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Health care reform in England: progress and plans

United Kingdom
Partner Institute: 
London School of Economics and Political Science
Survey no: 
Adam Oliver
Health Policy Issues: 
Role Private Sector, Long term care, System Organisation/ Integration, Funding / Pooling, Quality Improvement, Access, Remuneration / Payment, Responsiveness, HR Training/Capacities
Current Process Stages
Idea Pilot Policy Paper Legislation Implementation Evaluation Change
Implemented in this survey? no no no no yes yes no
Featured in half-yearly report: Health Policy Developments 7/8


The Government is being heavily criticised in the media for the financial deficits that are reported in the NHS, despite historical rises in NHS expenditures over recent years. Some experts believe that the deficits are the result of large increases in doctor?s salaries and ?heavy-handed? performance targets, which are costly to meet. The Government is therefore keen to emphasise the ?success? of its reforms, and send out the message that it will not be dissuaded from its plans.

Purpose of health policy or idea

The Government has introduced a large number of mutually inconsistent health care reforms over the last nine years. Very briefly, they have focussed on

  • large increases in NHS expenditures (not a reform in itself, but very important, and primarily motivated by the Government's objective to bring health care spending in line with the EU average),
  • a commitment to markets, choice and payment-by-results as incentives for hospitals to reduce waiting times/lists and improve various indicators of quality (e.g. mortality rates),
  • an emphasis on targeting more resources towards primary care services (and in particular with respect to improving services in deprived areas, as part of their effort to reduce inequalities in health outcomes across socio-economic and geographically-defined groups), and
  • attempts to better integrate health and social care, among other things.

The Government has offered no explicit recognition that some of their individualistic policies (e.g. expanding patient choice) is fundamentally at odds with some of their communitarian objectives (e.g. improving social equity), and also does not seem to recognize that the individualistic policies could fundamentally undermine the communitarian objectives (i.e. equal access for equal need) on which the NHS is based.

In the face of strong criticism of how they have handled NHS reform, the Government regularly restates its commitment to the reforms and its future plans, which in essence focus upon more patient choice, a re-introduction of GP-fundholding and more performance targets. Nonetheless, the Government has managed to significantly reduce waiting lists (although through a combination of targets and money, rather than choice-based reform), and has implemented some reforms that do appear to be quite sensible, with respect to, for example, dentistry and social care.  

Main points

Main objectives

The Government's main objectives were (and, according to their rhetoric, still are):

  • to reduce waiting times (which are used as the main indicator by the Government, the media and the general public on whether or not the NHS is "improving" - there is now an 18 week waiting time target for elective care),
  • increase 'productivity' (e.g. the number of operations per unit expenditure on health care),
  • improve indicators of health outcome,
  • improve 'quality' (although there is yet no commonly accepted definition of what 'quality' comprises), and
  • reduce inequalities in health across socio-economic groups and across regions with the worst and best health outcomes indicators.

Type of incentives

There is a mix of financial and non-financial incentives. For example, managers of hospitals now have to meet certain performance criteria which relate to such things as financial management, waiting times targets etc. If they meet these targets, they earn greater managerial autonomy, and can also benefit financially. If they fail to meet the targets, they can be (and in some cases, have been) fired.

As one can imagine, this creates significant pressures on personnel within the system, and it is far from clear that this serves to improve the overall service within the NHS. Possibly the most high profile incentive in the NHS at the moment is the introduction of patient choice of hospital provider at the point of referral. Coupled with the introduction of the new payment system per hospital procedure (the 'HRG', very similar to a 'DRG'), whereby the patient in a sense takes a little pot of money with them to the hospital they choose, the intention is that hospitals will 'compete' for patients on the basis of waiting times and other indicators of 'quality'. Whether this incentive mechanism will actually reduce waiting times (and/or improve other indicators of quality), not to mention the broader implications of this mechanism in terms of raising expectations in the NHS and undermining other important NHS objectives such as universality and affordable care at the point of use, remains to be seen.

