The House of Commons Health Committee says it welcomes the extension of oversight powers at Monitor, the regulator of NHS Foundation Trusts, to 2016, and the fact that these powers will then be reviewed.

The Committee "strongly supports the view that the standards for authorising Foundation Trusts must not fall as a result of the government's desire to see all remaining NHS trusts become Foundation Trusts," it says, in its annual review of Monitor's work.

"Monitor has established a reputation as an effective regulator of Foundation Trusts. We believe it is important to safeguard that hard-won reputation," said the Committee’s chairman, Stephen Dorrell.

"That means insisting on the maintenance of a rigorous approvals system. It also means maintaining an effective oversight regime in what are likely to be increasingly challenging times. Finally, following government amendments at the Health and Social Care Bill which were tabled at the Commons Report Stage, it means the operation of an effective distress and failure regime for Foundation Trusts," said Mr Dorrell, who is Conservative MP for Charnwood.

The Commons Committee report also notes that the enhanced role for Monitor envisaged by the Bill will involve substantial change for the regulator. It is "vital that the transition period is carefully managed, with each of Monitor's responsibilities, both old and new, being executed to a high standard," say the MPs.

However, earlier this week, the UK's largest union warned that Monitor is set to become "a bloated bureaucratic monster."

The regulator's running costs are set to rise from £72 million annually to £82 million, with a 600-strong staff begin paid twice the national average wage of £26,000, said the Unite union.

Ministers are creating "a bloated, old-fashioned bureaucracy which would be responsible for handing over lucrative NHS contracts to the government's friends in the private health care sector," the union claimed.

It also pointed out that Monitor is expecting to spend a further £14 million a year on consultants and £4 million in legal fees, according to the Department of Health's own impact report, and that the impact assessment team has been unable "to develop a robust monetary estimate of the benefits of changes to the regulatory regime."

"All this indicates that a revamped Monitor is not being geared for the benefit of patients, but as a conduit to channel lucrative NHS contracts to private healthcare companies, many of whom have bankrolled the Tory party since David Cameron became leader," said Rachael Maskell, Unite's national office for health.

Unite will be lobbying the Members of the House of Lords who will be scrutinising the bill over the next couple of months, and Ms Maskell described the peers as "the last thin line defending that great British institution - the NHS - from rampant privatisation."