Alan Milburn – 2003 Speech to the Social Market Foundation

Below is the text of the speech made by Alan Milburn, the then Secretary of State for Health, on 30 April 2003.

Domestic politics is back. This week there will be important elections in Scotland, Wales and England. Over these last few months, Iraq put bread and butter issues on hold. The Government’s decision on the Euro could have a similar effect. But whilst Iraq and the Euro are hugely important for the future of our country and the wider international community, it is not the five tests on the Euro that will determine this government’s fate. It is the three big domestic tests: delivering on jobs and the economy, crime and asylum, health and education.

Here there is a stark choice for the Government. To pursue the cautious incrementalism that sometimes characterised our first term, or to embark on a more fundamental transformation of our country. It is the latter course of action I believe we must choose if we are to successfully meet each of these three key domestic tests.

Reassurance was right for our first term. Radical reform is what is needed now. Not reform for reform’s sake but reform to open up new opportunities for people to deliver on our commitment to social justice.

So for public services that means using the considerable extra resources now going in to health and education to reinvent collective provision for today’s world.

Some find that an uneasy proposition. Reform in health or in education is often caricatured as being in conflict with the values of the Centre Left – as though reform can only ever come from the Right.

That is to confuse ends with means. The ends remain – of strong public services capable of providing opportunity and security in a globalised and increasingly uncertain world. It is the means of securing them must now change as society itself has changed.

We are in a century where deference is lower but expectations are higher than they were in the century that saw the creation of these great public services.

So, today I want to set out the case for public service reform. And I want to do so with particular reference to the changes we seek to make in the National Health Service including NHS Foundation Trusts.

My starting point is this: strong public services are the best provider of opportunity any society can have. A good education helps lift people up. A good police and criminal justice system keeps communities safe from harm. And a good health service secures the health of the nation.

All my adult life I have argued for policies and for values that are about widening opportunity in our society. That is why I believe the NHS is such a source of strength for our country. It expresses the values that I believe in. Solidarity, community, opportunity. With the NHS we all share in the security – Nye Bevan called it the serenity- of knowing that we all pay in when we can do so that we all can take out when we need to. The health of each of us depending on the contribution of all of us.

These were the ideals that inspired the generation of Bevan and Beveridge. They remain our inspiration today.

Indeed, I believe profoundly that the case for the NHS system of funding and values is stronger today than it has ever been. Now more than ever, we live in a world where health care can do more but costs more. Since none of us knows when we will fall ill, how long it will last or what it will cost, having an NHS that pools risk because it is funded through general taxation and is free at the point of use, based on need not ability to pay, is the right way forward for our country.

Conversely, the market-based approach favoured by others would be both inefficient and unjust. As the costs of treatment and drugs grow, the risks to family finances of pay-as-you-go and health vouchers would grow too.

I reject the vision of some privatised future where the health care you are guaranteed for your family is the health care you insure for privately or pay for, in part or in whole. Where poverty bars the entrance to the best treatments. I reject the dogma of those whose dislike of public services is such that they would prefer a private sector working inefficiently to a public sector working well.

It is because we recognise the unpredictability of health needs, the rising costs of heath technology and the equity and efficiency of the NHS tax funded system that for us the NHS will remain a National Health Service – a public service free at the point of use with decisions on health care always made by doctors and nurses on the basis of clinical need.

The Government’s decision to double health spending in real terms by 2008 from the position we inherited in 1997 is a declaration of that faith in the NHS. With the right level of funding we believe it can be the best health insurance policy in the world.

I believe we are right to raise tax to increase spending in the NHS and the increased spending we have been putting in is beginning to repay that declaration of faith. More doctors and nurses. More drugs being prescribed. More patients being seen. Shorter waits for treatment. As the Modernisation Board put it recently there is a long way to go but the NHS is now turning the corner.

But money alone, however, cannot deliver the modern responsive health services our nation needs. To get the best from the money the NHS needs to be properly organised. I have heard it said that since the extra investment is now paying dividends in the NHS further reforms are not needed. It is true that the resources are tackling the historic capacity problems the NHS has faced for decades. What is equally true however, is that the NHS has cultural barriers that must also be overcome if it is to reach its full potential. That cannot be achieved through investment. It can only be achieved through reform.

The NHS has great strengths in how it has been organised. For over fifty years it has provided good care and treatment for millions according to the right values. Its ethos and its staff express the values of the nation. Its unitary structure gives it great advantages both in overall levels of efficiency and its focus on public health. Its primary care services, led by Britain’s family doctors, are the envy of many other countries.

But the NHS has structural weaknesses too, not least its top down, centralised system that tends to inhibit local innovation and its monolithic structure that denies patient choice. NHS Foundation Trusts are a means of overcoming that faultline.

And for those of us on the Left the most depressing thing of all is that despite having the fairest health care system in the world, for fifty years the gap between the health of the wealthiest and the health of the poorest has widened not narrowed. A boy born today in Manchester will live on average a decade less than a boy born in Dorset.

