Below is the text of the speech made by Gordon Brown, the then Chancellor of the Exchequer, to UNISON Conference on 20 February 2002.
I am delighted to be here today at this discussion of the future of public services – not just because this meeting allows me to set out some of the considerations that led to the Government’s Budget decisions and some of the conditions including reform that will lead to our decisions in the Spending Review to come, but as important because this forum allows me to set out the beliefs which have shaped the Government’s decisions.
First, in Britain a well established ethos of public service – so important to the delivery of our public services – rightly runs deep in our history, determines the character of our country, defines Britain’s uniqueness to the world, and in our Budget decisions we aim to sustain and renew that ethos of public service.
Second, I will suggest that the case for a health care system free to all at the point of need is stronger today – when the costs of new technology in health are far greater than ever – than in 1948 when the National Health Service was first created, and we should aim to make the NHS the best insurance policy in the world.
Third, our approach to public services will always be built upon a foundation of delivering economic stability, a discipline from which we will not depart.
And, fourth we will not hesitate to press ahead with modernisation so that at all times resources are matched to reform to ensure the best delivery and results.
All of us can tell our own story about the importance to us and to Britain of the ethos and traditions of public service in our country.
We think of our own teachers and the extraordinary power of teachers to make a difference to our lives.
We know nurses, doctors and health service staff who everyday can make the difference between life and death.
Social workers and care staff, who can transform hopelessness into hope.
Home helps and care assistants who for the frailest and the weakest make public service the mark of civility.
Street orderlies and ancillaries who show by their commitment why public service is about improving the quality of life.
And if you’ve ever been involved in an emergency you remember the calm unflappable skill, the professionalism, and self-sacrifice of all our public services.
Each time good is done it sends out a message that duty, obligation and service are at the heart of our country’s sense of itself. And it is from these acts of selfless dedication inspired by higher ideals that the ethos of public service is continuously renewed and the very character of our country as a community with its shared needs and linked destinies is shaped.
And many will look back like me and recall that so many of the opportunities we have had – the best schooling, the best of health care when ill, for many of us the best chances at university – so many of the opportunities we have enjoyed – owe their origin to the decisions of past Governments to create a welfare state that takes the shame out of need, to fund a National Health Service free to all, to build decent public services worthy of a civilised society.
That is why through public investment built on a platform of stability we have new more ambitious objectives in our generation.
Not just to build the best modern transport, health, education and housing our country can afford, but through tackling child and pensioner poverty to ensure every child has the best start in life and every pensioner dignity in retirement.
And through raising standards in education to ensure that for the first time not a minority but a majority of young people can attend university and so education, once the preserve of the minority, can become the hope and aspiration of the majority of our citizens.
For me the National Health Service is a clear, enduring and practical expression of these shared values which shape our country: the NHS built upon the conviction that the health of each of us depended upon a contribution by all of us and that it was the mark of a modern caring society, compassion in action, that we moved from the patchwork of uneven voluntary, charitable, private and municipal pre-war provision, and ensure universal access to health care, regardless of ability to pay: health care as a fundamental human right, not a consumer commodity.
And the question for Britain is whether the consensus that endured on a tax funded health care system for the last fifty years should be renewed for the next fifty. And it was right for us to examine other systems. The Government has examined the case for funding healthcare by private insurance where, in the case of the US, family premiums average around £100 a week and are set to rise next year on average by £13 a week, and because of its costs insures only some of the people for some of their care.
We have examined the case for funding by social insurance whose narrower base for contributions means – in France for example – the typical employer paying £60 a week per employee and where the direct relationship between insurer and insuree usually means less investment in public health preventive health and community health services.
And the Government has examined the case for charging for clinical services which also means patients paying rising bills for individual operations and treatments – costs ranging from £6,000 for a hip replacement to £10,000 for a heart by-pass on the BUPA price list – basing our healthcare system on medical charges would mean, in effect, the sick pay more for being sick.
There is another consideration as we look to the long-term.
In 1948 when the NHS was founded, much of what could be offered was a standard, and in practice rather modest, service. At that time, the scientific and technological limitations of medicine were such that high cost interventions were rare or very rare.
There was no chemotherapy for cancer, cardiac surgery was in its infancy, intensive care barely existed, hip and knee replacement was almost unknown.
