board meetings and to see all the papers;
    4. attend closed sessions and Board in committee sessions;
    5. a governors’ own Steering Group with responsibility to determine the Council of Governors agenda;
    6. regular joint Board/Council of Governors meetings. All major policies must be timetabled to allow full Council of Governors advice and to be signed off by Council of Governors.
  8. There should be radical improvements to the actual election process. Minimum standards should be established for the election processes and for eligibility. In particular:
    1. constituencies should be neither too big nor too small – big enough for a contested election, but small enough for candidates to know the area.
    2. Candidates should be given sufficient opportunity to say something about themselves in the election process and why they want to be Governors.
    3. If they have to be proposed or seconded by other members the list of members must be published.
    4. The Trust should facilitate hustings meetings where possible
    5. Governors should be elected by the Alternative Vote model.
  9. Governors should be able to have recourse to the regulator to ensure the above are enforced.
  10. Any rules which prevent members of Local Involvement Networks or any similar bodies from being Governors should be scrapped.
  11. We should reaffirm that the equality legislation applies to Governors and support must be provided to people who need provision for disability, money to pay for child care etc.
  12. Governors should be entitled to time off work for public service. Staff Governors should be entitled to time off with pay and cover for their work.
  13. There should be a national Code of Conduct which every Foundation Trust has to adopt and enforce on their governors (they could add to it). This should make clear issues around conflict of interest, communications with the media, standards of behaviour, role and responsibilities. It should also cover how governors could be removed for unacceptable conduct in breach of the code, or non attendance. These matters should not be open to local decision making.
  14. There should be appropriate funding for governor training and development and member engagement. The Foundation Trust Governors Association should also get appropriate funding, for example for developing training courses and materials, and its role should be acknowledged. A national one day induction course should be established and no governor would be able to take office until they have been through the course. Annual follow up half day courses should also be mandatory.
  15. Governors should be given opportunities to meet with governors from other Foundation Trusts.  Membership of the Foundation Trust Governors Association should be open to individual Governors, even if their Trust does not subscribe.
  16. A good job description for the role of Governor should be published before an election so candidates really know what is involved – in terms of formal tasks, opportunities for involvement in the hospital, and time commitment.
  17. Foundation Trusts should use common terms and be prevented from calling their Governors by other names, such as “councillors” as some do, because it just confuses the public.
  18. Monitor should
    1. consult widely and publish new guidance around the roles and responsibilities of members, governors and members’ councils. Some independent research and publication of best practice should be undertaken.
    2. have one nominated board member responsible for liaison with governors.
    3. have responsibility for supervising the democratic governance arrangements for all Foundation Trusts.
  19. All Councils of Governors should consult with their membership and propose formal arrangements through which members are regularly informed, given the chance to participate and consulted formally on major issues before the Council decides its position.

See also our Evidence to the Health Select Committee February 2003 and our Policy Statement 2004