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National Health Service History

Geoffrey Rivett

home inheritance1948-19571958-19671968-1977 1978-1987  1988-19971998-2007 2008-20172018 - 2027envoishort history London's hospitals

Speech by Rt Hon Alan Milburn MP, Secretary of State for Health to the New Health Network
14 January 2002 

Redefining the National Health Service

Later this week we will publish our response to the Kennedy report into events at the Bristol Royal Infirmary. Those events were a turning point for the NHS and I believe a catalyst for change.

The world has moved on since then of course but underlying the whole Bristol tragedy was a profound structural problem. An NHS that was more geared to its own needs than the needs of its patients. A health service where there was confused accountability between services, professionals and government.

Today a new relationship is needed between patients and services and between the health service and the government. The NHS Plan we published eighteen months ago sets out our vision for the future of health care in our country. Where patients always come first. Where patients are in the driving seat able to make informed choices about their care. Where the NHS is decentralised with a plurality of providers operating within a framework of clear national standards regulated independently.

I want to set out in this speech the nature of these new relationships and how I believe they can be forged. I want to describe how they will define a different sort of health service which genuinely puts patients first.

Some say this vision of turning an old style monopoly nationalised industry into a patient-driven service can never be realised. That the NHS must be abandoned in favour of a market-based solution.

The NHS today has never had more enemies. Over very recent years the NHS has faced an unprecedented ideological onslaught from the Right – sections of the media and politicians – determined to bring down what they now freely describe as a "Stalinist" creation.

It is important for those of us who believe in the first principles of the NHS to recognise that underpinning much of the day to day hostility to the NHS is an ideological pursuit of a smaller state and an outdated Thatcherite obsession that public services must inevitably fail.

It is collective provision of health and education and other public services that is now under attack. The NHS is on the frontline of that ideological battle. I believe it is time for those who believe in the concept of universal provision of health care, to which we all contribute via general taxation, to stand up for it. The NHS needs to speak up for itself. And it needs others – in professions, in the community, in politics, in voluntary and patient organisations - to forge a national alliance to speak up for it, too.

Even today after decades of under-funding – which only a fool believes can be put right by a few years of extra investment – and at the start of the NHS Plan’s ten year reform programme the vast majority of NHS patients get good care. Yes, waiting times are too long but they are falling and 7 in 10 patients get their hospital operation within three months. The NHS needs to be reformed not rejected.

Health care cannot be just another commodity to be bought and sold in a market. Our need for health care is, by its very nature, unpredictable. It can be extremely expensive. Rather than asking people to take the risk of providing for their own care it is surely right that we provide for it collectively and pool those risks across the population as a whole.

The NHS gives each of us the security – "serenity" Nye Bevan called it – of knowing we will be cared for when we are ill. A system of health care that is used by all and financed by all makes for a stronger society for all. Now more than ever we should say unequivocally that an NHS providing comprehensive services, overwhelmingly free at the point of use, according to need not ability to pay is the right way forward for Britain.

Expanding private health insurance would entail huge deadweight costs to subsidise those who already have it. It would end up costing the NHS more money than it saved. It would also mean a two tier health care system subsidised at taxpayers expense. The same is true of the option favoured by Iain Duncan-Smith of patients paying to see their GP. Aside from shunting patients into more expensive, already busy A&E departments. It would end up disenfranchising those – the elderly and the poor – who need health care most and can afford charges least.

European insurance-based systems, cited so approvingly by some, are not without their problems either. Ironically, while some in Britain are looking to Europe for the answer, the experience in Europe over recent decades has actually been in the opposite direction - away from insurance towards tax-based systems driven by concerns about the scale of the funding burden placed on employers and employees. The real cost and complexity of a wholesale introduction of a new funding regime in Britain would be years of turbulence and instability. That would delay precisely the rapid improvements in services patients and staff want to see.

What health care in these other European countries have had is not a superior system of funding but a superior level of funding. What the NHS in this country has lacked is investment and reform. It is that we are seeking to put right.

On investment the NHS is today growing faster than ever before. It is the fastest growing health service of any major country in Europe.

On reform the NHS is today implementing the biggest programme of change in its fifty year history.

As the NHS Modernisation Board’s report quite rightly said last week after decades of neglect some very real problems remain. But there are signs of real progress too. Indeed one of the striking things I have found talking to NHS staff over recent months is that there is now a greater recognition of the money and changes coming through. I do not pretend for a moment that the problems are solved. They are not. We are just a year and a half into our ten year reform programme.