Now, the standard of technology and treatment is such that unlike 1948 some illnesses or injuries could cost £20,000, £50,000 or even £100,000 to treat and cure.
Because the costs of treatment and drugs are higher than ever, the risks to family finances are greater than ever, and therefore the need for comprehensive insurance cover of health care stronger than ever.
Insurance policies that, by definition, rely for their viability on ifs, buts and small print can cover only some of the people some of the time.
Because none of us ever know in advance whether it is you or your family that will need that expensive care – for acute or chronic illness – the most comprehensive insurance cover is the best policy to cope with unpredictability.
And this is true for the most comfortably off members of our society as it is for the poorest.
Why? Because charges for any one of these treatments could impoverish individuals, households, and families far up the income scale, it is now not just in the interests of a lower income family but those on middle or higher incomes to be insured in the NHS’ comprehensive way.
Some present the current NHS system of funding as an ideological hand-me-down from the immediate post war era to be supported only out of sentiment rather than hard headed calculation.
Others dismiss the NHS funding system as an impossible dream – “fine in principle, a failed experiment in practice”.
But far from being a hangover from a distant age or an unrealisable vision, the NHS system of funding – comprehensive and inclusive insurance with treatment free at the point of need – is demonstrably the modern rational choice. Not just for poor or low-income families in Britain, but for the vast majority of families in Britain. Not just for today but for tomorrow too.
And far from it being valid for the needs of the 1940s but not for now, a tax funded system offering the most comprehensive insurance is Britain’s better way forward for coping with the three challenges facing health care: the rising costs of new technology, the increase of 3 million by 2020 in the elderly population, and the ever rising expectations for higher standards of personal care.
So it is our view that the NHS system of funding with comprehensive cover available for all is not just the most equitable but that a reformed NHS, by offering the most comprehensive insurance policy to meet the rising costs from medical advances – the best insurance policy in the world – can give the British people the greater security they need.
Yet the Budget debates have revealed an astonishing and dramatic break with a fifty year long all party consensus on the NHS system of funding – that the NHS would be free to all at the point of need.
Where health care is universal it would not, for them, be free and where it was free it would not be universal – with severe consequences for all: a huge growth in means testing of low income families on American Medicaid lines; the bills literally sent to middle Britain which would have to pay charges or insurance premia for its health care; and because forcing people to pay would be the biggest assault on the family finances of middle England, those advocating this must now explain what would be the cost of a hospital stay, a GP visit, or an operation under their policies.
This Government rejects those visions of some privatised future where the healthcare you’re guaranteed for your children and your family is the healthcare you insure privately or pay for and where poverty bars the entrance to the best hospital, and we reject the dogma of those whose dislike of public services is such that they would prefer a private sector working inefficiently to a public service working well.
It is because we recognise the unpredictability of health needs, the rising costs of health 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 care always made by doctors and nurses on the basis of clinical need.
The foundation for improved public services is an economic stability that can sustain increases in public investment in health, and let me say something about the background to our public spending decisions.
When I became Chancellor in 1997 I said that without stability first, without stability as the precondition of growth – and without, therefore, the first tough two years – we could not build the foundation for sustainable rises in public investment.
So since 1997, we have taken tough decisions to deliver economic stability, starting with Bank of England independence and cutting borrowing to bring the public finances under control.
Having in six budgets since 1997 entrenched economic stability and fiscal discipline; cut unemployment and debt, releasing new resources to invest in the NHS and vital public services; and, insisted that strings are attached to match new resources to better results, we have managed to set in place a modern and more long-term framework for better public services.
When we reformed public spending in 1997 we moved on from the Plowden principles that had dominated public spending decisions since the 1960s.
The Plowden approach was annual, input driven, ad hoc and incremental, departmentalist, consumption dominated and remote from the private sector.
In its place our approach to public spending is long term, with a three year not one year cycle.
It is results driven with targets for outputs.
Spending decisions are based on in depth policy review, not simply on last year’s figures.
Spending decisions are based not on the old departmentalism but on interdepartmental reviews as to whether across Government there is sufficient co-ordination so that overall objectives are being achieved.
Investment has been restored to its proper place so that we can tackle major long-term infrastructure problems, and a backlog of under-investment.
