A legal review of the ‘whistleblower’ situation has concluded that NHS England has no legal power to direct Foundation Trusts (FTs).

The review followed NHS Chief Executive Sir David Nicholson’s promise that he would intervene if NHS organisations failed to protect whistleblowers.

Like Health Secretary Jeremy Hunt’s promise to sack FT leaders who neglect patient safety, the promise overstated his powers under the Health and Social Care Act.

In February, Nicholson was asked by the Commons Health Committee what he would do about trusts that did not support whistleblowers.

He replied: “Wherever I see it or if I have a whiff of it, I immediately intervene in the organisations themselves to tell them what their responsibilities are.”

However, Nicholson later warned a doctor who had been forced to sign a gagging agreement regarding the treatment of dementia patients in a hospital that he could not intervene.

Lawyers had determined that the Department of Health has no legal authority over FTs, he said.

All NHS trusts have to become FTs by April 2014, and they will then not be subject to any control by NHS England or the Department of Health.

A spokesperson for NHS England commented that Nicholson was able to raise relevant issues with the Care Quality Commission, which can take steps to protect patient safety.

The public enquiry report on preventable deaths at Stafford General Hospital has placed emphasis on improving the ‘transparency’ and regulation of the NHS.

The long-delayed report by Robert Francis QC recommends bringing together economic and care quality regulation.

However, it does not – as had been predicted – recommend that the NHS have the power to take back Foundation Trusts into public ownership.

In addition, it blames the breakdown of care at Stafford Hospital, which caused 400 to 1,200 preventable deaths, on a “systemic” failure rather than calling for leaders to be held responsible.

The Staffordshire-based organisation Cure the NHS said it would continue to campaign for the dismissal of those who “covered up” the scandal, including NHS Chief Executive Sir David Nicholson.

The scandal of poor care at Stafford General Hospital between early 2005 and early 2009 has been called the most serious failure of care standards in NHS history.

The local PCT, the Healthcare Commission and the Royal College of Nursing all denied that anything was seriously wrong. Only local campaigners kept the number of deaths and the suffering of patients in the public eye.

During an extended phase of patient neglect that Francis calls “appalling”, Mid Staffordshire NHS Trust gained Foundation Trust (FT) status.

The first enquiry in 2010, which was internal to the NHS, concluded that a “chronic shortage” of nursing staff caused by the hospital’s drive to meet the financial conditions to become an FT was the main cause of the problems.

It also noted the severe negligence implied by persistent failures to provide “the most basic elements of care” to patients in terms of hygiene, pain relief, feeding and hydration.

The Labour Government twice refused to open a public enquiry into the Mid Staffs scandal, but the Coalition Government did so in 2010.

In May 2011, Nicholson warned that the Francis report would conflict with the direction of NHS reform: it would recommend the unification of Monitor with the Care Quality Commission (CQC), when their roles were being moved further apart; and it would recommend that the NHS take back FTs that failed to maintain care standards, when FT status was being made obligatory.

The 12-month delay in the publication of the Francis report may be linked to these issues – certainly, the recommendation concerning FTs has been dropped. While the joining of Monitor with the CQC is still recommended, it appears unlikely given that Monitor is now concerned only with enforcing competition.

Other recommendations in the Francis report include:

• A “duty of candour” towards patients and the public for all healthcare organisations, including a ban on gagging clauses and a requirement to publish all upheld complaints on the organisation’s website.

• Only registered people may care directly for patients.

• The CQC should develop a team of specialist hospital inspectors.

• GPs should be responsible for monitoring secondary care services received by their patients.

Health Secretary Jeremy Hunt has said that “the crisis in standards of care” is the single greatest problem facing the NHS. However, how the recommendations of the Francis report can be integrated with the market agenda of the NHS reforms – for example, how the “duty of candour” compares with the commercial confidentiality insisted on by independent health providers – remains to be seen.

Mike Farrar, Chief Executive of the NHS Confederation, has said the growing crisis in hospital funding demands major investment in community-based healthcare.

His statement follows an Audit Commission report showing that the number of hospital trusts in deficit increased from 13 in 2010/11 to 31 in 2011/12.

While the report called for tight control of trust finances, Farrar argued that the underlying problem is the over-dependence of the NHS on acute care.

The Audit Commission’s annual report on NHS finances said that while PCT finance was mostly healthy, there had been a dramatic increase in the number of foundation trusts and NHS trusts in debt.

There was “no room for complacency” over hospital trust finances and the need for tight spending controls, the Commission said.

Andy McKeon, its Managing Director of Health, commented: “The Department of Health and other relevant national authorities need to focus their attention on the minority of organisations whose financial position is deteriorating and on their geographical distribution and service standards.”

