Liam Fox – 2003 Speech to Conservative Spring Conference

Below is the text of the speech made by Liam Fox to the 2003 Conservative Spring Conference on 16th March 2003.

Our proposals need to be seen against the backdrop of one simple, stark and shocking fact. The British people do not enjoy the standard of healthcare we deserve.

During our extensive and detailed analysis of healthcare provision in more than a dozen countries over the last two years, we have seen systems which share our ideals, but which offer a considerably higher standard of care and much better clinical outcomes than the NHS.

Unless there is fundamental and radical reform, the NHS will never produce the quality of care we have a right to expect in the World’s fourth largest economy.

That reform must occur on three broad fronts:

– taking politicians out of running the NHS;

– giving real freedom to health professionals; and

– ensuring patients have real choice in health.

Only the Conservatives will be able to undertake that reform. The result will be an NHS which offers high quality care, free at the point of use and irrespective of the ability to pay.

There is a clear ideological difference between the Labour Party and the Conservative Party over where power should lie in the NHS. Labour believes that the best way to achieve a quality agenda is for Ministers to determine clinical priorities and to try to enforce them through a rigid target culture.

Conservatives believe that politicians should be taken out of the running of the NHS, that clinical staff should be given more power and that only by giving patients greater freedom about where and when they are treated can the NHS produce quality care better tailored to the needs of individuals.

We believe that the NHS is there to service the patients not vice versa.

We will give new freedoms to patients, empowering them to take more control over the health care they receive. We also intend to develop new capacity by encouraging more spending on health on top of that already spent in the NHS.

The principle will be that we will want to see total spending on health increase, but we will want to see the proportion of that spending that comes from other sources increase at a greater rate than that coming from the state.

In today’s NHS choice is highly restricted. Freedom of choice cannot be limited just to those who opt to pay for extra care on top of what they contribute to the NHS. Choice must be available for all patients whether they receive their health care from the NHS or from another provider. Unlike Labour, we do not believe that this choice should only become available after the system has already failed you.

There needs to be a profound improvement in the overall quality of healthcare available.

This can be brought about only by increasing the volume of treatment carried out, and raising the standard of such treatment.

Increasing the volume of treatment carried out can be achieved only by either increasing the output of existing suppliers or introducing new suppliers. Under Labour, despite vast increases in expenditure on the NHS, the total output of the system has barely increased. All the indications are that further huge increases would not be matched by increases in output, since Labour refuse to introduce the radical reforms needed to encourage diversity and innovation. In order to create new capacity and to encourage diversity, it will be necessary to persuade new, non-NHS suppliers of healthcare to invest.

At present, the state holds a near-monopoly on the supply of healthcare. The most recent available data on health expenditure in the UK shows that it comprises 85% from the NHS, 4% from Private Medical Insurance (PMI) and 11% from a variety of self-pay sources.

Over recent years, whereas there has been minimal growth in PMI, the number of people opting for self-pay has increased by an average of over 20% per annum.

In order to increase the quality and quantity of healthcare undertaken, we will need to take a number of steps:

– Create an environment in which the private and voluntary sectors believe it is worth their while to invest, in order to generate extra capacity.

– Reform the NHS, removing political interference and giving clinical freedom back to professionals

– Funding the NHS on the basis of real activity not block contracts

– Allow patients the option of moving between any NHS provider based on a national tariff system which would define set costs for specific procedures

– Allow NHS patients to take some or all of the NHS tariff with them if they decide to have treatment outside the NHS.

The most effective way of stimulating the creation of new, non-NHS capacity is to make it more attractive for individuals to supplement what is already being spent by the state through the NHS. This will allow total expenditure to rise in a pattern more like that in neighbouring European countries where the amount of money spent on health by private citizens is higher than in the UK.

There are three main candidates which might be incentivised:

– Personal private medical insurance (PMI)

– PMI available through company schemes

– The pay-as-you- go market where patients pay for a single procedure or item of care.

Other countries use a combination of cash rebates, tax incentives and reductions of the cost at source with the state reimbursing providers.

PMI offers a chance to insure against unforeseen circumstances in a way that self-pay cannot do. Experience in Australia with the use of financial incentives has resulted in a large increase in those carrying PMI.

Company PMI schemes have the attraction of greater risk sharing, and thus better value for money and a wider income distribution than personal products provide.

The self-pay market accounted for 250,000 procedures last year; if these patients did not opt to offload themselves in this way the NHS would be unable to cope with the extra demand. It is vital that this number is maintained or increased. It will therefore be necessary to produce a carefully balanced system of incentives to prevent the NHS (with its tiny increases in recent capacity) from becoming swamped.

We want that choice to be extended to as many as possible.

We will introduce a Patients Passport which will enable patients to move around a number of providers, NHS, not-for-profit, voluntary or independent. This freedom is essential if we are to see greater plurality and diversity in both the funding and provision of healthcare that we seek. We intend to move away from the state monopoly with its increasing centralising targets and standardization of supply.

The changes to the organization of care set out in “Setting the NHS free” will enable us to move towards an NHS where the patient as a consumer is sovereign for the first time.

Knowing the cost of all NHS procedures and treatments and funding providers on the basis of activity will enable us to radically change the balance of power in the direction of the patient.

Our Patients Passport would enable patients to move around the NHS and to take the standard tariff funding with them. This would set them free from dependence on block contracts agreed between PCTs and agreed providers. The NHS is there to service the patients not to control the patients.

It would seem sensible that the point of entry to this passport system should be the GP who is best able to determine the type of referral and the level of clinical urgency. GPs could act as independent professional advocates for patients advising them on factors such as waiting times, outcomes and different options on locality. This counters the argument that patients would be unable to make decisions about their own treatment- a view that is both patronizing and outdated.

We will extend the “Patient’s Passport” system to those services beyond current NHS hospitals – in the voluntary, the not–for-profit and private sectors.

This will yield two important benefits. It will become a realistic option for a much larger proportion of the population to have access to a very much wider range of healthcare providers than is now the case. Further, those who choose to have their health care provided within the NHS will reap the benefit of shorter queues if more patients choose to access care elsewhere. Patients will, of course, be able to stay entirely in the NHS if they choose.

The proportion of the standard tariff funding that patients can take beyond current NHS hospitals will need to take account of several factors: the total cost to the public purse, the level of available capacity from other providers, the predicted effect on NHS demand, the effect on the current private insurance market and the need to promote greater diversity in provision.

We will produce a level relevant and suited to the UK and the varied, pluralist and consumer responsive health service that the Conservative Party would like to see.

Only by raising our sights can we achieve the level of care that the people of this country deserve.