But it is worth reminding ourselves that there are 10,000 more nurses than one year ago. Last year was the first year in thirty years where there were more beds not fewer in hospitals. The biggest hospital building programme in NHS history is now well underway. In the last year 800 GP surgeries have been modernised. The NHS now has the world’s best smoking cessation services. Prescribing of cholesterol lowering drugs has risen by one third in just a year. Waiting times for cancer and cardiac care are falling.

So while sections of the media seem intent on describing every problem, and denying any progress, it really is time for a bit of balance in the coverage about the NHS. The NHS is not full of bad doctors. It is full of good ones. And good staff who are doing an amazing job for patients. The glass is half full not half empty. And it is being topped up.

The investment and reform programme outlined in the NHS Plan is intended to bring the health service into the modern age. While its values are right its structures are wrong. Too much of it still has the feel of the 1940s – both for those working for it and those using it. Queuing is endemic. Staff are run off their feet. Capacity problems mean shortages of staff and equipment and services that are slow and unresponsive. Patients are disempowered with little if any choice. The system seems to work for its own convenience not the patient’s –a frustration that is shared between staff and patients alike. The whole thing is monolithic and bureaucratic. It is run like an old style nationalised industry controlled from Whitehall.

The NHS today is a product of the era in which it was formed. In the post-War world of the mid-twentieth century big national problems were solved by creating big national institutions. Just as the National Coal Board took over a failing coal industry so Nye Bevan’s new National Health Service took over a failing health system. The NHS for the first time gave Britain a national system of health care

The benefits were enormous, not least in driving through public health and immunisation programmes. But as the century wore on the NHS fell behind. Cost containment took precedence over quality of care. Top down control stifled local innovation. As a monopoly provider there was no plurality in organisation and no choice for the user.

For fifty years, the structure of the NHS meant that governments – both Labour and Conservative – defended the interests of the NHS as a producer of services when they should have been focussed on the interests of patients as the consumers of services.

In today’s world that will no longer do. People today expect services to respond to their needs. They want services they can trust and which offer faster, higher quality care. Increasingly they want to make informed choices about how to be treated, where to be treated and by whom.

The Right says that this can only happen through market mechanisms. The overwhelming evidence however is that the public do not want a market in health care. More than three in four people agree with the proposition that the NHS is critical to British society and we must do everything to maintain it.

What they want to see however, is a reformed service which genuinely serves patients.

The NHS today lives too much in the shadow of its own history; as an organisation where government provided limited resources, doctors were left in charge of providing limited services and patients were expected to be grateful for the limits of what they received.

The investment we are making is about breaking through those limits to expand the services available to patients. The reforms we are making are about designing those services in the interests of patients. Driving shorter waiting times and higher quality care. Getting the basics right – clean wards, good food, matrons in charge. Getting health and social care to work as one so that patients receive a seamless service. Providing services round-the-clock through NHS direct and walk in centres.

There is no single ‘silver bullet’ that can deliver these changes. As in any complex organisation undergoing change, there needs to be a mix of levers. Recent research on high performing private sector organisations confirms that this is the case. Complementary sets of changes are needed. A relentless focus on the needs of the consumer alongside support for staff. Customisation wherever it can be made but standardisation where it is appropriate. Management through hierarchy alongside management through networks.

These levers are now for the first time being consistently applied to the health service. Getting health and social care to work as one for the benefit of patients. New roles for nurses and therapists and new contracts for doctors to provide flexibility around the needs of patients. Inspection to highlight successes and to pinpoint problems. Targets to improve performance alongside devolution to those responsible for delivering them. Open assessment linked to rewards for those who are doing well and help, support, and where necessary, intervention for those who are not.

All of these reforms involve government acting on behalf of patients in order to influence how the NHS relates to patients. They are all about getting the NHS to put the needs of its patients first. But a service designed around the needs of patients has to hand over more power directly to them. So there are reforms to give patients a greater role and a stronger say in the NHS - patients forums in every trust, patients electing patients onto trust boards, the results of patient surveys helping determine the ratings and the resources that trusts receive. And there are reforms too to introduce new procedures for informed consent.  Because while patients have a responsibility to keep healthy, treat professionals respectfully and use services wisely, they have a right to be involved in decisions about their own care.

