Milburn: gets his way

The government is to include plans for new arms-length Foundation Hospitals in this year's Queen's Speech.

The news comes after an agreement was reached between the Treasury and the Department of Health over what borrowing powers the new wave of semi-autonomous hospitals should have.

The Treasury had initially opposed plans which would have allowed the hospitals - which will remain within the NHS but will be independently run - to borrow money on the open-market.

Gordon Brown was concerned that "off balance sheet" borrowing would leave public debts spiralling out of his control.

The chancellor has set a rule of borrowing only to invest and he argued that giving freedom to foundation hospitals risked upsetting the balance of public finances.

Following an intervention by Tony Blair the Foundation Hospitals will be given the power to raise capital - but only if it meets criteria laid down by a new independent watchdog.

"The government is moving ahead with these plans to devolve greater power and resources to the NHS," said a Number 10 spokesman.

The move is a partial victory for the health secretary, Alan Milburn, who had repeatedly clashed with the chancellor over the issue.

Shadow health secretary Dr Liam Fox said it would be "churlish not to welcome any step in the right direction", but warned that there were still unanswered questions about the details of the agreement.

"This announcement smacks of a fudge designed to keep Gordon Brown happy," he said.

"We believe that freedoms to borrow and set their own priorities should be given to all hospitals and not just a handful."