For half a century, uniformity of provision has not guaranteed equality of outcome. Too often, even today, the poorest services are in the poorest communities. The hard fact is that for over fifty years it is poorer people and poorer communities who have lost out from poorly provided public services.

That is an affront to all that I believe in. For me, the only purpose of being in politics is to build a society where, regardless of race or gender or social class, there is opportunity for all not just for some.

Take choice, which the Left has mistakenly conceded to the Right. For too long choice in health care has only ever been available to those with the means to pay for it. Those with more money have been able to exercise more choice. That is the real two-tier health care in our country.

The trap we must avoid is that identified by Richard Titmuss four decades ago of so many people opting out of publicly provided health and education that public services become only for the poor and then end up themselves being poor services.

Then there’s the pensioner with modest savings. Worked hard, paid in all his life, finds he needs a heart operation and then is forced to choose between waiting for treatment or paying for treatment.

That is a dilemma I want to solve. The way to do it is to reduce the waiting times and make choice available on the NHS; choice for all not just for some so that for the first time NHS patients can choose hospitals rather than hospitals choosing patients.

The route to patient choice lies not through more healthcare charges but through big cultural changes. The cultural changes which redesign services around the needs of patients so that they are able to make choices about where and when and by whom they are treated. And so that NHS patients can make that choice free of charge, within the NHS.

So it is right to be bold on reform. But boldness is not an end. It is a means to an end. It should be about making health services more responsive so they can provide more opportunities for the communities they serve. That is the purpose of our reform programme in general and NHS Foundation Trusts in particular.

We must not allow our reform programme to be caricatured as a values-free zone. It is actually quite the reverse. It is about strengthening our public services as a means of securing the values that guide us – of social justice and stronger communities. It is boldness for a purpose.

So it is right to press ahead with fundamental reform in how the NHS works. For some – particularly on the Left – this is not an easy process because the NHS is in our blood. For many it is the touchstone of all that we stand for. And yet in our hearts we know that the NHS needs to be better – not because it has failed but because the world has changed.

Sixty years ago when the NHS was formed it was the era of the ration book. People expected little say and experienced precious little choice.

Today we live in a quite different world; a consumer age; the computer age; the informed and inquiring society. People demand services tailored to their individual needs. People want choice and expect quality.

We all do it and we all know it. These changes cannot be wished away. They are here to stay. And these changes challenge every one of our great public services.

To meet that challenge we’ve got to move on from the one-size-fits-all, take-it-or-leave-it, top down health service of the 1940s towards an NHS which embraces devolution, diversity and choice – precisely so that its services can be more responsive to the way the world is today.

Unless we do so, more and more of the public will simply walk away from public services eroding the national consensus that supports them. Reform is not about undermining tax-funded public services. It is about strengthening that consensus by making the NHS more responsive to those who use it.

In our first term we rightly sought to do that by putting in place a new national framework of standards. It is easy to forget how far we have come. There are new national standards for cancer, heart disease, mental health, elderly care and now for children’s services. There is greater transparency over local service performance so that we and more importantly, patients and staff, can spot if things are going wrong and put them right. 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 to tackle postcode prescribing. For the first time the NHS has an independent inspectorate. With the NHS Modernisation Agency there are now new systems for when things go wrong and more help to learn from what goes right. There are clear targets to focus effort across the whole NHS not least to address the biggest public concern about the health service – how long patients wait for treatment. And for all the comment about targets no one should kid themselves that we would be making the progress we are now – with waiting times falling on virtually every indicator – without the targets we have set.

These measures have all served to strengthen equity in the NHS. And I believe they were all necessary to kickstart the process of improvement that was overdue. But the NHS cannot be run forever like a 1940s-style nationalised industry.

National targets and standards are important but ultimately improvement is delivered locally not nationally by frontline staff in frontline services. And that is where power needs to be located if those services are genuinely to be responsive to local communities.

Sustaining improvements in NHS performance can only happen when staff have more control and local communities have a greater say in how services are run. Disempowering frontline staff – whether it is doctors or nurses, social workers or police officers, teachers or managers – is never going to be the best way to run a public service. That’s why we have devolved power to Primary Care Trusts and why we want to establish NHS Foundation Trusts. It is right to set standards nationally but it is wrong to try to run the NHS nationally.

Just as there are limits to the role of free markets in health care, there have to be limits to the role of the centralised state.

Ours is a small country with big differences. It is not uniform. It is multi-faceted and multi-cultural. Different communities have different needs. We have local councils to run local services because we recognise that needs do differ between communities. What is true for social services is also true for health services. With the best will in the world, those needs cannot be met from a distant Whitehall. They can only be properly met locally not nationally.

That is why, with a national framework of standards and inspection now in place, the centre of gravity is shifting decisively to the NHS frontline. More devolution to primary care trusts, more diversity in provision, more choice for patients to open up the system so that it is more responsive to those who use it. NHS Foundation Trusts are part of that process.

We are now in transition from the old order to the new. As we set out in the NHS Plan the more performance improves the more control local health services will assume.

Rather than trying to drive improvements simply through top-down performance management, the transition is towards improvements driven through greater local autonomy in which PCT commissioning, new financial incentives and the choices patients make become the driving force for change, backed by national standards and independent inspection. That transition will take time but the direction of travel is now set – and it must not be reversed.