The balance of power has to shift decisively in favour of the patient. So now most fundamentally of all, our reforms will give patients greater choices over services. By the end of March 5 million patients will choose the date of their hospital operation rather than having it chosen for them. From April patients faced with a last minute cancellation of their operation can choose an alternative hospital for their treatment. From July heart patients who have waited six months for their surgery will choose between waiting longer locally or travelling further to be treated quickly in another public or private hospital. And then on the basis of the progress we make this year within the next four years patients throughout the NHS – helped by their referring GP – will be able to make informed choices about where they are treated, when they are treated and by whom they are treated.

As capacity expands so choice will grow. Choice will fundamentally change the balance of power in the NHS. Hospitals will no longer choose patients. Patients will choose hospitals. And in primary care patients will have more information about the choices available there too.

Most patients want a simple choice: the choice of a good local surgery and a good local hospital. And that is why – unlike the failed internal market experiment – we have put in place the levers needed to raise standards everywhere. But in this new choice-driven system hospitals will need to respond actively if they are to benefit most from patients, with their GPs, making informed choices.

Of course the core costs in hospitals of providing emergency or long term care services will have to be met but patient choice over elective surgery will mean developing new ways of money flowing around the system to sharpen incentives to respond to patients. Hospitals, whether they are public or private, will get more money for being able to treat more patients more quickly and to higher standards.

This is a fundamental change in accountabilities – where the patient is in the driving seat. Where the NHS looks outwards to patients and communities rather than upwards to government or inwards to its own providers. To make patient power happen there will need to be a changed relationship between the NHS and the Government.

For fifty years the NHS has been subject to day-to-day running from Whitehall. The whole system is top down.. There is little freedom for local innovation or risk taking. The local health service has to get permission from somewhere else in the hierarchy to appoint a nurse consultant or even to spend the money it gets from sales of its own land.

A million strong service cannot be run from Whitehall. Indeed it should not be run from Whitehall. For patient choice to thrive it needs a different environment. One in which there is greater diversity and plurality in local services which have the freedom to innovate and respond to patients needs.

Our reforms are about redefining what we mean by the National Health Service. Changing it from a monolithic, centrally-run, monopoly provider of services to a values-based system where different health care providers – in the public, private and voluntary sectors - provide comprehensive services to NHS patients within a common ethos: care free at the point of use, based on patient need and their informed choice and not their ability to pay. Who provides the service becomes less important than the service that is provided. Within a framework of clear national standards, subject to common independent inspection, power will be devolved to locally run services so they have the freedom to innovate and improve care for NHS patients.

The implications of this re-definition are profound. It means that NHS healthcare does not need to be delivered exclusively by line-managed NHS organisations but by range of organisations working within the national framework of standards and inspection. The task of managing the NHS becomes one of overseeing a system not an organisation. Responsibility for day to day management can be devolved to local services. National accountability moves away from organising a particular institution around large numbers of targets towards overall systems performance and health outcomes. That in turn will allow a better concentration on tackling inequalities and improving health rather than just on improving health services.

This direction of travel has already begun. I know there is concern about the pace of change and the extent of change to come. But these changes are rooted in the NHS Plan. They are needed at all levels in the NHS.

For the Department of Health it means focussing on the things that only it can do. In any large organisation or complex system not everything can be devolved from centre to local. There is little public appetite for diverse standards between local services. People do worry about a lottery in care. When people hear about problems in one part of the NHS it tends to dent public confidence in the whole NHS. There is strong public identification with the NHS as a national service. That is a good thing. The universalism of the NHS helps to cement national cohesion and to shape national identity.

For all these reasons in our first term we have established a clear national framework within which local NHS services can operate. The absurdity of describing the NHS as Stalinist is that until very recently there was little national control over quality or standards in local NHS organisations. When we came to office in 1997 there was an absence of national standards and no means of implementing them. No means of spreading good practice or eliminating bad practice. No national evaluation of new treatments and no external inspection of local services. The anarchy of the NHS internal market had merely added to a long term spiral of decline. As Kennedy identified it was this lack of clear standards and clear lines of accountability that underpinned the Bristol tragedy.

font size="2" face="Arial, Helvetica, sans-serif">It is easy to forget how far we have come in just four years. There are new national standards for services. For cancer, heart disease, mental health, elderly care. There is greater transparency over local service performance. There is a new legal duty of quality and a new system of clinical governance to enshrine improvements throughout the NHS. There is the National Institute for Clinical Excellence evaluating new treatments. For the first time the NHS has an independent inspectorate, the Commission for Health Improvement. With the NHS Modernisation Agency there are now new systems for when things go wrong and more help to learn from what goes right. Today with that national framework in place, in our second term the centre of gravity is shifting decisively to the NHS frontline.

