Top hospitals to get financial freedom

Alan Milburn will outline today plans for the 35 best-performing hospitals in the country tobe freed from strict Whitehall management and financial control.

The Secretary of State for Health will explain that they will become independent, not-for-profit enterprises with an "annual cash-for-performance contract" and power to spend NHS funds as they see fit.

In a speech to the chief executives of these Foundation Hospitals, which last won three-star ratings for their performances, Mr Milburn will make clear that he wants the change to happen fast, possibly in the next couple of years.

They will still be subject to NHS standards, outside inspections and bound by the principles of the NHS. But they will be able to borrow money from the commercial markets, set up joint venture companies so that they benefit research and keep the proceeds from selling land.

These hospitals will be neither conventional public-sector nor private-sector bodies, but a type of hybrid organisation for which there is no current UK model.

Earlier this year, the minister announced contentious plans under which the best hospitals would earn more freedom. Mr Milburn said at the time that chief executives of the best trusts wanted more scope to innovate than they had "within the existing state-run nationalised industry".