Rebels say they will continue their NHS battle

The government's controversial plan to create foundation hospitals has cleared its first hurdle in the House of Commons despite a rebellion by more than 60 Labour MPs.

The Health and Social Care (Community Health and Standards) Bill to set up foundation hospitals was given a second reading by 304 votes to 230.

A rebel amendment designed to wreck the bill was defeated by 297 votes to 117, a majority of 180.

Sixty-five Labour MPs, including the two tellers, rebelled, making it the third largest revolt of Tony Blair's premiership - after the votes on Iraq and welfare reform.

A total of 31 Labour MPs also joined the Conservatives and Liberal Democrats in voting against giving the bill a second reading.

This is now going to be a running sore in the health service, the Labour Party and the trade unions Frank Dobson Labour MPs who voted for the rebel amendment

The bill will now pass to its lengthy committee stage where rebels say they will continue their fight.

Labour MP Glenda Jackson told BBC Radio 4's Today programme: "I have little doubt that over the following weeks, when the bill is in committee, there will still be a continuing effort on the part of those who don't wish to see the basic principles of the NHS destroyed putting these arguments."

But the government's success on Wednesday night will give some relief to Mr Blair, who spent the day trying to win round potential rebels in a bid to limit the size of the revolt.

A spokesman for Health Secretary Alan Milburn said: "We are obviously very pleased at the result.

"We have still got a job of work to do to persuade particularly the public that we are serious about reform and that the extra investment we have raised will be matched by reform."

'Threats'

Ahead of the debate, Mr Blair said the "massive investment" in the NHS had to be matched by "real reform" in order to prove to the public that their cash was being well spent.

As money follows patients, poorer-performing hospitals will see their revenue streams dry up David Hinchliffe MP Foundation trusts at a glance How changes affect you

Opponents fear the creation of foundation hospitals, which are semi independent from Whitehall with powers to raise their own funds, would lead to a two-tier health service.

Former health secretary Frank Dobson, a leading rebel, said: "This is now going to be a running sore in the health service, the Labour Party and the trade unions."

He said the rebels had been encouraged by the size of the rebellion in the face of "some very, very, heavy whipping and threats".

"We probably got rather more votes than we expected in the end," he said.

'Suffocating targets'

David Hinchliffe, the chairman of the Commons health select committee, warned: "The concerns expressed today by many Labour MPs will not go away."

Shadow health secretary Liam Fox said his party supported the principle of foundation hospitals, but claimed they had been "emasculated" by Chancellor Gordon Brown.

Tony Blair urged MPs to accept the plans

"They will still be subject to suffocating government targets through the star rating system, the emasculating of borrowing powers will create a dog-eat-dog culture within the system," he said.

Evan Harris, the Lib Dems health spokesman, described the plan as a "sham democratisation".

"We want to see a mixed market in providers. But we want to see that without the false elitism that is inherent in the government's proposals and without the beggar-thy-neighbour approach that is also inherent in the foundation hospitals proposal," he said.

'Universal service'

Earlier, Mr Milburn sought to convince critics of his foundation hospital plans in the Commons by saying the NHS had to change to keep pace with the modern world.

He said his vision of NHS Foundation Trusts would strengthen, not weaken, public ownership of the health service.

"In no way can this bill be reasonably described as privatisation, or a step in that direction - through the front door, through the back door or through the side door," he said.

"This is not privatisation. It is democratisation."

The vote came after Mr Hinchliffe's committee warned some hospitals could be locked into a "downward spiral of poor performance".

Top performing hospitals will be the first to be offered new freedom by becoming foundation trusts, but the government wants all hospitals to follow within four or five years.