Alan Milburn – 2002 Speech on Healthcare

Below is the text of the speech made by the then Health Secretary, Alan Milburn, on 15th April 2002.

The debate in the country about the future of our public services is crystalising. The Budget this week will make those dividing lines even clearer. As the Prime Minister, Chancellor and myself have all made clear in recent weeks, the biggest political issue today is whether we are prepared as a country to provide the resources and make the reforms necessary to bring about improvements to our key public services, in particular to the National Health Service

As a party and as a government we believe that we should be prepared to do so. Our formula is simple: investment + reform = results.

The debate is now sharpening, not just because of the imminence of the Budget and the progress of the Spending Review, but also because of the position now being taken by our political opponents.

Today I want to set out both our analysis of the position being taken by the Conservatives and our own analysis that we have made of why a reformed NHS – funded through general taxation – is the right way forward for Britain.

Our report – The Right’s Remedy – which we are publishing today, highlights where the Conservatives have got it wrong.

Within the last week we have heard twice from the Conservative Party about the future of health care in our country.

First, Liam Fox spelling out – in his Secret Speech – the Conservatives’ strategy on the NHS seeking to “persuade the public that the NHS is not working…it has never worked before and will never work” as a prelude to what he called more people having to “self-pay”.

Second, yesterday the Conservative’s publication outlining what they call “Alternative Prescriptions” for health care in our country. Whilst this second publication avoids plumping for any specific solution – that as Liam Fox makes clear will come later and is dependent upon first undermining public confidence in the NHS – it does now illustrate the clear direction both of Conservative thinking and the Conservative’s strategy.

They are in the first stage of their approach: undermining the NHS and suggesting there is a better alternative to it. This is a cynical and destructive softening up operation that should be seen for what it is.

For them the NHS, as Liam Fox puts it “cannot work and won’t work”, and as IDS puts it in today’s publication, “the system is not working.”

They quote approvingly in their document (page 54) those countries with up to 30% of spending undertaken in the private sector as offering an acceptable level of fairness. This sits interestingly with Liam Fox’s determination to encourage more people to “self-pay” and is the equivalent of up to £20 billion of UK NHS spending.

What this all points to is that for all their grand study tours of Europe the Conservatives are opting for an American-style solution. A two-tier health care system – for the poor a Medicaid style NHS and “self-pay” solutions for middle income families with top-up services having to be paid for privately. Low income Britain would pay the price through second rate services that are poor because they only serve the poor. Middle income Britain would pay the price through increased costs and extra charges.

The Conservatives have brought the post war consensus on health to an end. Indeed it is revealing that no-one reading their document could believe they remain committed to a universal NHS that is free to all and accessible to all. Instead they talk up the advantages of other health care systems.

Their examination of the supposed superiority of other systems for funding health care tells is partial and selective. We too have examined the case for other systems of funding. But, like the BMA who conducted a similar examination last year, we have found these other systems wanting.

The report we are publishing today contains analysis from a range of academic sources across the world about the fault lines in different systems of health care funding.

In essence, the problem with social insurance systems is who bears the majority of the costs of the total health care budget. It is estimated that at 2003-4 levels of funding the additional costs of a wholesale move to a social insurance system here would be the equivalent of an extra £1,500 per worker per year using the French model and an extra £1,000 per worker per year using the German model without a single extra penny to currently planned NHS funding.

In essence the problem with private health insurance – whether compulsory or voluntary – is that it would increase bureaucracy and decrease efficiency. Compulsory private insurance is simply replacing a single state-managed risk pool with numerous, complicated, less efficient private risk pools. Tax incentives to encourage voluntary private insurance are costly, inefficient and inequitable. They tie up millions in dead-weight tax breaks for people who already have insurance before a single extra person takes out private cover. Tax incentives have a cost to the Exchequer and thereby, reduce the levels of investment available to the NHS.

The truth is there is no perfect health care system in the world. All have strengths. All contain weaknesses. What is wrong is to pretend that the only way to address the weaknesses is to move hook line and sinker to a new system. When the Conservative Party says the NHS should be reformed, what they really mean is that it should be adandoned.

From a pragmatic point of view the disruption in doing so – not to say the costs of doing so – would delay precisely the improvements in services that people long to see. From a principle point of view we would end up throwing out the baby with the bath water.

There are many things wrong with the NHS but it does have great strengths. It should be a cause of national pride in our country that no-one asks for your insurance policy or credit card before you get the care you need.

Without the NHS the sophistication of modern treatments – and of course their cost – would put individual provision of health care beyond all but the very wealthiest in society. Without it the sick would end up paying for the privilege of being sick. In a world where health care can do more and costs more than ever before having an NHS based on need not ability to pay, with services that are free and comprehensive, is a real source of strength for our country and security for our people. So the NHS should be supported with our heads as well as our hearts. The relevance of its values make it the best insurance policy in the world.

Where it is weak is on two counts

First, while its values are right its structure is wrong. For decades it has been run as a top down, centralised, monopoly service where patients interests have too often played second fiddle to the system’s interests. It is these faultlines in the system that the NHS Plan seeks to address. By devolving power so that locally run primary care trusts control NHS resources.

By introducing new incentives so that the best hospitals get more freedoms and the poorest are helped to change or else are taken over. By securing greater diversity with better co-operation between the public, private and voluntary sectors. By giving patients more choice over when and where they are treated. These reforms address precisely the structural weaknesses that the critics of the NHS pretend can only be delivered by rejecting the health service.

Second, the shortages of capacity that are the cumulative effect of decades of under-investment. On any count comparing health care investment in this country with investment in other developed countries shows that the NHS has been short-changed for decades. It is not a superior system of funding which France and Germany have enjoyed. It is a superior level of funding. The gap on public spending between France and Germany and the UK has been substantial: according to latest OECD figures French per capita public spending on health as a precentage of GDP stood at 7.1%. German public spending at 7.8%. The UK figure was 5.7%. It is this gap that is now being closed. Indeed in the last few years while in France and Germany health spending as a proportion of GDP has been falling, since 1997 in Britain it has been rising.

The point is this: the NHS can be fixed providing there is the right level of resources and the right programme of reform. The reforms are as important as the resources. Indeed the more cash goes in the more the public have a right to expect they get out. The greater the programme of investment, the bolder the programme of reform. It will take time – the NHS Plan is for 10 years – but what we have started we should now finish.

This week the battle lines for this Parliament will become clear. Labour committed to building up and reforming the NHS and the Conservatives committed to talking it down, as a prelude to forcing more people into paying for their own care.