And we have ended the sterile war for territory between public and private sectors and see public and private now working together for public interest objectives.
So we have a new spending regime which has now allowed us the largest sustained rises in public investment the country has seen.
Just as we have taken tough decisions to reform our monetary and fiscal regime to secure stability for the economy, we must now take equally tough decisions to ensure investment in public services delivers results.
For just as schools exist for school children, and the NHS exists for patients; public services exist not for the public servant but for the public who are served.
And our aim must be that every classroom has the best teacher, every school the best staff, every operating theatre the best doctors and staff, every police station the best police men and women – that every public service has the best public servants.
And those of us who believe passionately in public services have a special responsibility to ensure their effectiveness, understand that there can be no blank cheques, that the days of something for nothing are over in our public services. And know also that we can only deliver world class public services if strings are attached and we change, update and modernise, to ensure that public services can best serve the public.
Just as we cannot serve the public if investment is low, staffing poor and conditions unacceptable, we cannot serve them either if service is poor, if performance is faulty, if there is resistance to necessary change.
And behind the modernisation of delivery are a set of principles that will dominate decisions not just on NHS spending but in our public Spending Review.
First, an emphasis on national standards with proper audit and accountability to ensure standards are met;
Second, “front line first”, with local devolution and delivery;
Third, greater flexibility to achieve greater results; and
Fourth, extended choice.
First, we are setting national standards with proper accountability – working with hospitals, schools, police forces and local government to agree tough targets, and to see performance independently monitored so people can see how their local services compare.
The Spending Reviews and the Public Service Agreements that we have introduced reflect a much needed culture change in focusing Government on results. In the coming Spending Review, there will be even more of a focus on standards based on evidence of customer satisfaction – delivering through a system of clear accountability the improvements that make the most difference to citizens’ actual experience of their services.
Performance targets have an important role to play in measuring how far these standards are being met. School and NHS trust performance tables, local authority and police performance indicators, all offer the public the chance to see how well their local school, hospital, council or police force compares with others in the country.
There were, for example, no national standards of treatment of coronary heart disease in 1997 even though it is the biggest cause of premature death in the UK.
To tackle this problem, we published the National Service Framework for Coronary Heart Disease in March 2000 to ensure national standards in prevention, treatment and care. Heart operations are now up by around a quarter and the use of cholesterol-lowering drugs is up by over a third.
The National Service Framework for Coronary Heart Disease has been followed up with similar frameworks for tackling cancer, providing services for the elderly, and delivering mental health services.
So we can meet our objective of genuine opportunity for all, a national strategy to assist secondary schools in driving up standards of achievement for 11–14 year olds is being rolled out, to complement the literacy and numeracy targets succeeding in primary schools.
So a majority of young people can enjoy university education, challenging targets have also been set to increase higher education student numbers, and the newly-established adult learning inspectorate is helping raise standards of teaching and learning.
A new Police Standards Unit has been established, to measure performance, enable clear and fair comparisons to be made and, in partnership with Her Majesty’s Inspectorate of Constabulary, help every police force aspire to the standards of the best.
And so that our local government service can rival the best, the Local Government White Paper sets out how the “Best Value” framework is being streamlined and strengthened, to enable councils to use it as an opportunity for radical challenge, and to engage citizens and staff in improving services.
And for the first time for modern public services we have insisted on a separation of responsibility for standards and of the responsibility for audit, inspection, scrutiny of users’ complaints and reporting to the public.
So the public will now have the right to know what is happening, how money is being spent, whether standards are being achieved, how targets are being met, what people’s complaints are and the link between the money they invest and the results achieved.
The second modernisation is the policy of front-line first: local devolution so the money gets down to the local level. Moving far beyond the old days of ‘the man in Whitehall knows best’. Central Government has had to learn to let go and give successful front-line professionals the freedom to deliver.
Learning from the success of devolution to date, in the context of well-defined accountability, the Government is determined to devolve and delegate further. Local government will be released from unnecessary restrictions and controls and in the police service, basic command units should have the freedoms they need wherever possible to meet the demands of the public on the ground.
Demanding standards and devolution need to go together. The best way in which a national standard can be met is by recognising local and often individual differences, and giving service providers the flexibility to shape services around the needs and aspirations of customers and communities.
