Foundation hospitals granted public sector status

The Office for National Statistics today announced that, consistent with international guidelines for National Accounts, NHS Foundation Trusts will provisionally be classified in the public sector as central government bodies.

The decision, taken by the Public Sector Classification Committee (PSCC) of the ONS, is based on the judgment that government has control of the general corporate policy of NHS Foundation Trusts.

NHS Foundation Trusts are a new type of organisation, called a "public benefit corporation". They will have members instead of shareholders. Some control of NHS Foundation Trusts will rest with their directors and members, the majority of whom will be from the private sector.

Foundation Trusts will have additional freedoms, compared with existing NHS trusts, but their ability to determine their general corporate policy will be restricted by government involvement through restrictions in both the planned legislation and regulatory powers:

• The imposition of borrowing limits

• A legal duty to follow NHS values

• Regulatory approval needed to amend constitutions

The ONS has decided that this involvement is sufficient to determine the trusts as government controlled. This decision is provisional as legislation on Foundation Trusts is going through Parliament.

The PSCC also reviewed the classification of existing NHS Trusts and has decided that these should also be classified as central government. They were previously classified as public sector corporations.

The PSCC's terms of reference are to consider requests for classification advice and to decide on the appropriate National Accounts classification. Its members are drawn from ONS staff who use their personal expertise and call on the views of others as necessary in formulating their responses.

Decisions are consistent with the principles of the international statistical manuals, European System of Accounts 1995 (ESA95) and the System of National Accounts 1993 (SNA93) and supporting manuals and case law.

Eurostat, the statistical office of the European Union, has also considered the classification of NHS Trusts and NHS Foundation Trusts and agrees with the ONS's conclusions.