By Chris Hogg BBC health correspondent

"The days of Whitehall .. knowing best are over", Health Secretary Alan Milburn told an audience of the great and the good at the New Health Network this week.

The question some of his audience were asking as they munched their way through think-tank canapes afterwards was: "Has he told Gordon?"

Two days after the chancellor gave the Social Market Foundation his vision of how healthcare should be organised, Mr Milburn put forward what looked like his own way to get round tight treasury fiscal controls.

He is looking at a method used in the USA to raise local funds to invest in the public service infrastructure - local bond issues.

Milburn v Brown

The details are still to be worked out - his officials were keen to stress this was still at the discussion stage, not a firm proposal.

Perhaps that explains why a call to the press office of her Majesty's treasury to ask what they thought of the proposal resulted in a pretty blank response. They knew nothing about it.

So will this turn out to be Round 2 in the Milburn Brown bout?

Some commentators argue that Mr Milburn lost Round 1 over the funding arrangements for foundation hospitals.

Officials were of course quick to crush any suggestion that council tax would rise as a result of these plans.

Any borrowing they undertake will be under the watchful eye of an independent regulator and will be taken off the Department of Health's chunk of public sector borrowing - essentially the funds it is given by the Treasury.

Local bonds might be a way of getting round that problem.

As the officials describe it, if a local community feel that Whitehall is not giving them enough cash for a particular project bonds would offer them an alternative funding stream to the public private partnership (PFI).

How they will work is still to be worked out though.

Referendum

One possibility is that the council or a hospital board would issue bonds to individuals to raise the cash.

The advantage of this is that they would be a safer investment than the stock market, for example, and has the added benefit that they would give people the satisfaction of investing in their own community.

Another model used in the US requires a referendum.

If 60% of voters agree, the council funds a bond issue, perhaps requiring slightly higher taxes to pay interest to those institutions which buy the bonds, and then hands over the money to the local hospital.

Diversity will bolster the pursuit of equality not undermine it Alan Milburn Health Secretary

Officials were of course quick to crush any suggestion that council tax would rise as a result of these plans.

As they kept repeating, the detail has still to be worked out.

But hang on, the chancellor in his speech talked about giving local communities "the freedom to agree for each service their own local performance standards - choosing their own performance indicators and monitoring both the national and performance indicators".

No mention there of encouraging them to stump up the cash to make their hospital better than the one down the road.

Concern

Yet Mr Milburn made clear in his speech that the result of this local investment would be "diversity" of provision - as one expert listening told me afterwards, a clever political term which obscures the reality that some places will be better than others.

Is this at odds with the chancellor's impassioned defence of Labour's traditional values?

The health secretary thinks not. He said uniformity has not produced equality.

"Diversity will bolster the pursuit of equality not undermine it", he argues.

But also worth mentioning is a pretty frank admission he made during questions after the speech about another issue which may yet undermine that pursuit of equality still further.

The health secretary's speech suggested his instinct is to continue devolving power and accountability to the front-line

He made clear his concern about "commissioning", the process by which Primary Care Trusts enter into contracts with hospitals and others to buy care for their patients.

Commissioning he said was central to everything he wants to achieve in the NHS. Mr Milburn said the problem was that this was a new thing "embryonic ... a fragile creature".

There is clearly concern at the highest levels of the Department of Health that the success or failure of their reforms and investment rest on the shoulders of the managers of these relatively new organisations and their ability to make this process work.

The health secretary's speech suggested his instinct is to continue devolving power and accountability to the front-line.

The question is that if commissioning does not work properly, or if the improvements for patients it is supposed to bring are not obvious to the focus groups will the treasury and the civil service mandarins reign him in?