That will leave the Department of Health with four essential functions. One, setting strategic direction by distributing resources and determining standards in particular to move policy towards a more explicit focus on improvements in public health. Two, ensuring the integrity of the whole system for example by securing integrated information systems, staff training and development support for improving services. Three, developing the values of the NHS through education, training and policy development. And four, securing accountability for funding and performance including ensuring reports to Parliament.

The NHS should be able to speak more for itself as it is beginning to do for example by the NHS Confederation, rather than the department, leading negotiations on a new GP contract. Similarly, just as we have moved appointments to NHS bodies out of the hands of Ministers into the hands of an Independent Appointments Commission, so we intend to move responsibility for the regulation of the system to a strengthened Commission for Health Improvement.

The CHI will take responsibility for the independent publication of information about clinical and organisational performance. It will have a greater inspectorial and reporting role over the health system’s performance. That will necessitate closer working, and over time, organisational integration between the CHI, the Social Services Inspectorate, the National Care Standards Commission and the Audit Commission so that health and social care services are subject to a common set of standards whether they are provided by public, private or voluntary sector organisations.

There will be a transition towards politicians and civil servants focussing on strategic issues rather than on day to day management of the health system. Day to day management will devolve to the 28 new strategic health authorities in England. They will oversee the work of local NHS Trusts, PCTs and private providers. They will become the headquarters of the NHS locally. Their chief executives will account both nationally and locally for the performance of local health services. Franchises for running the STHAs will be let, based on performance against an annual delivery agreement with the Department of Health.

The real power and resources in the NHS will move to the NHS frontline. The NHS is a high trust organisation. It works on the basis of trust between professionals and patients. In the way it is organised it needs to enshrine that trust. So from April this year locally-run primary care – involving professionals and patients - will be up and running in all parts of the country. Within a few years they will control 75% of the total NHS budget. They will be able to choose from which hospitals – public or private – care is commissioned. The best hospitals are likely to be those where they too, practice the philosophy of devolution and empowerment. Where the principled motivation and expertise of clinicians and managers alike can be harnessed to redesign services from the patient’s point of view.

Both PCTs and Trusts will be subject to rigorous performance assessment. But the balance between top-down performance management and horizontal performance improvement will move sharply in favour of the latter as the NHS Modernisation Agency increases its role in spreading good practice throughout the system.

Local services will operate within the context of clearly defined national standards. Intervention will be limited. It will be in inverse proportion to success. Where the CHI decides that an NHS organisation is in trouble it will recommend special measures are taken. That could include external help through the Modernisation Agency. In those local services where there are persistent problems – which are more often than not organisational and cultural - the management could be franchised. Within this new definition of the NHS, the franchise could go not just to another public sector health organisation but in time to a not-for-profit body such as a university or a charity or to some other external management team. As franchising progresses it is possible to imagine a number of local health organisations all being run by a single team of successful public service entrepreneurs. The assets, of course, of the franchised local hospital or PCT will remain within public ownership. It is the management that will be franchised. This is not privatisation in any way, shape or form.

Each year CHI – rather than the Department - will rate local health services according to their performance. Those that are performing best will earn not just more rewards but greater freedom. As we said in the NHS Plan as performance improves this system of earned autonomy will see more and more power move to local frontline services in the NHS.

The better the performance of the organisation the greater the freedom it will enjoy. The first wave of three star hospitals will be able to establish joint venture companies, get automatic access to capital resources and be subject to less monitoring and inspection.

In order to encourage greater innovation and responsiveness in local services these existing freedoms will need to be extended.

Last month I met with the chief executives of the three star Trusts. They had a list of further specific restrictions that they wanted to have removed from them and we are now considering how best to do so. But they also asked us to go further. If they were as good as we agreed they were why could they not become independent not-for-profit institutions with just an annual cash for performance contract and no further form of performance management from the centre? They all recognised the importance of external inspection and the national framework of standards. None were arguing to go private or to abandon the public service ethos. They wanted instead wanted greater freedom to improve services than they currently have within the existing state-run nationalised industry.

