In the future, the NHS will look very different from how it looks today. On this much, Labour and the Conservatives appear to agree. In place of monopoly state provision, there will be a mixed market in healthcare, with independently run but state-owned hospitals vying for patients alongside voluntary and private sector providers. The NHS will instead primarily be a funder of healthcare. Moreover, funding will be devolved, and the money will follow the patient to the hospital with the shortest waiting time. Patients, in consultation with their doctors, will exercise real choice about the treatment they receive.
This is all a very long way from Labour’s 1997 general election manifesto, in which a promise to ‘end the Tory internal market’ formed the centrepiece of the party’s health policy. In the words of Downing Street health adviser Professor Julian Le Grand, writing in a Progress article last year, ‘the hard evidence suggests that – properly designed – markets and quasi-markets work better than the alternatives in delivering public services.’ Labour now accepts that markets have a role to play.
It would be quite wrong to conclude, however, that a consensus exists on the future direction of health policy. There are real and important differences between the new Tory policy on health and the government’s five-year plan, both published last month. These differences will no doubt loom large as the general election approaches.
The first big area of dispute is how quickly patient choice should be introduced. Labour’s plans, which have been heavily criticised by the Conservatives, do not allow for full choice to be introduced immediately. Instead, patients will be offered a choice of only four or five providers by the end of 2005, with full choice – of approved NHS, voluntary or private sector providers – granted by 2008. In contract, the Tories claim that they would given patients the ‘right to choose’ immediately, and would ‘abolish waiting lists’ by the end of their first term.
Partly, Labour’s phased introduction of choice reflects the need to get proper systems in place – for example, the electronic booking system that comes on-stream in 2005, and the new arrangements for financial flows within the NHS, without which choice simply cannot happen.
However, the need for increased healthcare capacity is also of enormous importance. In a capacity-constrained system, patient choice is effectively a zero-sum game – every winner also produces a loser. Tory claims that full choice can be introduced immediately, before capacity has been built up, are simply not credible.
This therefore leads on to the second big dividing line between the two parties – how to secure increased capacity. Labour’s approach has been both effective and imaginative, going beyond simply ratcheting up the amount of public money spent on healthcare. As well as dramatically expanding the number of places in medical schools, hiring extra nurses and investing in new facilities and equipment, the Government has taken steps to stimulate new private sector capacity. For example, 34 of the new treatment centres operational by the end of 2005 will be operated by the independent sector, compared to 46 run by the NHS. And instead of giving the contracts to Britain’s expensive and inefficient private hospital sector, the government has contracted providers from South Africa, Canada and Australia. These new operators are able to provide treatment at costs comparable to NHS prices. And the challenge of new market entrants has in turn shaken up our sleepy, homegrown private sector, with operators like Bupa, Nuffield and Capio slashing their prices and demanding fee reductions for private consultants. As a result, they too are likely to see an increasing proportion of their business come from the NHS, but at prices that provide the taxpayer with value for money.
In contrast, the Tories would do nothing to stimulate additional capacity, and would place their faith in private operators choosing to cut their prices to NHS levels. Their policy paper talks about giving private hospitals ‘the right to supply’ but says nothing on the modalities of achieving value for money for the NHS.
Furthermore, the right to supply sits uncomfortably with the most controversial aspect of the Tories health policy – the 50 percent voucher to subsidise private treatment, formerly known as the ‘Patients’ Passport.’ Why should private hospitals reduce their prices when the Tories are offering to generously subsidise their inefficiency? Furthermore, how can they justify targeting their promised funding increases at a policy that will result in a £1 billion deadweight cost of subsidising existing private patients before a single additional operation has been carried out?
This is the third and most important dividing line between the two parties. Whereas Labour looks to the private sector primarily as a mechanism for delivering high quality care, free at the point of use, the Tories still see it as a parachute out of the NHS. For this reason, although both parties are committed to a mixed market, the Tories still see a much broader role for private healthcare, and the NHS would not necessarily be the dominant funder. Having said that, there is reason to believe that the Tories might recognise the weaknesses of this policy – the proposed value of the voucher has been reduced from when the policy was originally announced, and the idea is now being given far less prominence than before.
There is good reason to be confident about Labour’s policy on health. Unlike the Tories, Labour has a coherent vision for how power can be devolved to patients, for how healthcare capacity can be built up, and of the NHS as the pre-eminent funder of healthcare. The Tories in contrast remain preoccupied with helping people opt out of the NHS and with providing subsidies for an inefficient private hospital sector that can never, as presently constituted, play a serious role in delivering mass healthcare. The fact that the Tories are now talking about the ‘right to choose’ does show that they are now taking steps to make their policies relevant to the majority of ordinary people. But they have not yet made them credible.
For Labour, the big risk lies mainly within its own ranks. Having embraced the internal market after first promising to scrap it, Labour has embarked on a course without convincing its own followers that it is the right one. The dispute about foundation hospitals demonstrated this. Other important changes, like the reform of financial flows within the NHS, have caused less controversy, but the government’s reform agenda remains highly contentious. It is this dividing line that represents Labour’s greatest vulnerability.