UNISON, the health workers’ union, yesterday repeated its demand that Foundation Hospitals should be fully reintegrated into the NHS.

This followed reports that the Foundation Trust Network is to seek powers to use core hospital assets as collateral for loans.

Network bosses are arguing that this would give them the ability to raise money from major banks, at more competitive interest rates.

A UNISON spokeswoman told News Line that the government’s Foundation Hospitals policy was creating a ‘two-tier NHS’.

Her remarks were reiterated by ex-Health Secretary and Labour MP Frank Dobson, who warned the policy would ‘end in tears’, at a great cost to the public.

Foundation Hospitals are allowed to operate like businesses, outside NHS control, borrowing money for projects and generating ‘surpluses’ to pay for the loans.

So far only three of the first 25 Foundation Trusts have borrowed money and all have used the Department of Health’s financing facility, although they have had talks with big City institutions.

The ‘Financial Times’ newspaper has reported that the Foundation Trust Network, is calling for greater powers for Foundation Hospitals to use more of their assets to raise funds.

It quoted the Network’s director, Sue Slipman, saying that the strongest Foundation Trusts, which are to be allowed to borrow up to 40 per cent of their capital, should be taken ‘off balance sheet’.

UNISON’s spokeswoman said: ‘We argued when Foundation Trusts were first mooted that they are creating a two-tier health service, giving more to those who are already achieving, inevitably at the expense of those who are struggling.

‘It’s a scheme for setting hospital against hospital. It puts hospitals in competition with each other.’

UNISON warned that if Foundation Trusts were allowed to borrow against their core assets ‘it would introduce even greater financial risk into the NHS.

‘And who is going to bail them out if something goes wrong? It will be the taxpayer who will have to foot the bill,’ said the union’s spokeswoman.

‘We say there shouldn’t be Foundation Hospitals and allowing them to go even further would be very worrying.

‘It is just too great a risk to allow them to borrow additional money.

‘If the Trusts were allowed to go “off balance sheet’’ it could undermine the financial stability of some of these Foundation Hospitals.’

Some Foundation Trusts are reported to have already sold-off land to generate capital and UNISON said: ‘The accounts of these trusts need to be made open to the public.

‘Are they seeking short-term gain by selling off assets?

‘What happens if they sell off nurses’ accommodation, for example, it could create enormous problems.

‘We don’t want market policies in the NHS.’

Ex-Health Secretary and Labour MP Frank Dobson told News Line: ‘Foundation Trusts are part of the government’s policy of getting hospitals to compete with one another and I think that is a ridiculous policy that will end in tears.’

Allowing them to borrow against their core assets would be ‘a breach of the agreement that was reached when it went through parliament,’ he added.

‘Secondly,’ he said, ‘nobody in their right mind would lend money to a publicly-owned hospital if the Treasury weren’t backing the loan.’

Dobson accused Foundation Trust bosses who want more commercial freedom of wanting to be able ‘to carry out irresponsible borrowing in the belief that uncle will bail them out if anything goes wrong.’

And calling for their borrowing to be taken off the government’s balance sheet was basically pretending that Foundation Hospitals ‘are not publicly-owned and that their loans wouldn’t be part of public borrowing,’ he said.

‘The idea that they could borrow against the value of an operating theatre is again preposterous,’ he added.

The Healthcare Commission, the quango set up by the government after it abolished Community Health Councils, is publishing its first annual report on hospitals which have been granted Foundation status.

The Foundation Trust Network, which now claims to have 40 members, is publishing its own report calling for more powers.

So far three Foundation Trusts, Stockport, Moorfields Eye Hospital and Homerton Hospital in east London, have borrowed a total of £35 million between them.

Homerton Hospital finance director Caroline Clarke said the Foundation Trust had secured a twenty-year £9.1 million loan to fund a new perinatal centre that ‘wouldn’t have happened for another four or five years’ under the standard NHS funding system.

The Foundation Trust Network said some trusts were already selling off land to raise funds.