Groups affected

Every conceivable group in the NHS, and, indeed, in the population in general, but obviously, patients, the public, hospitals, primary care trusts, the pharmaceutical industry, patient advocacy groups etc.

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Characteristics of this policy

Degree of Innovation traditional innovative innovative
Degree of Controversy consensual controversial highly controversial
Structural or Systemic Impact marginal rather fundamental fundamental
Public Visibility very low high very high
Transferability strongly system-dependent neutral system-neutral

I think I've already made my views clear above. The policies are very risky, and if they backfire they could fatally harm the NHS. It is possible, however, that the existing ways of doing things (i.e. the existing institutions) in the NHS will dilute the most harmful potential effects of the reforms, and that the positive aspects of the Government's initiatives (e.g. increasing capacity, reducing waiting lists) will be the things for which the reforms are most remembered. We can live in hope that this will be the case.      

Political and economic background

It is a little difficult to speculate exactly why the current Labour Government has chosen a 'competitive market/choice-based' reform programme, not least because this does not sit well with 'traditional' Labour Party 'welfare state'-type ideology. The current Labour Party Leadership seem to be genuinely convinced that markets and choice are the way to improve quality and performance in public sector health care. Some may attribute the Government's path to advice received from key academics, but I suspect that the Government formulated what it was going to do and then targeted particular academics to 'justify' rather than 'inform' its direction.

Much of the content of the reforms probably has to be attributed directly to Tony Blair. Some academics would argue that Blair himself was merely responding to societal pressures to introduce more choice in health care, although I am not entirely convinced of this line of reasoning. The public, in general, seem to want better quality services rather than more choice (i.e. they want to continue visiting the same GP practices and the same hospitals in their locality - they just want these services to be better). Moreover, the first two Labour Party majorities (elected in 1997 and 2001) were so large and the majority of Labour MPs were so eager to court favour with the Labour Leadership that Blair was in an ideal position to 'shape' policy whichever way he felt was best. It's just that he chose the 'competitive' way, underlining his genuine (although perhaps somewhat simplistic) belief that markets are the unquestionable answer to improve the NHS.

Purpose and process analysis

Current Process Stages

Idea Pilot Policy Paper Legislation Implementation Evaluation Change
Implemented in this survey? no no no no yes yes no

Origins of health policy idea

See above. It was probably about 2000 with the publication of the NHS Plan (the ten year 'blueprint' for the NHS) that the Government's NHS policy direction became clear, and the commitment to choice and competition has been regularly re-emphasized since that point in time.

Initiators of idea/main actors

  • Government: The Government has essentially imposed these policies on the NHS, which was made relatively easy during its first two terms of office, due to its large parliamentary majority. Clearly, the Labour Party Leadership is very supportive of the policies. It is less clear that the broader Labour Party is as supportive ? indeed some Labour Party members and Members of Parliament (including the former health Secretary, Frank Dobson) are fundamentally opposed to the Government?s public sector reforms, and with their reduced parliamentary majority, it is now less clear that the Government will be able to pass all of their reforms through the legislative process. For example, the Government plans to re-introduce GP fundholding (a practice previously implemented by the Conservative Government in the early 1990s but abolished by the Labour Government in 1997) but has already faced some opposition from its own MPs with respect to this policy, and it is therefore not entirely clear at the moment how these policies will ?pan out?. Although I cannot be 100% sure, I also have a feeling that the majority of those who work in the NHS are less than enthusiastic about the Government?s reforms. Moreover, most academics working in the health care area are, at best, sceptical about the motivations and likely effectiveness of the reforms. Patients and the general public are, on the whole, unlikely to take much interest in the content of the reforms (they are more interested in visible ?outcomes?, such as waiting lists). Some right leaning ?think tanks? (and even some centrist left leaning ones) are generally supportive of the reforms. In fact, some of them (as well as the Conservative Party) would probably like to see the Government go much further in involving the private sector on the financing as well as the provision sides of the NHS (the Government is encouraging private providers to compete with NHS providers for NHS resources, but has committed itself to keeping the NHS a predominantly task-financed, single payer system).

