Annex A > Chapter 5 - Regional, District and Trust Management > Statutory framework > NHS trusts

NHS trusts

19 The legal framework for NHS trusts was established by the 1990 Act, which empowered the Secretary of State by order to establish bodies `to assume responsibility ... for the ownership or management of hospitals ... or to provide and manage hospitals'. [16]

20 Each trust is a body corporate with a chairman appointed by the Secretary of State, and with executive and non-executive directors (the latter were not to be employed by the trust). However, NHS trusts are independent and the trust is not a servant or agent of the Crown or the Department of Health (DoH). [17]

21 There is nothing in the 1990 Act to spell out the duties of directors on the trust's board. The Secretary of State was, however, empowered to make Regulations to regulate the appointment and tenure of chairmen and directors of NHS trusts. [18] These set the maximum number of directors at 11. Two were to be appointed by the RHA. All others were appointed by the Secretary of State. The tenure was not to exceed four years, but reappointment was allowed. The Regulations set out circumstances in which disqualification would occur (e.g. bankruptcy, sentence of imprisonment, loss of independence as a result of trade union office or membership of a health service body).

22 The executive directors of the trust had to include the chief officer, the finance officer, a medical practitioner and a registered nurse or midwife. A committee, composed of the chairman and non-executive directors of the trust, appointed the chief officer. Once appointed, the chief officer joined that committee in order to appoint the other executive directors of the trust.

23 The Regulations made provision for standing orders to govern proceedings of the trust (Regulation 19), and for the exclusion of directors from business in which they had a pecuniary interest (Regulation 20). The Regulations are `procedural' in nature only. They give no guidance as to the duties or responsibilities of the directors, whether executive or non-executive.

24 The orders given by the Secretary of State in respect of each trust were meant to specify the functions of the trust. [19] The trust is required to carry out `effectively, efficiently and economically' [20] those functions that have been conferred on it by this framework. [21] It has a duty to comply with guidance or directions from the Secretary of State (e.g. in circulars). An annual report has to be submitted to the Secretary of State, in a form determined by him; the Secretary of State also has the power to require trusts to submit further information.

25 The trust is also obliged to ensure that revenue covers outgoings and that it meets any financial objectives set from time to time by the Secretary of State. [22] NHS trust hospitals are funded from the revenue generated by contracting with NHS purchasers and others.

26 The trust has the power to do anything necessary in discharging its functions. [23] Under the 1990 Act Section 3, the RHA and DHA could enter into an NHS contract as a purchaser; under Schedule 2 para 10 a trust may enter contract as a provider.

27 The UBHT was formally established by the `The United Bristol Healthcare National Health Service Trust (Establishment) Order' [24] which came into force on 21 December 1990. The Trust was established for the purpose specified in Section 5(1)(a) of the 1990 Act. The Trust's functions were to `own and manage hospital accommodation and services' at various premises. It was to have a chairman, five executive directors and five non-executive directors. The operational date for the start of the Trust was 1 April 1991. Various transitional provisions were made to allow it to get up and running at that date. [25]

<< previous | next >> | back to top

Footnotes

[16] Section 5, 1990 Act

[17] Section 5(8) and Schedule 2 paras 16(1) and 18, 1990 Act

[18] Section 5(7). See also the NHS Trusts (Membership and Procedure) Regulations 1990, SI 1990/2160

[19] Schedule 2, part 1, para 1

[20] The Audit Commission has defined those terms, in relation to its own work, in its 1990 code of Audit Practice for Local Authorities and the NHS in England and Wales. `Economy' relates to the terms on which resources are acquired; an economical organisation acquires them at the lowest cost. `Efficiency' is concerned with the services provided in relation to the costs of provision; an efficient organisation produces either the maximum services for a fixed level of output or a fixed level of quality of service for the minimum output. `Effectiveness' is a measure of how well a service achieves its goals. The statutory framework and any relevant guidance or directives set the goals

[21] Schedule 2, part 1, para 6(1)

[22] Section 10(2)

[23] Schedule 2 para 16(1), 1990 Act

[24] SI 1990/2450

[25] Under para 6(2)(d) of Schedule 2 of the 1990 Act