The end of the NHS as we know it?

BACK in the bad old days, it was the Tories who were accused of trying to privatise the NHS. The howls of protest that greeted the then Conservative Government's proposals to turn Health Service hospitals into NHS trusts mainly came from Labour and the unions.

And those howls grew louder when the Tories created what was known as the "internal market", an attempt to introduce market disciplines into what was then a huge, state-run bureaucratic structure. But according to Labour and the unions - and not a few academic observers - the scheme was flawed and promoted rivalries and jealousies.

It was said to encourage duplication of services and competition, as trusts fought each other for a bigger slice of the NHS cake. Things were made worse by the creation of elite groups of so-called fund-holding GPs, family doctors who were given a slice of health authority funds to buy extra services from NHS hospitals.

Part of Labour's election platform back in pre-landslide 1997, was to sweep away the internal market and restore a truly national health service. And sure enough, after Tony Blair's triumphal entry to Number 10, Labour set about dismantling fund-holding and abolishing the distinction between providers and purchasers.

Recently, under the increasingly radical Health Secretary Alan Milburn, a master plan was drawn up to revive the flagging fortunes of the Health Service. The NHS Plan, which was well received, promised a dramatic expansion of the Health Service to meet the growing demand. At the same time, the Government stressed that increasing funds would be ploughed into the NHS.

Yesterday, in a bid to demonstrate his radical credentials as a Blairite moderniser, the Darlington MP delivered a bombshell which could become a boomerang.

The Health Secretary announced his plan to create an elite group of virtually independent "foundation hospitals", and allow the private sector, charities and universities to take over management of England's failing hospitals. Managers of successful hospitals will be able to set up not-for-profit companies with an annual cash for performance contract.

But more importantly, they will be liberated from direct Whitehall control, giving them complete independence in all areas, including staff pay and conditions.

Mr Milburn has stressed that hospitals would still be subject to national standards and external inspections. But the top performing three star hospitals - which include trusts in South Durham, Northumbria, North Tees and Hartlepool, Sunderland and South Tyneside in the North-East - "will be able to establish joint venture companies, get automatic access to capital resources and be subject to less monitoring and inspection."

While the Darlington MP probably sees his new venture as the logical extension of his drive to modernise the NHS, his plan to divide hospitals into sheep and goats has triggered one of the strongest negative reactions since Labour took office.

Veteran anaesthetist Bill Ryder has seen NHS reforms come and go during his long career. But the specialist, who is based at Queen Elizabeth Hospital in Gateshead, believes he is witnessing something significant.

"It is the beginning of the end of the Health Service, I am absolutely certain," says Dr Ryder, who chairs the Northern region consultants committee. "It is privatisation by the back door."

He argues that giving autonomy to the so called better performing trusts is going to be very divisive. "It is going to attract all the best doctors into all the best hospitals and make the not-so-good hospitals even worse. Nobody is going to work in a hospital which has a poor reputation, if an autonomous hospital is offering half as much again to work there.

"Once you give these trusts the sort of complete autonomy Milburn is talking about, you have no control of them, unless you can prove the clinical standards are below acceptable standards."

APART from the fragmentation of the NHS, Dr Ryder also fears for the effect on an already fragile staff morale. "Over the last three or four years, there have been so many revolutions in the NHS. There is never enough time given for the first revolution to be implemented before the other one comes on the scene, sometimes contradicting the previous one.

"Staff are left reeling. They are punch-drunk. They don't know where they are."

The announcement of an elite group of hospitals with the ability to set their own pay and conditions is "particularly galling," according to Dr Ryder, because the current national negotiations about a new contract for consultants is close to conclusion.

"One of the things we have been stressing all along is that this should be a national contract," says Dr Ryder, who thought the Government had agreed in principle to this.

Another long-serving observer of the NHS scene, South Durham and Weardale Community Health Council chief officer Val Bryden, is also appalled at this apparent step backwards by the Government.

"It is a recipe for disaster in my view," says Mrs Bryden, who is based in Bishop Auckland. "It will lead to division, it will lead to the return of competitiveness. With this plan I don't believe you will get the co-operation between the different parts of the NHS that we need to make it work.

"Truthfully, what we need is a period of stability and consolidation to give the new structures the opportunity to find their feet and to find ways of resolving local problems and meeting local health need. What we don't need at this point in time, if we are to really save the NHS, is something like this."

Mrs Bryden is also concerned at the impact of differential pay rates being introduced. "We all know how we are struggling to put the doctors and nurses into the NHS. That is a huge challenge on its own," she says. "Introducing differential pay scales in hospitals is going to do nothing to encourage people to go and work in what they label failing hospitals."

Liz Twist, Northern head of health for the public services union Unison, says the Health Secretary's announcement has more to do with making headlines than any real improvement in the NHS.

"What is needed to improve our Health Service is more money and investment, not pushing our most successful hospitals into the private sector and fragmenting the NHS." Ms Twist says that the Government has already has an NHS plan which deals with what to do with hospitals that do not meet standards.

"Mr Milburn should hold his nerve and stick to that plan - only that way will we get the improved health services we need in the North," she says.

In the weeks and months ahead, the previously unflappable and unsinkable Health Secretary will have to make the most of his charm to win over his critics, and convince them that dismantling the NHS is not on his agenda.