HEALTH Secretary Alan Milburn has defended plans to allow private companies to run failing hospitals, after they came under attack from unions and some members of his own party.

Darlington MP Mr Milburn's announcement that England's poorest hospitals could be franchised came as a French hospital prepared to receive the first NHS patients to be sent abroad for treatment.

His plans would allow the private sector, charities and universities to take over the management of the poorest-performing hospitals.

Three-star hospitals, including North-East trusts at South Durham, Sunderland, North Tees and Hartlepool, South Shields and Northumbria will be given greater autonomy under the plan.

But unions attacked the move as a recipe for chaos and warned it could lead to some hospitals poaching desperately-needed staff from elsewhere in the NHS.

Dave Prentis, general secretary of Unison, said that pay problems which had blighted the railways could spread to the NHS if different rates of pay were set by managers from the private sector.

GMB union general secretary John Edmonds said the public did not want to see the NHS become a ''new Railtrack''.

He said: ''This shows that ministers are not prepared to listen to reason and are intent on forcing through backdoor privatisation of the NHS.

''It is staggering that at a time when the failure of rail privatisation is there for all to see the Government is intent on making the same mistake with our hospitals."

David Hinchliffe, Labour chairman of the health select committee, attacked Mr Milburn's vision as incredibly worrying.

Under the shake-up, top-performing hospitals will be "liberated" from Whitehall.

Managers of these hospitals can set up not-for-profit companies with an annual cash-for-performance contract and no further management from the centre.

At those hospitals persistently failing, the management would be franchised but the assets would remain within public ownership.

Mr Milburn said: "This is not privatisation in any way, shape or form."

Plans to bring in private management for failing hospitals were condemned as naive and dangerous by Gerry Steinberg, Labour MP for City of Durham.

But Vera Baird, MP for Redcar, gave cautious backing to the plans for private running of failing hospitals.

End of the NHS? - Page 1