Stakeholder positions

Discussed above.

Actors and positions

Description of actors and their positions
Governmentvery supportivevery supportive strongly opposed
Those on the political rightvery supportivevery supportive strongly opposed
Those on the political leftvery supportiveopposed strongly opposed

Influences in policy making and legislation

Discussed above. The Government still has a healthy majority in the House of Parliament, but it is no longer an overwhelming majority. Therefore it is now less easy for the Labour Leadership to trample over the views of its own party members. So, we may see some interesting times ahead.

Legislative outcome


Actors and influence

Description of actors and their influence

Governmentvery strongvery strong none
Those on the political rightvery strongneutral none
Those on the political leftvery strongneutral none
Those on the political rightGovernmentThose on the political left

Positions and Influences at a glance

Graphical actors vs. influence map representing the above actors vs. influences table.

Adoption and implementation

Discussed above. Most of the direction came from senior members of the Government and civil servants working closely with these individuals.

Monitoring and evaluation

The Government regularly issues updates on the progress of its reforms, and there are of course a great many academic articles and policy reports produced by think tanks that detail progress on various issues.

The main indicator of 'success' has thus far been the very substantial reductions in waiting times (although, as stated above, these have been achieved through targets and money, not choice and competition). Deaths from the big killer diseases have also been declining, although the size of this effect that can be attributed to the NHS (let alone the NHS reforms) is unclear.

Incidentally, Patricia Hewitt, the current Health Secretary, has recently said that the goals that she has for the NHS (e.g. the 18 week waiting list target) cannot be achieved through national targets and command and control measures. However, from evidence from the UK and overseas, targets, command and control (and money, of course) seem to be the most effective way by which to improve performance, and that there is in fact little evidence to suggest that the competition and choice incentives that the Government has introduced are an effective way of improving performance.

Review mechanisms

Mid-term review or evaluation

Dimensions of evaluation

Structure, Process, Outcome

Results of evaluation

The main results thus far are that waiting lists are significantly down, and that the Government has managed to increase the capacity of the system (e.g. more doctors, dentists, nurses in training), but to reiterate, all this has thus far been acheived through money and targets. Moreover, the massive increases in NHS expenditure seem to be coming to an end, and thus the future financial situation of the NHS, given that the Government's reforms have substantially increased expectations and that some hospitals are already in the red, seems quite perilous. 

Expected outcome

I personally think that the Government's reforms may potentially undermine other, more important, objectives of the NHS; i.e. that it covers everyone within the population, and that it be readily affordable to everyone at the point of use. The basic structure of the NHS serves the population very well, and it would be unfortunate (to say the least) if the Government's reforms undermine this basic structure. The unfortunate consequences of some of the Government's policies (e.g. by increasing doctors' salaries too much and by introducing potentially very costly expectations the NHS has overspent) is already showing signs of playing into the hands of those who, through self-interest, would want to fundamentally change the structure of the NHS (e.g. by expanding the role of private financing).

Impact of this policy

Quality of Health Care Services marginal fundamental fundamental

Too early to determine the impact of the competition and choice-based reforms. I expect the impact to be disappointing (and possibly damaging), but I could be proved wrong.    


Sources of Information

Department of Health. Health Reform in England: Update and Next Steps. Department of Health: London, December 13 2005.

Department of Health. 2006 - A Year of Transition, A Year of Reform. Department of Health: London, January 10 2006.

Adam Oliver, Elias Mossialos and Alan Maynard (Eds.). Analysing the Impact of Health System Changes in the EU Member States. Health Economics 14 (S1), September 2005.

Department of Health. The NHS Plan: A Plan for Investment, A Plan for Reform. The Stationery Office: London, 2000.

Author/s and/or contributors to this survey

Adam Oliver

Suggested citation for this online article

Adam Oliver. "Health care reform in England: progress and plans". Health Policy Monitor, April 2006. Available at