Integrated Care Organisation - 7 reasons why UNISON opposes Foundation Trusts

In 2003 the Labour government introduced legislation to allow the best performing hospitals to become foundation trusts, independent bodies with freedoms to set wages and attract private funding. The first foundation trusts were introduced in 2004.There are seven reasons why UNISON has continued to oppose foundation trusts.

Reason 1: Foundation trusts compete as part of a commercial market

Foundation trusts operate in a competitive, commercial market in the NHS. In this market primary care trusts (PCTs) buy services from a range of different providers across the public and private sectors, including NHS trusts, foundation trusts and privately run diagnostic and clinical centres. As foundation trusts have more freedoms to invest in services and health facilities than other health competitors it is likley that competition will become a ‘one-horse race’.UNISON is concerned services will suffer and harmful competition could lead to a two-tier health service and the possible closure of smaller general hospitals.

Reason 2: Foundation trusts are a backdoor to privatisation

Foundation trust status creates a backdoor to privatisation by allowing private and voluntary organisations, such as BUPA, to apply for a licence to run a foundation trust.UNISON is concerned the threat of increased privatisation in the health service could lead to the outsourcing of some or all health services to the private sector.

Reason 3: Foundation trusts will not lead to greater local accountability or social ownership

NHS hospitals were already owned by and run for the benefit of the whole public. The governance framework for foundation trusts does not lead to greater local accountability or social ownership. For example, foundation trusts are able to run with only a very small number of members in relation to the population that uses them.UNISON is concerned that foundation trusts do not represent the communities they serve.

Reason 4: Foundation trusts are poor value for money

Foundation trusts have freedoms to borrow privately which costs more than if they borrowed from the public sector. Private investment does not lead to increased total levels of investment, as the private sector borrowing counts towards the overall capital allocations agreed between the Department of Health and the Treasury.UNISON is concerned that public finance will simply be replaced by more expensive private finance, leading to higher costs and no overall increase in the level of NHS capital investment.

Reason 5: Foundation trusts lead to greater inequalities between trusts

Foundation trusts have greater powers and freedoms than NHS trusts which leads to inequalities in the health service. For example, they are able to keep all operating surpluses and asset sale proceeds themselves, whereas under the current system surpluses go to a central NHS funding pool from where they are redistributed to wherever the need in the NHS is the greatest.UNISON believes the levels of private borrowing by foundation trusts leads to decreased funding for non-foundation trusts.

Reason 6: Foundation trusts draw scarce staff away from non-foundation trusts

Foundation trusts have greater powers to raise private funds and set wage levels and will therefore be able to exercise additional flexibility on pay, leading to these hospitals drawing scarce staff away from Trusts that do not have Foundation status.UNISON is concerned that trusts without foundation status will have difficulty recruiting and retaining staff. This will undermine their performance and increase their reliance on temporary staff.

Reason 7: Foundation trusts undermine the NHS’s public service principles

Foundation Trusts undermine the provision of an integrated and planned health service and reinforce inequalities in access to health care. They will have an extremely negative impact on the NHS and staff as there is an emphasis on meeting financial needs rather than health needs.UNISON is concerned that foundation trusts damage services and harmful competition is leading to a two-tier health service.

Useful Documents on Foundation Trusts:

UNISON's Opposition to Foundation Trusts

Foundation Hospitals and the NHS Plan

In the Interests of Patients?

UNISON documents on NHS Bill:

UNISON's reponse to White paper - Liberating the NHS

Regulating Healthcare Providers

Local Democratic Legitimacy

Commissioning for Patients

Transparency in Outcomes

UNISON's reponse to Listening Exercise