Our best NHS hospitals have asked the Government to explore new models of service delivery which would see them fully part of the public sector NHS with new freedoms and flexibilities the idea of ‘foundation hospitals’ is to move from a top down management system to a system based on a few key rules within which organisations have much greater flexibility over managing their resources and designing services. This innovation is part of our move to devolve responsibility to the frontline and improve accountability to patients and the public.
And so that our local services can be the best, the Local Government White Paper proposes that high-performing councils should be given a wide range of freedoms and flexibilities, including the right to trade and raise forms of income.
The third modernisation is flexibility to achieve results – removing the artificial barriers that prevent staff delivering service improvements.
A key part of devolving power and responsibility will be the removal of needless rules that are a hangover from the era of centralisation. And if local managers are to be freer to innovate, they need greater freedom of movement.
There must be responsibility in pay agreements. Just as sustained economic growth demands responsibility in setting private sector pay, so a sustained commitment to better public services demands responsibility in setting public sector pay. Discipline will be our watchword.
Central to better results is an end to the sterile dispute between public and private sectors. We want to see public and private working together for the public interest. In transport, for example, we will maintain our £180 billion ten-year plan to modernise our transport infrastructure – a doubling of transport investment. And we will continue our programme of public private partnerships.
Let me give the example of the Underground.
Prior to 1997, the average public investment in London Underground was just £395 million a year. In the next 15 years the public investment in trains, track and stations will total £16 billion – investing at three times the old rate – the biggest single investment in the Underground in its history. More investment by the public sector in the next 15 years than we saw in the last hundred years.
And when billions of your money are being invested you would want us to ensure not only best value for money but the best possible public service.
So to construct the new infrastructure that will increase the Underground’s capacity by 20 per cent to 1.3 billion travellers each year, the construction and engineering companies will simply continue to do the work as they always have in digging the tunnels, building the infrastructure and replacing the track. But now for the first time they will have to take responsibility for what they deliver. So they will have to pay for the overruns, the delays, the faults in the construction and the mistakes that lead to extra maintenance.
So that we do not have another Jubilee Line fiasco – two years late, massive overruns – which if repeated in the new Underground investment programme would cost us two billion pounds.
And while the private sector directs its skills and expertise in risk and project management towards maintaining and improving the infrastructure, the public sector in the Underground – and public sector staff – will operate the track, run and provide signalling, run trains and stations on every line, set service levels, set the standards and ensure safety, and be in charge of an integrated tube network from 5.00am to 1.00am.
At all times safety paramount with the London Underground and the safety inspector the final decision-maker on what needs to be done for a safe transport system.
And we will work with the approval of the Health and Safety Executive on the highest of safety standards.
Our choice is clear. Not a return to the old ways, not the short-termism of the past, but an approach that makes sure that the billions we invest provide the best service for the public.
The fourth modernisation is extending choice. In designing services around citizens, it is important to be clear about their requirements. In some cases, we all want pretty much the same service – the bin to be emptied regularly, the street to be swept clear of litter. But in others, citizens increasingly want to be able to choose the service which best fits their requirements. They might want to choose the GP surgery that is most convenient for them to get to. They might want to be able to choose the hospital with the shortest waiting times or the most experienced specialists.
It is the Government’s task to ensure that everyone can make appropriate choices, regardless of income. This means that customers need better quality information on their public services and, in particular, how these services match up against the standards that matter most to them. And where standards are not being met, citizens should be able to seek effective redress.
A key area where these reforms are being put into practice is the NHS. And let me tell you what has been happening with the budget.
I said at the time of last November’s Pre-Budget Report that the precondition of new resources was reform, and the Secretary of State for Health, Alan Milburn, has announced vital new reforms to ensure extra money secures results:
– new financial incentives for hospital performance;
– greater freedoms for high performing hospitals and trusts;
– powers and resources devolved to front-line staff in Primary Care Trusts;
– reform of social services care for the elderly; and
– a series of measures increasing choice for patients.
In order to make sure that money invested yields the best results, for the first time in the history of the NHS, we will enshrine in statute, independent audit, independent inspection, and independent scrutiny of patient complaints – with a duty to account and report to the public on money spent and standards achieved.
