My recent book on health policy, Who Decides Who Decides?, discussed the many ways in which central government does all it can to avoid placing money directly into the hands of the consumer. Andrew Lansley’s reforms represent another hugely costly exercise in that evasion. 

We need competing providers and competing purchasers, with individuals controlling mobile money. While the poor could be supported by tax-transfers, everyone else should be encouraged to be responsible for their personal fund, to which they could add. Government will never be able to fund by direct taxation the necessary treatments, for example, the new generation of cancer drugs, which will be denied to us in the UK.

The bureaucratic cost of regional health authorities is a good saving, of course. But I suspect that the Tories will now have a huge fight, and political losses, about these new reforms whilst still failing to tackle the fundamentals on the demand side.

Gordon Brown tried to spend his way to safety, but with no management changes. In the 1990s, when I was a central policy adviser, GP fundholding worked well in disciplining some providers. This is it once again. The local lesson was that if you give people direct financial controls you get results. It’s likely that productivity will indeed rise. But other issues such as encouraging individual responsibility for better healthy living are not going to be addressed, save by the usual waffle. This proposed reform entirely evades the key issue of individual responsibility. If there is no financial cost to the individual for drinking, smoking, not exercising, and then demanding care, what is the incentive to behave responsibly?

As to politics, how will they Tories deal with the bankruptcy of failing hospitals – made more obvious by the new funding system? By huge tax-based centralised subsidy? Many will be in marginal seats. And even good hospitals will have financial troubles. If GP demand moves away, you cannot sack half a nurse, and what do you do with expensive, tenured consultants from whom no-one wants to buy services? It will not be attributable to consumer demand, but to the actions of government agents, the GPs.

The better model is to expand the direct payments system which we have seen working in social services. Alan Milburn understood this. I do not understand why the Tories will not make these incremental changes.