The foundation trust model: death by a thousand cuts 

For more than a decade, staff across the NHS toiled in the pursuit of foundation trust status. Monitor’s tests were unforgiving, but the prize was worth fighting for: freedom from the grasp of government and a brand that stood for quality and professionalism.

Those days seem long behind us. The foundation trust pipeline dried up as NHS funding was hit by the economic downturn. This, along with a series of changes to government policy, has eroded the freedoms that foundation trusts fought so hard for.

It is now increasingly difficult to describe a clear distinction between foundation trusts and NHS trusts, with foundation trusts subject to greater central control than at any time in their history. The new NHS planning guidance published in December 2015 and recent letters from national bodies to trust chief executives hammer the final nails into the coffin.

If this is a memorial, let us pause to reflect on the concept of foundation trusts and their initial promise. Alan Milburn’s White Paper of 2002, Delivering the NHS Plan, pledged to liberate foundation trusts from central control so that they could innovate and improve patient care. They would be free to determine their own pay, to retain surpluses and to decide how to use their assets. Rather than looking to the Department of Health for guidance, they would be accountable to their communities in a more patient-centred NHS.

Foundation trusts may have been an initiative of Labour under Tony Blair, but they were enthusiastically adopted by the coalition government in 2010. Andrew Lansley’s White Paper, Liberating the NHS, promised again to release NHS providers from central government micro-management and to increase foundation trusts’ freedoms to create the largest social enterprise sector in the world.

But in practice the model was under threat from its conception. Foundation trusts inhabited a precarious halfway house between the public and private sectors: independent corporations on paper yet entirely dependent on the state in reality – for funding, capital investment and bailouts when things went wrong (the original plan to create an independent NHS bank was discreetly abandoned).

It was never going to be easy for a single payer and monopoly providers to maintain an arm’s length, contractual relationship. In the private sector, such close mutual dependency often ends in merger (see Klein’s famous case study on General Motors’ acquisition of Fisher Body). For its part, the Office for National Statistics was never convinced that foundation trusts were really autonomous companies and actually kept them on the public balance sheet.

Those tensions were apparent from the start. In theory, foundation trusts were supposed to be subject to powerful local governance by their members. In practice, the Department of Health and regulators played the main role in determining their priorities and overseeing their performance. Monitor could end a chief executive’s career; foundation trust governors could not. So the leaders of many foundation trusts continued to look upwards to Whitehall for direction, rather than inwards and outwards to their staff and their communities as had been envisaged.

Nevertheless, some successful foundation trusts retained a meaningful degree of autonomy throughout the 2000s. Organisations such as Salford Royal or the Royal Marsden – who hit key targets and balanced the books – rarely felt the regulators’ stick. Conversely, those who breached Monitor’s terms of authorisation could expect a ratchet of increasingly invasive intervention, from requirements to develop sustainability plans to the replacement of board members.

That compact crumbled as the financial situation deteriorated. Government pushed prices below any reasonable level. Cash-strapped commissioners withheld funding. And large swathes of the foundation trust sector found themselves in breach of Monitor’s financial rules and subject to intervention, not through any fault of their own in many cases, but because of the gap between funding and the real cost of services.

The planning guidance and associated communications from the national bodies dispel any remaining illusions that foundation trusts, even the handful who are still in good financial health, are autonomous organisations. The planning guidance officially re-establishes a planned economy (as was always the case for the trust sector) where money is moved around local NHS organisations to ensure their sustainability.
It is now clear that all foundation trusts, even those with good finances, must accept control totals for capital expenditure. So that last remaining freedom, the right to decide what to do with their surpluses, has been lost. Meanwhile, the national bodies are micro-managing the details of how foundation trusts deliver services more than ever before, to the extent of directing them on staffing cover and annual leave planning.

The NHS veers between centralisation and decentralisation with alarming speed but dull predictability. Fundamental features of our tax-funded system pull government and providers into a hierarchical relationship. But dissatisfaction with public sector hierarchies – their unresponsiveness and inability to innovate – is never far from the surface. Hence the stream of policy papers promising, and failing, to set providers free.

Command and control from Whitehall may appear to some the only realistic course in the current crisis. But what are the chances that it creates the next Salford Royal, Frimley Park, Southcentral or Jönköping?

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#545788 Patrick Newman

FT's were on a path to privatisation/charitiblisation/MBO's of large hospitals including mental health. It is a National Health Service and we all should benefit from both national and regional planning so it never made any sense to deliberately exempt some of the better hospital from these processes. Sorry Mr Milburn not even Jeremy Hunt was ready for creeping privatisation.

#545790 Stella Tsartsara
Consultant Integrated Care
South East Europe Healthcare

"Monitor could end a chief executive’s career; foundation trust governors could not" - this is Key. As long as you do not cut the umbilical cord there is no way they will find how to swim. No way! I am researching exactly this area. Would you be interested in knowing more? Please contact me in my email

#545791 Neil Goodwin
Aintree University Hospital NHS FT

This analysis is depressingly accurate and a similar account could have been given for why NHS Trusts didn't achieve their greater freedoms when they were created in the early 1990s.

The current situation is compounded by at least two interrelated factors alluded to in the blog. First, the failure of the majority of FTs to realise the benefits from their greater freedoms in the early days of the FT movement. And second, the lack of a coherent approach to the development of corporate management within FTs, particularly at board level.

Although Monitor did more than any other national body to develop boards, this was - with hindsight - not followed through with a robust programme of corporate development within each organisation. One of the consequences of that we are likely to see develop in the current climate is the differential impact of boards across the NHS and the development of stronger, direct executive links between CEOs and national regulators. In summary, the develop of a corporate management approach will rapidly emerge as an increasingly significant challenge for the NHS.