It is right however to show where money is spent and the results achieved and in future an annual report to Parliament prepared by the new independent auditor, will account for the money allocated to the NHS, where it has been spent and what the results of the expenditure have been. This will be accompanied by local reports stating, for each local community, the link between money spent and results achieved.
New incentives for individual members of staff will be matched with a new system of financial incentives on NHS organisations. The hospitals that can treat more patients will earn more money. Traditional incentives work in the opposite direction. Indeed it is often the poorest performers who get the most financial help.
We will therefore introduce a new system for money to flow around the health service, ending perverse incentives, paying hospitals by results. The incentive will be to treat more NHS patients more quickly to higher standards.
And patient choice will drive this system. Starting with those with the most serious clinical conditions, patients will have a greater choice over when they are treated and where they are treated.
From this summer patients who have been waiting six months for a heart operation will be able to choose a hospital – whether it is public or private – which has capacity to offer quicker treatment.
Reductions in waiting times to get into hospital must be matched by cuts in waiting times to get out. Older people are the generation who built the NHS and who have supported it all their lives. This generation owes to that generation a guarantee of dignity and security in old age. Bed blocking denies both.
In recent months the extra resources we have made available has reduced the numbers of elderly patients whose discharge from hospital has been delayed. But the long-term solution is not just investment. It must be matched by reform.
So in order to bridge the gap between health and social care we intend, as they have done in Sweden and elsewhere, to legislate to give local councils responsibility from their 6 per cent extra real terms resources for the costs of beds needlessly blocked in hospitals.
Councils will need to use these resources to ensure that older people are able to leave hospital when their treatment is completed.
If councils reduce the current level of bed-blocking so that older people are able to leave hospital safely when they well, they will have freedom to use these resources to invest in extra services. If bed blocking goes up councils will incur the costs of keeping older people in hospital unnecessarily. There will be similar incentives to prevent hospitals seeking to discharge patients prematurely. In this way we will provide local councils with the investment and the incentives to improve care for older people.
So on the basis of reform and modernisation I set aside money for public spending in last week’s Budget. I propose to raise current public spending from £390 billion this year to £420 billion next year, to £444 billion in 2004-5 and £471 billion in 2005-6.
And I propose to raise our historically low levels of net public investment that were at 0.6 per cent in 1997 to 2 per cent by 2005-6. Taken together, the largest sustained investment for better services in our history.
And in last week’s Budget, I announced plans to raise UK NHS spending on average by 7.4 per cent in real terms each year – an annual cash rise of 10 per cent – not just for three years but for five years.
With year on year rises, UK health spending will grow from this year £65.4 billion to £72.1 billion to £79.3 billion to £87.2 to £95.9 billion and then to £105.6 billion in 2007-8: even after inflation a 43 per cent rise over five years. Since 1997, a real terms doubling in health service investment.
UK health spending will rise from 6.7 per cent of national income in 1997 and 7.7 per cent of national income this year to 8.7 per cent by 2005-6 and to 9.4 per cent by 2007-8 – rises year on year well into the next Parliament.
Last year we invested £2,370 for the average household on the NHS.
By 2007-8 we will be investing £4,060 pounds per household: after inflation, a 48 per cent real terms increase.
And let me spell out exactly what this new investment will deliver:
35,000 more nurses
15,000 more doctors
40 new hospitals
500 primary care centres.
Upholding and improving the NHS not just because it is an institution that is part of our history and our shared values but because, reformed and renewed, it can be the most efficient and equitable guarantee of health care for millions, provide the better choices and service they need and become, for the British people, the best insurance policy in the world: the best for each of us and the best for all of us.
Let us be clear about the choice in this Parliament on our great public services.
This is a battle for nothing less than the future of the National Health Service, and our public services.
It is a battle to demonstrate that in the 21st century we can build strong public services, there when people need them.
I started by saying that at their best our public services represent the best ideals of Britain.
Indeed our public service ethos – the emphasis on service, duty, obligation and not profit at the heart of health care provision – marks Britain out from the rest of the world.
With the new investment in public services to tackle underlying long-term problems in our country, that public service ethos can bring out the best of Britain to root out the worst of Britain.
It is because we all benefit from reformed, modernised public services that let us join together in this crusade for renewing the National Health Service and our public services.