Foundation hospitals Bill faces defeat in the Lords

Tony Blair faces a fresh showdown with Labour critics of foundation hospitals after Opposition peers vowed to throw out the proposals when the House of Lords debates the plans today.

Conservative and Liberal Democrat peers said they expected to achieve a "resounding" defeat of the Government's plans to set up the self-governing NHS trusts, which would despatch the Health and Social Care Bill back to the Commons.

The opponents of the Bill want to force a repeat of the Commons debate on foundation hospitals in July when the Government's majority was cut to a record low of 35 after a major rebellion by Labour backbenchers.

Earl Howe, the Conservative health spokesman in the Lords, condemned the proposals as a "shambles". He argued that foundation hospitals would create a two-tier NHS and would allow extremists, political agitators and single-issue campaigners to play havoc with hospital management.

Lord Clement-Jones, the Liberal Democrat health spokesman in the Lords, denounced the Bill as "cack-handed", and called on Labour backbenchers to think again.

But John Reid, the Secretary of State for Health, vowed to reverse any defeat in the Lords. He pointed out that the Government had already made significant concessions and accused peers to trying to "wreck" the Bill.

Amendments put down for debate during today's Report stage of the Bill simply excise the parts of the Bill which would create foundation trusts. The alliance of Conservative and Liberal Democrat peers should ensure the defeat of the Bill, with many Labour peers expected to stay away.

A defeat in the Lords would force the Government to reintroduce clauses creating foundation hospitals in the House of Commons, raising the prospect of an embarrassing second rebellion by rebel Labour MPs as the end of the Parliamentary year approaches.

Lord Howe said that the Conservatives supported many of the fundamental aims of the foundation hospitals scheme, but could not back the detailed proposals put forward in the Bill.

He said restrictions on hospital borrowing imposed by the Chancellor, Gordon Brown, meant that foundation trusts would reduce the capital available for other NHS hospitals to invest and would create a two-tier health service.

"It really does mean the rest of the NHS will be disadvantaged quite severely and that to us is unacceptable. We are looking at a two-tier health service in a very major sense for 10 years. That is profoundly worrying," he said.

Lord Howe also criticised proposals to allow patients to elect governors to run the newly created foundation trusts, arguing that they would be open to "entryism" by single issue campaigners or extremists like the BNP.

He said: "I don't see how you will avoid having agitators, pressure groups and campaigners getting onto the boards of foundation hospitals. These are people who are capable of causing an enormous amount of nuisance to the professional people charged with running hospitals."

Lord Clement-Jones added: "We all accept the principle of autonomy, but it is the way they have put it in the Bill that is completely cack-handed."

Dr Reid accused peers of exceeding their powers. He said: "The hypocrisy of the Conservatives and Liberal Democrats is now clear. They are intent on wrecking Government plans, not improving them.''