Farrar, who has long argued for a shift in funding from acute to preventative and long-term care, said: “This is the time for the NHS Commissioning Board to help providers, not with bailouts, but by releasing money to new CCGs so they can work with providers to help put them on a sustainable footing by changing the type and range of services they provide.

“Now is the time for big investment in community and primary care. It is worrying that the number of trusts in deficit has more than doubled in the past year. This situation is likely get worse unless we take radical action.”

An extra £100m for purchase of new IT resources to aid frontline NHS patient care has been promised by Prime Minister David Cameron.

The funding will be used for electronic data handling, recording and communication systems – enabling nurses and midwives to spend “more time at the bedside”, he said.

Hospitals will access the funding in the form of loans, repayment of which will be reduced depending on patient endorsement through the new ‘friends and family’ feedback system.

A further £40m is promised to develop the clinical leadership skills of 10,000 ward sisters and community nursing team leaders over the next two years.

The PM also announced a £15m cancer radiotherapy innovation fund, starting from April 2013.

New Health Secretary Jeremy Hunt commented: “Most nurses and midwives chose their profession because they wanted to spend time caring for patients, not filling out paperwork. New technology can make that happen.”

Guidance for foundation trusts on the ‘friends and families’ NHS patient endorsement system was published by the DH on 1 October, and the system will be operative from April 2013.

Patients will be asked whether they would recommend a particular hospital ward or department to their friends and family. The results will highlight local priorities for the trusts.

David Stout, outgoing policy head at the NHS Confederation, has warned that individual NHS organisations cannot succeed if others are failing.

The success of the NHS depends on the “complete interdependence” of its parts, he said – contradicting the Government policy of making foundation trusts compete.

His comments were backed up by new Care Services Minister Norman Lamb, who said payment by results “sucks money into hospitals” to the detriment of integrated care.

Stout will leaves the NHS Confederation, where he is Deputy Chief Executive and Head of Policy, shortly to become Managing Director of the new CSU for Essex and Hertfordshire.

Speaking at the first Guardian healthcare partnership debate, he said that current economic pressures made the cohesion of the NHS more important than ever.

“If a foundation trust says it is succeeding, when organisations around it are failing, that won’t work any more,” he argued.

Norman Lamb agreed that partnership was essential to the NHS. He noted that the current arrangements led foundation trusts to compete with other NHS organisations instead of collaborating with them.

For example, he said, the system of payment by results “sucks money into hospitals” and is “not necessarily sensible” when there is a need to reduce the emphasis on acute care.

The event showed that even within the Department of Health and the NHS leadership, the principle of co-ordinated planning still has traction.

West Middlesex University Hospital Trust is seeking a merger after determining that it cannot achieve foundation trust status independently by the April 2014 deadline.

The district hospital has said that its “reconfiguration” plans will not have a major impact on its finances until 2015–16.

At present, it said, possible mergers with NHS foundation trusts and takeovers by private health providers are being considered.

Trust Chief Executive Dame Jacqueline Docherty said: “Despite our optimism about the long-term viability of the site, the trust is not able to meet the financial criteria required to become a standalone foundation trust by the Department of Health deadline of April 2014. The board has therefore agreed to explore partnership options that would enable us to meet the required timeline for FT status.

“The preferred option for the North West London reconfiguration proposals will secure a healthy future in the long term for our hospital site. However, the timetable for implementation means that the changes will not have a major impact on the trust’s income until 2015–16 and beyond.”

An earlier business analysis of London’s hospital sector by McKinsey said that West Middlesex was “not viable” as an independent trust.

NHS North West London is carrying out a review of services across its eight constituent PCTs, including West Middlesex. It is expected that a number of A&E units will be downgraded.

Daniel Elkeles, Accountable Officer for Inner North West London CCG, commented: “We are committed to supporting West Middlesex University Hospital Trust’s board to develop a robust and sustainable future strategy.”

The financial problems faced by NHS foundation trusts (FTs) will become worse over the next few years, according to Monitor.

The economic regulator’s review of FTs’ annual plans states that far from being a legacy of their NHS trust past, the financial malaise of FTs is set to intensify as their cost-cutting measures reduce their income.

Without positive service redesign, Monitor says, the 20% spending cuts planned by FTs over the next five years will not improve their financial health.

It notes that the financial gap between more and less successful FTs is widening, with the latter including many based at district hospitals, carrying PFI debts or in deprived areas.

“We expect an increasing number of trusts could be placed in significant breach for financial reasons,” said Stephen Hay, Monitor’s Chief Operating Officer.