NHS Foundation Trusts are the next stage in that journey. In some quarters it is a controversial policy; for many in the NHS it is a welcome one.

Since I first outlined the policy more than a year ago, there have been a number of myths and misconceptions about what we intend to do and how we intend to do it. So let us nail some myths today.

NHS Foundation Trusts will be NHS hospitals. They will be fully part of the NHS but with greater freedom to run their own affairs.

Freeing NHS Foundation Trusts from day-to-day Whitehall control will improve care for patients by encouraging greater local innovation in service delivery. It will help unleash that spirit of public service enterprise that exists in so many parts of the NHS but for too long has been held back.

NHS Foundation Trusts will be owned and controlled by the public locally not nationally so as to strengthen the relationship between local hospital services and local communities.

In place of the centralised system of government appointments to hospital boards, for the first time there will be direct elections by local people and local staff of hospital governors.

Strengthening public ownership by making NHS Foundation Trusts more locally accountable will particularly help improve services in poorer areas. Indeed I very much welcome the fact that hospitals in some of the most deprived areas of the country, including Hackney, Liverpool, Bradford, Doncaster and Sunderland have all expressed an interest in being amongst the first NHS Foundation Trusts.

We are starting with existing three star NHS hospitals. In time the Foundation principle will be extended to mental health trusts and other parts of the NHS. To date 32 NHS Trusts have applied. I will be making decisions about those applications shortly. I hope to be able to approve the vast majority of them. But that is just the start. I will also be bringing forward plans – including extra financial support – to help each and every NHS hospital to become an NHS Foundation Trust over the course of the next four to five years. A policy, in other words, that is for all and not just for some.

This is part of an ‘equity guarantee’ that the Bill introducing NHS Foundation Trusts enshrines. That equity guarantee means that NHS Foundation Trusts will remain part of the NHS providing services to NHS patients according to NHS principles – care for free, based on need not ability to pay. It means they will be subject to NHS standards and systems of inspection. And it means they will be bound by a legal duty to work in co-operation with others to improve the quality of health care throughout the NHS in keeping with our values where the strong support the weak for the benefit of all.

So NHS Foundation Trusts will be built on the values and principles of community empowerment, of staff involvement, and of democratisation. Indeed the way they will work draws on some of this country’s best traditions of mutualism and co-operation. They draw too on international experience of greater independence improving performance in hospitals across Europe.

This is not the reinvention of an internal market. Far from it. NHS Foundation Trusts will get their income through local Primary Care Trusts, just like every other NHS hospital. They will all work within the flexibilities of the Agenda for Change pay system we have negotiated with the NHS trades unions.

There will be no competition based on hospitals offering the lowest price. In future all hospitals will be paid a nationally set price for the same procedure. Those who treat more NHS patients should of course get more NHS money. So there will be a payment by results system but NHS Foundation Trusts can not make a profit or pay a dividend. There will be a legal lock on their NHS assets ensuring their continued use for NHS patients and the proportion of their income from private patients will be capped at current levels.

So those who claim this is privatisation or a step in that direction – through the front door, through the back door or through the side door – are simply wrong.

By all means let us debate NHS Foundation Trusts but let us do so on the basis of what the policy is rather than what it is not. Greater local freedom, real local ownership, genuine staff involvement to give more responsive services and ensure community needs are better met.

NHS Foundation Trusts are part of a wider reform programme aimed at getting the right combination of national standards and local control. Both are needed if services are to improve and if the case for collective provision is to be won.

The Government has made public services the key political battleground in our country. We have staked our reputation on being able to deliver the improvements in public services that have escaped governments for decades. And we have embarked on a high risk but necessary strategy of raising taxes in order to raise resources for the health service and other key public services.

We have been right to do so. But we need to recognise that in so doing we have raised the stakes. Collective provision of public services – whether in health, education or local government – is challenged as never before.

The Right – in the media and in politics – believe the game is up for services that are collectively funded and provided. In today’s consumer world they argue that the only way to get services that are responsive to individual needs is through the market mechanism of patients paying for their treatment.

It is easy to dismiss the Right’s policies as the last twitch of the Thatcherite corpse. But if we fail to match high and sustained investment with real and radical reform it will be the Centre-Left’s argument that public services can both be modern and fair, consumer-orientated and collectively provided that will face extinction.

We will win the argument for public service investment and reform if we accept that the era of one-size-fits-all public services is over and that the Centre-Left’s approach today should be based on decentralisation, diversity and choice.

Our objectives – social justice and opportunity for all – remain. It is our means of delivery that must now change. Our job in carrying through these reforms is to preserve values and yet still change structures.

Reform is difficult. It is often controversial. The pioneers who created the NHS found that. The job of re-creation and renewal will be no less difficult. But we will be failing the public if we did anything other than press ahead with reform. The Government’s foot needs to be firmly on the accelerator not on the brake. We have just entered the period of unprecedented expansion when it comes to investment. We must keep up the pace of reform.