*Delivering the NHS Plan

1. There are two arguments that matter on the health service. One, how is it funded? Two, how is it run?
2. On the first question, more investment has to be paid for. Either through taxation, social insurance, or private insurance or individual charges. No system is free. Many systems are not only more expensive than taxation but leave millions uninsured, without any cover at all. We believe that the benefit of a universal tax based model is that it is an insurance policy with no “ifs” or “buts”: whatever your illness, however long it lasts, you get cover as long as you need it. We made our choice in the Budget stating plainly that for the NHS to improve faster and tackle years of underfunding, more money is needed. The Budget now demonstrates how, within our tough public finance rules, we will through general taxation be able to fund a ‘catch-up’ period to get us to health spending of 9.4% of GDP by 2008 – easily on a par with European levels of health spending.
3. On the second question, we believe that any system for delivering health care must uphold the founding principle of the NHS – that it is free at the point of use based on need, not ability to pay. But Chapter 1 describes how the 1948 model is simply inadequate for today’s needs. We are on a journey – begun with the NHS Plan – which represents nothing less than the replacement of an outdated system. We believe it is time to move beyond the 1940s monolithic topdown centralised NHS towards a devolved health service, offering wider choice and greater diversity bound together by common standards, tough inspection and NHS values. This will be underpinned by support for staff – with more staff, greater flexibility, increasedfreedom to do their job even better. The aim: shorter waits, better cancer and heart treatment, modern but compassionate care.
4. So we believe in the traditional method of funding, but a completely new way of running the service. It is this reform of the supply side system design which this document focuses on.
5. Chapter 2 outlines some of the key benefits that this extra health spending will bring. Waiting times for operations will fall from a maximum of 15 months now to 6 months by 2005, and 3 months by 2008. Waits in A&Es and primary care will fall too. And extra investment in major conditions will cut cancer and cardiac death rates, and improve services such as mental health and for older people.
6. Chapter 3 summarises some of the key building blocks to growing capacity. Compared with latest available headcount figures, there are by 2008 likely to be net increases of at least 15,000 more GPs and consultants, 30,000 more therapists and scientists, and 35,000 more nurses, midwives and health visitors. Primary care services will be expanded. More elective surgery will take place in new freestanding surgical units or ‘diagnostic and treatment centres’. Hospital capacity is likely to grow by at least 10,000 more general and acute beds.
7. To help ensure that the large extra investment the NHS is now getting translates into capacity growth not inflation, a greater share of the new funding will be used on training new health professionals for the future, and on capital infrastructure and modernised information technology rather than current spending.
8. Chapter 4 explains that we are confident that the new national architecture we put in place in our first term is right. There is now broad support for a national body like NICE to ensure growing NHS spending is targeted on the most cost-effective treatments. There is wide support for National Service Frameworks covering cardiac, cancer, mental health services and other major conditions. There is consensus on the need for an external independent inspectorate to assure the quality of hospitals and primary care on behalf of patients. On the need to spread best practice through the NHS Modernisation Agency. And whereas the 1990s were spent debating internal NHS structures, there is now almost complete agreement that Primary Care Trusts are the right approach. So in just five years, this new architecture has radically changed the way the NHS operates.
9. But having got the structures right, Chapter 4 goes on to argue that we now need to introduce stronger incentives to ensure the extra cash produces improved performance. Primary Care Trusts will be free to purchase care from the most appropriate provider – be they public, private or voluntary. The hospital payment system will switch to payment by results using a regional tariff system of the sort used in many other countries. To incentivise expansion of elective surgery so that waiting times fall, hospitals or DTC/surgical units that do more will gain more cash; those that do not, will not.
10. Chapter 5 underpins the new incentives with the introduction of explicit patient choice. Over the next four years, starting this year, the Scandinavian system will be progressively introduced across the NHS in which patients are given information on alternative providers, and are able to switch to hospitals that have shorter waits. By 2005 all patients and their GPs will be able to book appointments at both a time and a place that is convenient to the patient. This might include NHS hospitals locally or elsewhere, diagnostic and treatment centres, private hospitals or hospitals overseas.
11. Chapter 6 explains that as NHS capacity grows organically, we will continue to use private providers where they can genuinely supplement the capacity of the NHS – and provide value for money. This will also expand choice and promote diversity in supply, particularly for elective surgery. New PFI mechanisms, joint venture companies, and international providers will all be developed.
12. Devolution to the frontline will be stepped up, as Chapter 7 describes. The Department of Health will be slimmed down as, for example, in future negotiations over national employment contracts will be undertaken by NHS employers collectively rather than by the Department of Health. Instead of all public capital being allocated by the Department of Health from Whitehall, we will consider establishing an arms-length Bank, controlled by the NHS itself, which would invest capital from the Budget settlement for long term and innovative capacity growth and redesign. It will particularly focus on strategic shifts in configuration to more community and primary care based services. As regards revenue funding, locally run Primary Care Trusts will hold over 75% of the growing NHS budget.
13. The first NHS foundation hospitals will be identified later this year, with freedom and flexibility within the new NHS pay systems to reward staff appropriately, and with full control over all assets and retention of land sales. We will explore options to increase freedoms to access finance for capital investment under a prudential borrowing regime modelled on similar principles to those being developed for local government.
14. Chapter 8 makes the case for a radically different relationship between health and social services, particularly to improve care for older people. As the Wanless Report suggests, we will legislate to make local authorities responsible for the costs of hospital bed blocking. Rather than imposing structural reorganisation or nationally ringfenced budgets, this scheme means that social services departments will beincentivised to use some of their large 6% real annual increases to stabilise the care home market and fund home care services for older people. There will be matching incentive changes on NHS hospitals to make them responsible for the costs of emergency readmissions, so as to ensure patients are not discharged prematurely.
15. As well as growing the numbers of health professionals, there need to be fundamental changes in job design and work organisation. Chapter 9 sets out how this requires new contracts for GPs, consultants, nurses and other staff. The new NHS pay system will allow greater allowance for regional cost of living differences, and free local employers to design new jobs breaking down traditional occupational demarcations. In seeking to expand the size of the healthcare workforce, a careful balance will be struck between the need to pay staff competitive rates in tight labour markets, and the need to ensure productivity gains on a par with the wider economy. Staff will be supported to continue life long learning.
16. Given UK health capacity constraints, there are difficult judgements on the speed of funding increases. Too slow, and we miss the opportunity to improve the nation’s healthcare, with the risk that people simply give up on the NHS. Too fast, and investment might produce input price inflation, rather than improved output and responsiveness. On best advice the Government has decided that 7.5% is the optimal level of real NHS growth in England over the next five years. Higher than that would be unlikely to expand healthcare capacity any faster. Lower than that would mean an excessive and growing gap between supply and demand. But the Government is determined to ensure that additional funding is backed by independent oversight of how the resources are being used, to ensure they deliver the intended results.
17. Chapter 10 therefore describes how at a local level, PCTs will be required to publish prospectuses, accounting to their local residents for their spending decisions, the range and quality of services, and explaining the increasing choices that patients will have.
18. At a national level, legislation will be introduced to establish a new tough independent healthcare regulator/inspectorate covering both the NHS and the private sector, with a new Chief Inspector of Healthcare – not appointed by Ministers and reporting annually to Parliament. An equivalent body will be created for social services.

19. In summary the NHS is now on a stable financial footing and can face the future with confidence: with the NHS Plan in place; investment and reforms beginning to show results; power shifting to the NHS frontline. The changes will take time. But with investment to reform, the best days of the NHS are ahead of us, not behind.

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