New Labour’s objectives for modernising the United Kingdom’s (UK’s) NHS were set out in The NHS Plan (Department of Health, 2000) and generally involved establishing a more responsive health service capable of adapting to the needs of the patient. Patients would have “a greater say in the NHS, and the provision of services will be centred on patients’ needs” (Department of Health, 2000, p. 4) and that “Health services will continue to be funded nationally, and available to all citizens of the UK” but also be “responsive to the different needs of different populations in the devolved nations and throughout the regions and localities” (Department of Health, 2000, p. 4).

The NHS Plan revealed how funding, reform and modernisation of the NHS will “continuously improve its efficiency, productivity and performance”. Modernisation and reform(s) would be coupled to increased funding and the provision of additional physical resources for the NHS. Cash funding would be increased by 50% and in real terms by one-third over a period of 5 years reversing the pattern of earlier years where healthcare spending trajectories both in cash and real terms had been erratic 1 year to the next and consistently below OECD and European norms over an extended post-war period (Department of Health, 2000, p. 31). Additional financial resources would convert into much needed physical resources including: extra beds, hospitals, GP premises, nurses, consultants and GPs who would be recruited into the healthcare system so as to deliver additional capacity to treat patients.

Additional funding would also be coupled to reforms which would include: redesigning the services provided by the NHS around the needs of the patient; offering patients a choice of hospital for elective treatment; and providing a flexible and responsive provision of health services from preventative to primary and secondary care. New contracts would be offered to nurses, doctors and consultants so as to increase labour process flexibility and productivity; for example, the number of consultants “entitled to additional discretionary payments will rise from half to two-thirds but in return they will be expected to increase their productivity while working for the NHS” (Department of Health, 2000, p. 12).

To establish a firm connection between funding, reform and performance organisation restructuring and new modes of governance would serve to decentralise regional and local autonomy and incentives would help ensure that efforts were directed towards intended outcomes. For example, in relation to GP contracts the NHS Plan observes that “the GP remuneration system has failed to reward those who take on additional work to make services more responsive and accessible to patients and to relieve pressures on hospitals” (Department of Health, 2000, p. 28). More generally the current system of managing the NHS does not provide the right sort of incentives because these are generally concerned with “squeezing more treatment from the same resources”. New Labour’s objective within the NHS Plan was to shift the existing system of incentives that rewarded failure and penalised success towards rewarding hospitals treating more patients and reducing waiting times. Successful hospitals would attract more patients and payment by results would ensure that the “money followed the patient”.

Whereas the NHS post-war settlement effectively separated the NHS from the private sector, the NHS Plan cleared the way for a broader relationship with the private sector both in terms of providing and extended range of patient and hospital services in addition to private sector funding to modernise existing hospitals or build new hospitals through private finance initiatives (PFI).

The NHS Plan represented a break with the past reversing the previous funding trends in return for a series of reforms which the government argued would be necessary to increase capacity to treat patients, reduce waiting times and offer patients more choice. In order to square the circle between funding, reform and capacity regional healthcare institutions and local hospital managers would have more autonomy but performance would be tied to incentives which would reward success and penalise failure.

The NHS Plan outlined the New Labour government’s agenda for reform sought to steer a path between “command and control” and “market fragmentation” (Department of Health, 2000, p. 33). The NHS on the one hand could not be run and managed from Whitehall and on the other healthcare organisations cannot set their own standards without reference to the performance of other similar organisations. Regional and local healthcare managers would be released from the shackles of national and regional government so long as they delivered against national performance benchmarks. Employing a variety of performance metrics, it would therefore become possible to calibrate local managerial autonomy on a spectrum which was “in inverse proportion to success”.

The White Paper “The NHS Plan” is a document which can be divided into two halves the first of which is concerned with describing New Labour’s generic vision for a modernised NHS in Britain and the four nations. In the White Paper, the Labour government is specifically concerned with how funding and reform will impact upon the provision of health services in the four nations.

This is a Plan for investment in the NHS with sustained increases in funding. This is a Plan for reform with far reaching changes across the NHS. The purpose and vision of this NHS Plan is to give the people of Britain a health service fit for the 21st century: a health service designed around the patient (Department of Health, 2000, p. 10).

In contrast, Chapter 4 which also introduces the second half of the White Paper starts with the following statement which shifts the focus to health funding and reform as it applied to England.

The NHS has been under funded for decades. Now there will be sustained investment. The funding announced in this year’s Budget means the NHS in England will benefit from annual average real terms growth of 6.3%—twice the historic growth rate (Department of Health, 2000 Department of Health (2000). The NHS Plan: A plan for investment, a plan for reform, Cm 4818-I. London: Stationery Office.Department of Health, 2000, p. 25).

This shift from general statements about health reform in Britain to specific forms of intervention for England reflects the fact that funding and management of health services in the UK is devolved to the local Scottish Parliament and Welsh and Irish Assemblies. In the referendums of September 1997, the people of Scotland strongly endorsed proposals to establish a Scottish Parliament and the people of Wales narrowly endorsed the establishment of a Welsh Assembly. In 1998, parliament passed the Scotland Act establishing the first Scottish Parliament since 1707 in May 1999 and the Government of Wales Act, established the National Assembly for Wales in July 1999. The Northern Ireland Assembly was established as a result of the Belfast Agreement of 10 April 1998, which was endorsed through a referendum held on 22 May 1998 and subsequently given legal force through the Northern Ireland Act 1998.1 These new administrations are now responsible for health care in their jurisdictions while the English health care system remained under the direct control of Westminster.