The Queen's Speech: Go-ahead for first NHS PFI hospital

Queen's Speech: Health Service

The first hospitals in the history of the National Health Service to be built with private money will receive the go-ahead.

Plans for the two hospitals, the Norfolk and Norwich in East Anglia and the Dartford and Gravesham in Kent, together worth pounds 300m, were agreed months ago but have been held up because of fears that NHS trusts did not have the legal power to enter deals with the private sector.

A Bill to be published tomorrow will remove this final barrier and is expected to release the logjam of projects awaiting approval under the Private Finance Initiative (PFI). A total of 73 schemes, worth a total of pounds 794m, are at various stages of negotiation.

Although the schemes will provide much-needed capital funds for the NHS, after cuts of 17 per cent in the allocation from the Treasury over the past two years, it will give banks and private consortia a bigger say in the running of the service.

"The number of beds will be determined by market forces rather than medical need," David Hunter, director of the Nuffield Institute for Health Policy, in Leeds, said.

Plans for a Bill to end the NHS internal market and abolish fundholding have been shelved on the advice of civil servants who have suggested that Labour's objective of reducing bureaucracy and ending "two-tierism" can be achieved without legislation.

A white paper to be published in autumn will set out proposed changes, which will only be followed by a Bill if it is judged necessary.

A Health Department spokesman said: "The view is that you can go a long way, if not all the way, with a white paper and administrative changes. Don't have legislation that you don't need."

However, Frank Dobson, the Health Secretary, said some changes would be introduced "almost immediately."

Addressing senior staff at the NHS headquarters in Leeds last week, he said the Government would examine the balance of resources devoted to hospital and GP care "to ensure these fully reflect local population needs."

There are fears that this could mean a halt to the transfer of resources from hospital to community care, after Mr Dobson announced a moratorium on further hospital closures in London pending a new review, to be completed by the end of the year.

NHS managers say concentration of hospital services on fewer sites is essential to improve efficiency and release the funds necessary for new developments.

Mr Dobson said measures would also be taken to ensure GP fundholders "do not enjoy unfair financial advantages" and to cut down on the "current paperchase" of forms and invoices in the system.

The Audit Commission found in a recent report that GP fundholders had amassed millions of pounds of unspent savings which health authorities were unable to to touch.

One administrative change already being introduced by NHS trusts is the switch from one- to three-year rolling contracts.

Tough targets for a reduction in spending on management will also be set.

Labour has considered establishing common hospital waiting-lists to prevent patients of GP fundholders gaining earlier treatment.

The measure would end two-tierism with the minimum of disruption and cost nothing but a health department spokesman said there were no immediate plans to introduce it .