NHS reform is the price for budget protection, says Dorrell

6 Jul 10
Ring-fencing the NHS budget has given the government 'a licence' for fundamental reform, according to the new Conservative chair of the Commons health select committee

By Lucy Phillips

6 July 2010

Ring-fencing the NHS budget has given the government ‘a licence’ for fundamental reform, according to the new Conservative chair of the Commons health select committee.

Stephen Dorrell, who served as health secretary under the previous Tory government, defended the coalition’s decision to protect the £100bn NHS budget at the expense of other public services.  

He said the promise of real-terms increases every year during the course of the current Parliament had helped secure public support for the government, providing reassurance that the coalition was committed to the ideal of the health service. But this had come at a price.

He told Public Finance: ‘If you ring-fence health it’s arithmetically true that other budgets will be reduced by above-average amounts... Because we have made that commitment we now have a licence to undertake reform of the system, to ensure the money is being used for that.

‘There is a danger that ring-fencing the NHS budget gives the NHS a “get out of jail free” card, which it does not.... The requirement for NHS reform was always there and has been made more urgent by the requirement for funding reductions.’

Dorrell criticised the previous government for ‘not securing reform’ in return for the vast amounts of additional money spent on public services such as the NHS.   

His comments came as the 2020 Public Services Trust, of which Dorrell is a commissioner, published a report warning against ring-fencing the NHS budget. ‘The societal challenges ahead, such as the ageing population, question the economic sustainability of even a protected health service budget,’ says the report, Improving health outcomes.

A spokesman for the think-tank told PF: ‘Any new settlement for public services has to be cross- cutting – and protecting specific parts of public sector spending, particularly NHS budgets, limits the potential for real change in the way the government puts together its plans.’ Such a move also ‘risks halting steps taken to join up public spending’, he added.

Dorrell argued that the report claimed that ring-fencing the NHS budget would not by itself be enough to secure wider reform of public services. He reiterated that he was in favour of the protection the NHS has been afforded by the coalition. He said he backed ideas in the report, such as ‘big shifts’ in culture, power and finance to make the health service more flexible, personalised and responsive to patients. He said this was ‘a direction of travel for which I shall argue’ in his role as the first elected chair of the health select committee.

A poll conducted by the 2020 Public Services Trust in March showed 82% of people thought the NHS should be a priority area for protection from cuts in public spending.

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