#545798 Mike Tremblay
Cassis Ltd

I agree, this is a depressing turn of events. General Motors aside, many countries successfully blend public and private provision without needing to dominate or nationalise; the benefit for patients and outcomes is evident in superior clinical outcomes.

I agree with N Goodwin that the trusts may have planted the seeds of their destruction through timidity. But Milburn's original Spainish insight was transformed into a pale model of independence. Elsewhere, Canada's hospitals, while creatures of provincial legislature, broadly enjoy high levels of independence despite a monopsony payer; Germany has successful hospitals as does France and the Netherlands; Malaysia is the home to IHH, the world's second largest hospital chain; do we need to mention the US? And so it goes. All operate within both public and private healthcare systems. If I were looking around for world-class hospitals, there are higher performing models in other countries, what lessons would I gather from the NHS?

Having in the past taught hospital management, and conducted hospital performance reviews, I would say there is still a lack in the UK high level hospital / healthcare management degrees and suitable career paths for high performing individuals to move into executive roles. It sometimes seems amateurish.

The current state of affairs may be more a pecularity to how the NHS mandarins worry about their own response to crises. Fear drives actions such as we're seeing and the consequence is to constrain managerial freedoms to innovate, which in the end provides the evidence that state intervention was needed in the first place.

Even the most ambitious organisations eventually learn to stop struggling when the regulatory and bureaucratic chains become too heavy.

All I can reflect back is that if freedoms are good for prison or school governors, what is the problem with hospitals. Such policy incoherence is breathtaking.

#545799 Richard Spicer
Retired consultant surgeon

I worked in a Trust determined to get Foundation status and it was all about balancing the books; quality of service was low on their agenda and some services suffered to the extent that they have never recovered. Trusts nationally told the DOH that they needed fewer nurses (cost saving again), training numbers were decreased and they are now having to fill gaps with expensive agency staff.
Yet another example of how top-down reforms have had a malign effect and wasted billions of pounds. See Lale & Temple J. Roy. Soc. Med. 2016 109(1), 18-26.

#545800 Terry
Member of the public

At last, somebody has mentioned that magic word 'Governor' - thanks Stella.
If ever there was a need to place a large magnifying glass over their powers, duties and delivery it is now.
To have their Chair the same person as the Chair of the Trust is beyond belief ...'independence', 'holding them to account' ...really, doesn't LOOK good.
No one is saying that there is malpractice but what a recipe for potential disaster. Openness, fairness etc etc - how do you convince anyone that this is going on?
Little is heard of their demands, desires or otherwise to expose when problems are finally aired nationwide. How many sit there hood winked through presentations by Trusts and nod pleasantly in the Trusts direction having first put on their rose coloured specs?
Well meaning people I have no doubt but they are our direct representatives.... what of reality?

#545815 Pearl Baker
Independent Mental Health Advocate and Advisor/Carer

I will bring it back to 'basics'. The Monitor is accountable to the Jeremy Hunt MP Secretary of State for Health, if any individuals is unhappy with their 'performance' you may take your complaint to the Minister.

The 'Monitor' is failing in one of his responsibilities? he is failing to have any mechanism in place in engaging the Public in the debate of 'Health & Social Care' why is he NOT aware patients 'Health & Social Care' needs are NOT improving, brought about to some extent to NHS Trusts having to sign up to 'efficiency' savings, while experiencing a 'deficit'.

The 'MONITOR' is NOT truly independent.

The role of Governors? for the most is status, my colleague is a Governor, thirty years experience, however others within this TRUST have absolutely no idea what the CEO is talking about, the same goes for elected Councillors in LA positions.

My final comment is this, why are standards falling for the Mentally ill? many are 'invisible' to the system, while at the same time the 'MONITOR' will write another report on his 'personal' views regarding 'integration'. it's getting better!

'Vanguards' who are they? they are supposed to be an elite group of individuals acting as a 'steering' group' for others. Hampshire have such a group, however a Carer sought my help for her son, the Health & Social Care was practically 'non existent' this individuals was previously on a CTO, where does the 'MONITOR' 'fit into this' and how would he know about the ' practically non existent 'Health and Social Care' shown to this individual and many others,

The 'MONITOR' must raise his profile to the General Public, then his Report may contain the 'TRUTH'.

The 'MONITOR' is 'not fit for purpose' his only interest is money, and nothing else, because that is his MAIN 'JOB'

#545817 Wendy F Chadd
Managing Director
Evanti Consulting LTD

I agree there should be an executive line between CEOs and monitor in reality there is no relationship they are a regulator - and have the mechanistic levers of regulation operated by individuals with little or no service exposure. The TDA do seem to recognise the importance of relationships which in any sector and particularly in healthcare are the key ingredient to constructive working.

#545845 Stella Tsartsara
Consultant Integrated Care
South East Europe Healthcare

N. Goodwin, your conclusion brings an element that could be part of the article. Thank you for the addition.

#545853 John Coutts
Governace Advisor
NHS Providers

Thanks Ben for your blog, you draw attention to an important issue and summarise recent announcements well. But it shouldn’t be forgotten that a foundation trust is a just a legal form of body corporate that is required to have a board of directors responsible, a council of governors drawn mostly from the membership and a compliant constitution. The legal form allows for the possibility of good governance because it requires a unitary board that is answerable for what the organisation does and a council of governors to represent the interests of the public and to hold the board to account. Like any other organisation it depends on the skills of its leadership and staff to succeed and like any other legal form of organisation it is not guaranteed to succeed. The model has the advantage that all powers of the organisation rest with the board which allows proper corporate governance as practiced in the private sector rather than the watered down, often second guessed version that would seem to be finding favour at present. The strong link from boards through governors to the membership and the broader community facilitates strong local accountability promotes both vigilance in stewardship of vital public services and responsiveness to needs of those who use those services.

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