According to the regulator, FTs “need to be making significant changes in the way services are delivered, including further service reconfiguration and consolidation of suppliers”.

The financial plans of FTs forecast a 1% decline in income overall in the next three years, with no increase in acute care activity (compared with an average annual growth of 4.5% in recent years).

The review predicts that at least 17 FTs will receive a red rating (indicating a serious risk of breaching their authorisation terms) in 2012–13. “We expect there will be more,” it warns.

According to David Stout, Deputy Chief Executive of the NHS Confederation, Monitor’s report shows an urgent need for service redesign towards more integrated and community-based care.

Renowned NHS foundation trusts in England will be encouraged by the Government to establish new facilities abroad in measures to increase profits.

Proposals by the Department of Health and UK Trade and Investment will see high-profile hospitals such as the Royal Marsden and Great Ormond Street create branches abroad to boost funds.

Profits from the overseas facilities would then be reinvested back into the NHS.

The plans, which are set to come into force later this year, have been criticised by the Patients Association who called them concerning.

“The key and only focus of an NHS hospital should be to provide treatment to patients on the NHS,” said the Association’s Michael Watson. “Any moves which would see commercial ventures, which are naturally going to be important for hospitals because they need to use them to raise revenue, would simply result in the attention of the hospitals being taken away from the core purpose – to treat patients in the UK and instead be focused on these hospitals abroad.”

Under the plans, Healthcare UK will identify trusts wishing to expand into new countries and find clients who wish to use the services. Funding for the ventures would come from the private sector to establish the facilities.

London’s Moorfield Eye Hospital and Great Ormond Street already have facilities in Dubai. But critics have argued that other hospitals are not in a position to provide services overseas, and any profits raised would be minor compared to the £100bn annual running cost of the NHS.

Plans to globalise the NHS were first outlined by Labour back in 2010. However, Jamie Reed, Shadow Health Minister, said the proposals were further measures to commercialise the health service.

He said: “At a time when staff are losing their jobs and waiting times are rising, the Government’s priority should be sorting out the mess it has created in our NHS.

“Under David Cameron we’re seeing a rampant commercialisation of the NHS. He needs to get a grip and start focusing on patients, not profits.”

Monitor has outlined its new functions as NHS economic regulator by publishing a consultation document on its new NHS provider licence.

The proposed licence conditions cover the means by which Monitor will set prices for NHS services, ensure patient choice and provider competition, support integrated care and help commissioners maintain service continuity.

It also translates Monitor’s current oversight of the governance of NHS foundation trusts (FTs) into the new framework.

The statutory consultation, which ends on 23 October 2012, invites stakeholders to comment on the draft conditions and vote for options in some cases.

Monitor expects to issue licences to FTs in April 2013 and to other NHS providers from April 2014.

The general licence conditions include requirements that providers should display “effectiveness, efficiency and economy” and set out appropriate patient eligibility and selection criteria.

The pricing licence conditions include compliance with the National Tariff and “constructive engagement” with commissioners regarding local tariff modification.

The choice and competition conditions are designed to ensure that patients can choose between providers, and to stop providers “preventing, restricting or distorting competition”. Monitor consults on the option of requiring providers to ensure that patients are offered impartial advice about their choices.

To support integrated care, Monitor proposes “a broadly defined prohibition”: that the licensee will not do anything “detrimental to enabling integrated care”. This, it says, will allow providers and commissioners to “take the lead”.

To support continuity of services – described explicitly in terms of a licensee becoming “financially distressed or insolvent” – Monitor proposes measures including co-operation between providers and restrictions on disposal of assets. It will set out a Risk Assessment Framework later this year.

The proposed licence conditions for FTs include provision of information to a new advisory panel and Monitor’s continued oversight of FT governance.

Three foundation trusts in London have outlined proposals to merge together to create the largest trust in England.

The boards of King’s College Hospital, Guy’s and St Thomas’ and South London and Maudsley have proposed to form a new organisation that would create an annual turnover of more than £2bn.

The proposal details how a “single organisation could make better use” of combined assets which would release funds for “new models of healthcare” in the capital.

The full business case will now be presented to the three boards, the board of King’s College London and university partners in early 2013. If accepted, a merger could be completed the following year.

Barts Health Trust is currently the largest foundation trust in England. It has a turnover of £1.1bn – the largest in the NHS.

Proposals suggest the super trust could save between 3% and 5% in non-clinical support functions.

However, the proposal states that a merger would be “unacceptable” and “fail” if it resulted in a “remote, centralised organisation”. “It would have to operate in a very different way to be effective,” said the proposal.

If completed, it would be the first time that foundation trusts had merged and would have to be approved by the Office of Fair Trading.