Policy paper

Health Bill: providers - fact sheet

Published 19 May 2026

Applies to England

Introduction

This document sets out changes related to providers (NHS trusts, NHS foundation trusts and independent providers) in the Health Bill (‘the bill’) to put providers in the best possible position to deliver for patients and to realise the ambitions for them set out in the 10 Year Health Plan for England.

The legislative changes are designed to support the delivery of wider reforms to give local providers greater freedom to deliver for patients and the public, with clear accountability, strong partnerships and the space to innovate. We are reducing the excessive oversight in the system and will support the introduction of more effective governance arrangements for providers that will allow them to be more responsive to challenges and to the public they serve.

Background

The government’s 10 Year Health Plan sets an ambition to get the NHS back on its feet by redistributing power to the NHS organisations providing direct patient care, including providers, clinicians, staff and most importantly, patients and local communities. Improvements for patients and the public will be delivered by rewarding and incentivising good performance and re-establishing the principle of earned autonomy, which drove substantial improvements in the 2000s. At the forefront of this will be a reinvigorated and reinvented foundation trust model embodied by the introduction of advanced foundation trust status and the ability for NHS providers to hold integrated health organisation (IHO) contracts.

Advanced foundation trust status will be the new marker of excellence used for high-performing NHS foundation trusts and NHS trusts which pass an updated assessment process. They will make use of the NHS foundation trust legal form and maintain the original philosophy and policy: that well-governed, capable and entrepreneurial boards are best placed to respond to the needs of their communities and deliver improved care. Advanced foundation trust status will also be characterised by a fundamentally different relationship with the restructured Department of Health and Social Care (DHSC), involving greater strategic and operational autonomy.

In addition, high-performing NHS provider organisations will be able to hold the health budget for a defined local population through an IHO contract. The IHO model provides the vehicle to overcome organisational boundaries to invest in models of care that should deliver better outcomes and better productivity. The IHO model is evolving. Organisations designated to hold IHO contracts in 2026 will work with NHS England and their commissioners to co-develop the model during 2026 to 2027, with the first contracts set to be awarded in 2027.

Much of this can be delivered without legislative change but some changes are necessary to support the 10 Year Health Plan’s vision for providers. These include:

• removing the requirement for NHS foundation trusts to have a council of governors so they can choose a dynamic approach to local engagement tailored to the needs and structure of local communities as opposed to the ‘one-size-fits-all’ governor model
• introducing a power for the Secretary of State to be able to de-authorise NHS foundation trusts in cases of serious failure, where it is in the public interest to do so
• transferring NHS England’s responsibility for provider oversight and regulation to the Secretary of State

Objectives of the bill

Removing the statutory roles of foundation trust councils of governors and members

The requirement for NHS foundation trusts to have a council of governors and members will be removed to reinvigorate their governance model to support a more dynamic NHS operating model. While governors have provided helpful advice and oversight for some foundation trusts, we expect the next generation of NHS foundation trusts to put in place more dynamic and flexible arrangements to take account of patient, staff and stakeholder insights.

The councils of governors are part of the governance model of NHS foundation trusts, and they have a range of statutory functions including representing the interests of the foundation trust’s members and the public to the foundation trust’s board. Their various governance functions, which are set out in primary legislation, include appointing the chair and other non-executive directors and holding them to account for the performance of the overall board.

The provision for each NHS foundation trust to have a council of governors and members will be removed and the current functions of the council of governors, which are set out in primary legislation, will be either conferred on the Secretary of State or cease to exist. This will include powers to appoint NHS foundation trust chairs and non-executive directors which will align with the process for NHS trusts and support effective use of talent across the NHS.

In addition, a number of current governor functions in part duplicate existing NHS England responsibilities (which will transfer to the Secretary of State under the bill). These include:

• holding NHS foundation trust chairs and non-executive directors to account for the performance of the board
• reviewing plans and major transactions

Removing the council of governors requirements will therefore reduce duplication in the system.

All NHS trusts and foundation trusts will continue to be expected to put in place effective arrangements for engaging patients, staff and local communities, as set out in section 242 of the NHS Act 2006. The changes to the statutory framework to remove governors will allow for the delivery of these expectations more flexibly than at present, giving greater autonomy to local organisations to innovate and tailor their approach to their local communities, with a focus on what matters to local people over uniformity of process. NHS foundation trusts will have the option to retain aspects of their engagement model where it is working well but can take a different approach if needed. To ensure their effectiveness, we will test providers’ engagement arrangements as part of ongoing assurance processes including provider capability assessments, Care Quality Commission well-led assessments and the assessment process for advanced foundation trust status.

De-authorisation of NHS foundation trusts to NHS trusts

This bill is introducing powers for the Secretary of State to convert (or de-authorise) NHS foundation trusts to NHS trusts in cases of serious failure. Currently, NHS England, with the approval of the Secretary of State, can legally authorise NHS trusts to become NHS foundation trusts, where an NHS trust converts to foundation trust legal form with the statutory freedoms of a foundation trust. However, they cannot be de-authorised and revert back to NHS trust status.

Deauthorisation will form part of the regulatory arrangements for responding to and managing performance issues. Firstly, it will provide a mechanism for the Secretary of State to take on a more directive approach on a day-to-day basis where this is in the public interest. Secondly, having a 2-way process will help maintain the integrity of the re-invigorated NHS foundation trust status as a mark of good performance and provide an additional incentive for challenged foundation trusts to improve.

It is intended that de-authorisation of an NHS foundation trust to an NHS trust will only be carried out in the most serious circumstances.

Transfer of the NHS England role in provider oversight and regulation to Secretary of State

The renewed DHSC will support providers to improve by reducing national bureaucratic demands and devolving more power and responsibility to providers. So, while the legislative change proposed with respect to provider oversight is relatively simple (a transfer from NHS England to the Secretary of State), it is being accompanied by a transformation in the culture and operational reality of oversight that will empower providers while also requiring them to operate to a high degree of responsibility, with targeted support and intervention as needed. 

NHS England currently has a range of statutory functions related to the oversight and regulation of NHS trusts, NHS foundation trusts and independent providers. This includes:

• operating the NHS provider licence
• overseeing providers of NHS-funded services
• effecting statutory transactions between NHS providers (on application from the trusts)
• appointing NHS trust chairs and non-executive directors

These functions will transfer to the Secretary of State. In several other areas such as in the process for trust special administration, roles which are assigned in statute to both NHS England and DHSC are streamlined.

Oversight of the provider licence will transfer to the Secretary of State from NHS England. The addition of a new purpose for setting or modifying licence conditions will enable the Secretary of State to consult on adding new conditions to the licence to promote or secure compliance with existing legislation. The aim is to strengthen the use of the provider licence as a regulatory tool for compliance with legal obligations.