Labour suffers double defeat over health plan

Britain: Britain's Labour leadership suffered a double defeat yesterday over the government's controversial proposals for foundation…

Britain: Britain's Labour leadership suffered a double defeat yesterday over the government's controversial proposals for foundation hospitals.

And ministers were accused of lying to the British people over Iraq, on what proved to be the most difficult day of Prime Minister Tony Blair's conference week.

As expected, Mr Blair and his Health Secretary, Dr John Reid, vowed to disregard the conference vote and press ahead with their plans to devolve greater powers to top hospitals to manage their affairs on a not-for-profit basis still within the National Health Service.

However, they were urged to listen to party members after the surprise defeat of a moderate motion praising the government's record on health.

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The double defeat, spearheaded by the Unison union, will embolden more than 130 MPs who have already signed a Commons motion opposing the policy which they fear raises the spectre of a "two-tier" service within the NHS.

Former health secretary Mr Frank Dobson challenged Mr Blair to deliver on his promise to listen more to his party and abandon a scheme which he said was intended to recreate the Conservative Party's "internal market" and would set hospitals in competition against each other.

Resigned to defeat in advance of yesterday's debate, Dr Reid told delegates the health proposals amounted to "the greatest peacetime programme of improving the NHS". Foundation hospitals would expand capacity and enhance patient power in pursuit of Labour values.

Labour's purpose was to make available to everyone services previously monopolised by those who could afford them. "It is the most extraordinary effort in history to help ordinary people out of pain," Dr Reid told the conference.

However, the retiring leader of the Transport and General Workers' Union, Sir Bill Morris, made an emotional appeal to delegates to make an old man happy and defend the NHS by rejecting what he described as "a back-door policy written on the back of an envelope in the back of a taxi" on the way to Newcastle railway station.

Sir Bill's reference to the recently resigned health secretary, Mr Alan Milburn, was a reminder of continuing cabinet tensions over the policy which, along with variable university tuition fees, has become a flagship for Mr Blair's "renewal" in government.

Sir Bill is a close ally of Chancellor Gordon Brown, who raised concerns that foundation hospitals would borrow on the private markets for major projects and then find themselves facing heavy debts. Mr Blair intervened in the earlier dispute between Mr Milburn and Mr Brown to broker an agreement that funding for major projects would have to be included within the overall NHS budget.

Mr Blair yesterday acknowledged the concerns of Labour MPs and trade unionists who believed equality should be the basis for improving all NHS hospitals. He also acknowledged fears that those granted foundation status would be able to poach staff and offer better employment conditions, as well as services, thus opening up a divide between foundation and other hospitals.

However, he predicted that opposition would fade as the debate continued. Speaking during a hospital visit before the conference debate yesterday, he said: "When you do these things you get some opposition at the beginning but usually that opposition falls away toward the end."

Mr Blair was spared major embarrassment at the end of yesterday's foreign affairs debate when delegates overwhelmingly approved a document which did not invite conference to vote for or against the invasion of Iraq.

The anti-government charge was led by Ms Alice Mahon MP, who said: "We were lied to about the weapons of mass destruction and there is no delicate way of putting it."

Mr Mick Hogg, of the RMT transport union, declared it "a tragedy and a shame that a government of Labour, the party of peace and justice, has taken us to war for reasons that have been exposed as simply untrue."

And there were cheers for Mr Jeremy Corbyn MP when he demanded: "Why are we, a British Labour government with a very large parliamentary majority ... so signed up to the ultra right-wing George Bush?"

But there was an ovation for left-wing MP Ms Ann Clwyd - Mr Blair's personal representative to Iraq - when she told conference of her experience standing "on the edge of Saddam's killing fields" watching "the skeletons of men, women and children being dug up" from a mass grave. With tears in her eyes she challenged her colleagues: "I do not believe, and neither do you, that we should turn a blind eye to such atrocities."