We now have a clear set of frameworks and standards in place, it is time to let go

Alan Milburn

Addressing the New Health Network on Tuesday, Mr Milburn outlined how politicians and civil servants will relinquish overall control of the best-performing hospitals, which will not have to meet detailed targets.

External NHS managers and the private sector will be invited to take over the running of poor-performing units - probably those which received no stars in last autumn's performance tables.

Alan Milburn will spell out changes for the NHS

The management of the new special health authorities - combinations of existing authorities that will start operating in April this year - could also be put out to franchise, but only within the public sector.

Time for change

Mr Milburn told the BBC that a national framework in standards was now in place for the whole NHS and backed up by a system of independent inspections.

He said: "With that framework in place it is time to let the best hospitals free.

"To put the doctors, nurses, the other staff and the managers in a position where they can improve services for patients, rather than trying to run the NHS like an old-fashioned, top down nationalised industry."

The last thing the public wants is to see the NHS turn into a new Railtrack

John Edmonds

Mr Milburn said the job of government should not be to run the system but to oversee it.

He wanted greater community ownership and less state ownership, leading to greater diversity in local services.

He added: "Where we have got a problem with the management of the poorest performing hospitals, we should not hesitate to change it."

However, union leaders have given the plans a frosty response.

John Edmonds, general secretary of the GMB union, said: "This shows that ministers are not prepared to listen to reason and are intent on forcing through backdoor privatisation of the NHS.

"It is staggering that at a time when the failure of rail privatisation is there for all to see the government is intent on making the same mistake with our hospitals.

"The last thing the public wants is to see the NHS turn into a new Railtrack."

Panic measures

This is actually a panic measure, designed to head-off further criticism of Alan Milburn's appalling mis-management of healthcare

Dr Liam Fox

Shadow Health Secretary Dr Liam Fox accused Mr Milburn of taking "panic measures".

He said: "The Health Secretary claims that this proposal holds the key to solving the crisis in the NHS.

"If it does, why isn't it in the Health Reform Bill?

"The answer is simple. This is actually a panic measure, designed to head-off further criticism of Alan Milburn's appalling mis-management of healthcare."

Frank Dobson expressed reservations

Mr Dobson told the House of Commons he was reluctant to criticise Mr Milburn's plans.

But he said the success of some NHS hospitals proved that they could do a first rate job without the need to franchise out control to the private sector.

"Would he give at least some thought to the fact that the public service ethic managed to maintain the NHS through all the Tory years of under-investment and malignant policies?

"Wouldn't it be right to give the public service ethic the opportunity to flourish with the extra resources that are now available?"

Local control

Under Mr Milburn's plans the 35 three-star trusts could become autonomous, self-governing "foundation hospitals" with the ability to spend their money as they see fit. They will have the option of establishing themselves as not-for-profit companies.

Currently if hospitals sell land, the money would have to go into a central pot.

Under the new scheme it is expected that three-star hospitals will be able to keep it for themselves.

They will also be able to appoint consultants as they see fit, without consulting a central body.

National pay levels will continue, but individual hospitals will be given the freedom to take account of local circumstances.

Performance will be checked via the new quality bodies, such as the Commission for Health Improvement.

The Department of Health is currently looking at whether the new plans need legislative changes.