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The Health and Social Care (Community Health and Standards) Act 2003

20 November 2003

The Health and Social Care (Community Health and Standards) Act 2003 provided for the establishment of NHS foundation trusts (FTs) (a new form of NHS organisation with greater freedoms) and a new independent regulator (later known as Monitor).

The Act faced strong opposition both from unions and from backbench Labour MPs, who argued that the reforms could create a 'two-tier' system of healthcare, and that resources would be channelled to these new organisations at the expense of those in greater need.

The rebellion against the legislation was so strong that the government relied on Scottish MPs (whose constituents would not be affected by the reform due to the devolution of health to the Scottish Parliament) to get the legislation through Parliament.

Foundation hospitals (as they were first known) were intended to 'reflect the spirit of public sector enterprise that [the Labour government's] plans are designed to unleash'.

The Act outlined that NHS foundation trusts would not be subject to direction by the secretary of state. Instead, the new, independent regulator would monitor their performance. NHS foundation trusts were part of the NHS but would have greater financial and management freedoms, including freedoms to:

  • retain surpluses
  • invest in delivery of new services
  • manage and reward their staff flexibly
  • access a wider range of options for capital funding.


Each NHS foundation trust would have a board of governors responsible for representing the interests of the local community, staff and local partner organisations.

In addition to the board of governors, each FT was required to have a board of directors (executive and non-executive) to be responsible for the day-to-day management of the organisation on behalf of the public benefit corporation.

The chief executive was appointed and removed by the non-executive directors, and the chairman and other non-executive directors were appointed or removed by the board of governors.


The Act set out the process for NHS trusts to make applications to become NHS FTs as long as they had the support of the Secretary of State for Health. The power to authorise applications was given to the independent regulator.

In determining whether an applicant could proceed, the regulator would be required to consider the applicant's financial position and any reports of recommendations relating to the applicant issued by the Commission for Healthcare Audit and Inspection (CHAI).

The first 10 foundation trusts were established on 1 April 2004. It was thought at the time that all trusts would become foundation trusts by 2008, though this was not ultimately the case.

New inspectorates

The 2003 Act also provided for the establishment of the new Commission of Healthcare Audit and Inspection (CHAI) and the new Commission for Social Care Inspection (CSCI). Both inspectorates were established as independent, non-departmental bodies.

CHAI took over the responsibilities of the national care standards and the Commission for Health Improvement and was responsible for:

  • inspecting all NHS healthcare providers, with the ability to recommend special measures were taken
  • registering and inspecting private healthcare provision
  • conducting NHS value-for-money studies
  • validating and publishing performance assessment information and statistics on the NHS, including waiting list information.

CHAI was ultimately abolished in 2009 and its functions were transferred to the Care Quality Commission.

The Act placed a duty on the CSCI to encourage improvement in the provision of local authority social services in England with a focus on:

  • availability
  • access
  • quality
  • effectiveness
  • management
  • economy
  • efficiency and safeguarding children.

CSCI was also required to consider the provision of information to the public and to undertake an annual review of social services provided by every local authority.

The Act imposed a duty of quality on all NHS bodies (whether commissioners or providers). It provided for the standards to be taken into account by NHS bodies – in discharging the quality duty, and by CHAI – in reviewing the provision of health care.



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The West Lothian question.
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Vote raises devolution issue.
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Department of Health.
Departmental Report 2004.
Department of Health; 2004.