There are precedents for this sort of structure in the public sector. Indeed NHS Trusts themselves already have potentially far-reaching powers of autonomy. In education schools are now encouraged to develop different forms of organisation within a national framework of standards. In further education, FE colleges used to be run by local authorities, but are now incorporated as autonomous not-for-profit trusts. As independent corporations they have the powers to borrow privately, engage in PFI –style investments, buy and sell assets and choose the mix of courses they offer subject to negotiation with the Learning and Skills Council

This middle ground between state-run public and shareholder-led private structures is where there has been growing interest in recent years. Both the Right – through organisations like the Institute of Directors – and the Left – through the Co-operative Movement - have been examining the case for new forms of organisation such as mutuals or public interest companies within rather than outside the public services and particularly the NHS.

Their proponents have argued that there could be potential advantages to such forms of organisation. They have a clear public service ethos and are not-for -profit. The assets remain within public ownership so there is no question of the NHS being privatised. They offer specific public benefits and cannot be transformed or taken over by another form of organisation which will not provide such benefits. They motivate staff and management alike through more active involvement and control. They offer freedom from top down management but are regulated in the interests of consumers. They give greater control to those who use them. They open up more options for greater community accountability.

Our three star hospitals have now asked us to look at whether such models could be applicable to local health services to form Foundation Hospitals within the health service but run more independently than now. I think it is right that we should examine the case they have made. And we will consider the applicability of Foundations not just to the best hospitals but to the best primary care trusts too. Over the next few months we will be working with them to examine the legal, financial, governance and accountability issues. Amongst other matters we will be examining the case for specialist patient organisations to have a more direct role in the management of specialist hospitals or services.

This will only ever be voluntary not mandatory for the health service’s best performers. Alongside national standards, new incentives, more devolution and greater choice, however, it will help make for a new sort of NHS.

Some will see this as a very controversial step. I think it flows from the devolution agenda of the NHS Plan. And it is worth putting it into a slightly broader context. No other country in Europe, including those with a strong centre left tradition, would blink an eyelid at these plans. At the time the NHS was being formed as a nationalised industry in the UK elsewhere in Europe many socialist or social democrat governments forged institutions which favoured greater community ownership over state ownership. Even here there is a long and honourable tradition within the British labour movement of developing strong local community-led services. In the first part of the last century GDH Cole, Tawney and others were powerful intellectual advocates of such an approach. And in the first part of this century virtually every other public service has long since moved away from the pure nationalised industry model.

The sole exception is the NHS. It is an exception both in this country and abroad. As far as publicly financed hospital services are concerned, for example, the UK stands out today in the degree of centralisation of service delivery and the uniformity of its ownership. In many other European countries there are many not-for profit voluntary or charity-run hospitals all providing care to the public health care system. There are private sector organisations doing the same.

Similar steps are already starting here. We are in negotiations with BUPA about turning one of its hospitals over to the exclusive use of NHS patients. It will be run by BUPA but as part of the NHS. We will look to establish similar ventures in the future both from the domestic independent sector and from the sector in other parts of Europe that may wish to establish a presence in England. Like the use by the NHS of spare capacity in private hospitals this is all about expanding the volume of care available to NHS patients. There is no blank cheque. It is right that patients get the highest standards of care and taxpayers are assured of good value for money. But this is a relationship that is for the long term. It is not a one night stand.

After all just because patients might be treated in a BUPA hospital today or a Foundation Hospital tomorrow that does not mean they cease to be NHS patients. Quite the reverse. Patients remain NHS patients treated on NHS principles with care that is free and available according to need. The NHS is not its bricks and mortar. It is not a set of structures. It is fundamentally a set of values. An ethos if you like. We should be resolute in our defence of the values of the NHS but not of its outdated structures.

Getting there will not be easy. It will certainly not happen straight away. It will take sustained effort and time as well as sustained resources. It will mean sticking to the NHS Plan – developing it by all means but not departing from it. It will mean changing culture as well as changing structure.

What we envisage is a fundamentally different sort of NHS. Not a state run structure but a values based system:

where greater diversity and devolution are underpinned by common standards and a common public service ethos;

Where treatment is free and provided according to need wherever it occurs;

Where patients can make informed choices about their services and about their care;

Where we liberate the talents of NHS staff to improve care for NHS patients.

Where government no longer runs a nationalised industry but instead oversees a system of care;

Where there is greater diversity of provision and more freedoms for local services to improve care for patients.

Where there is a new common purpose shared across health sectors and a relentless focus on better health outcomes and less inequality;

Where there is a single national health service – an NHS of all the talents. One that puts its patients first.






home inheritance1948-19571958-19671968-1977 1978-1987 1988-1997  1998-2007 2008-2017 2018 - 2027 envoishort history London's hospitals



Geoffrey Rivett©