Health Secretary Alan Milburn has suggested local authorities could issue bonds to pay for better health services.

Voters could be asked their views through the ballot box in local referenda.

The idea, which is bound to spark controversy, could lead to some parts of the country spending substantially more on health services than others.

In other countries...local communities are able through referenda or through local elections to agree to raise local funds to invest in the public service infrastructure Alan Milburn, Health Secretary

In a speech in London, Mr Milburn said such a move would give communities a greater say in how their local health services are run.

He also suggested it would free the NHS from the constraints sometimes imposed by central government.

More money

Mr Milburn appears to have borrowed the idea from the United States, where some local authorities and hospitals can issue bonds to raise extra funds.

He said: "In other countries, with a stronger democratic input into local services, for example, local communities are able through referenda or through local elections to agree to raise local funds to invest in the public service infrastructure.

"In the USA, local bond issues are common. Some are issued by a local government authority which then lends the proceeds to the local hospital.

"Others are sanctioned by voters and issued by the hospital district direct. In this way, these health care systems can overcome the constraints either of central government capital rationing or the straitjacket of particular forms of procurement."

Officials at the Department of Health said Mr Milburn's comments were aimed at starting a debate on the issue.

A spokesman said no formal proposals had been drawn up.

Mr Milburn also reiterated his commitment to freeing the NHS from central government control.

He said the government was committed to giving local communities a greater say in deciding how their local services should be delivered.

"Transferring ownership from the central state to local communities - giving local people a stake and a vote in the public services they use - is the best way of moving localism beyond a gift conferred by Whitehall," he said.

'Political football'

But Shadow Health Secretary Dr Liam Fox accused ministers of turning the NHS into a political football.

He said: "It is quite clear that the government hasn't thought through any of these ideas.

"When Alan Milburn's spokesman admits that the health secretary simply wants to start a debate, it is crystal clear that he is actually making it up as he goes along.

"Alan Milburn's remarks clearly are more about his turf war with Gordon Brown than anything else - the chancellor is determined to restrict the freedom of foundation hospitals and Alan Milburn is desperate to wriggle free from his grip.

"The NHS has never been so much of a political football as it is now in Labour's internal war."

Liberal Democrat Health Spokesman Dr Evan Harris said: "The NHS must not be funded locally until the unfair council tax is scrapped and replaced by a local income tax, linked to the ability to pay.

"Equality must be guaranteed by measures to ensure that poor areas, with the greatest health need, do not fall further behind better off areas."