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The improvements we have made

We've come a long way in eight years.

The NHS always sat uneasily alongside the sweeping reforms of the 1980s. It is a tribute to its founding values of equal access for all free at the point of need, that the NHS survived the 80s. It is a tribute to its staff that in the 80s the flame of the NHS, though flickering and guttering, never went out.

But waiting lists went up. Buildings were left unrepaired. Salaries stagnated. Patient care suffered.

At the end of the 1980s, one in ten NHS hospital patients were waiting more than two years for treatment.

By the 1990s, many commentators were openly discussing the end of the NHS. It is not sustainable, they said. A tax-funded health service belongs to the past. We need private insurance, they said.

But they were wrong.

Last week, waiting lists fell to their lowest level since records began.

More than 19 out of 20 people get seen, treated, admitted or discharged within 4 hours at A&E.

We are refurbishing and building more hospitals than ever before.  Between 1979 and 1997, 10 hospital schemes over £50 million in cash terms were approved and proceeded to construction.  Since May 1997, 34 schemes over £50 million have been approved and proceeded to construction.

We are improving long-neglected services like mental health, with more effective ways of managing severe mental illness in the community alongside better in-patient care.

We are treating more people than ever before - and, most important of all, we are saving more lives than ever before with 43,000 lives saved from cancer in the last seven years and almost 60,000 lives saved since 1997 from coronary heart disease.

We're achieving these results because of our staff - more of them than ever before 190,000 more frontline staff than 1999, and, I'm proud to say, better paid than ever before.

Because of the investment - funding doubled already to £70 billion in the last financial year, increasing to over £90 billion by the end of 2008.

And because of the reforms - more choice for patients, foundation trusts, treatment centres for elective care - both NHS and independent sector.

So if investment and reform are working, why do we need more change?

First, because there is still so much more to do.

Second, because of the extraordinary changes taking place in healthcare, all over the world.

And third, because of the need to get better value for taxpayers' money.

First, let's look at what still needs to be done. By the end of this month, no-one will be waiting more than six months for their hospital operation. A huge improvement when we remember that, not so many years ago,  over thirty thousand people - many of them elderly and in great pain - had been waiting a year or more for something as simple, but as life-transforming, as a hip replacement.

But six months? Six months to wait for in-patient treatment - on top of the three months, maximum, for the first out-patient appointment, not to mention the weeks or even months in between that it can take to get the necessary scans and other diagnostic tests and additional out-patient appointments.

It doesn't happen in France or Germany . And it shouldn't happen here. And that is why, by the end of 2008, when NHS funding will have reached nearly 10% of total national wealth - around the European average - we have promised that no-one will wait more than 18 weeks from GP referral to hospital treatment.

It's a huge challenge. But it's one we can meet - provided we continue to match investment with reform.

But even this achievement, essential though it is, won't be enough to meet people's rising expectations. Older patients can remember what life was like before the NHS. Most people can't. They have more and more choice in almost every aspect of their lives - and they expect more choice and more control over their health and their healthcare.

Our patients and users are also better educated and better informed than ever before. Newspapers, magazines, radio and TV are all responding to people's thirst for health and medical information. The Internet makes everything - from clinical trials to personal experience and everything in between - potentially available to everybody.  There are more self-help groups in our country than there are GP practices.

We should never make the mistake of thinking that it is only the middle classes who are increasingly demanding of the NHS and other public services. I vividly remember a woman living in one of the most disadvantaged neighbourhoods in Britain - a council estate in my own constituency in Leicester - telling me that, thanks to the Internet and a self-help group she'd started herself, she now knew far more about her own condition than her family GP, and she knew exactly which hospital she wanted to go and which test, with what equipment, she needed to have.  As most GPs will tell you, and the Social Attitudes survey today confirms, she's not alone.

There are other, profound changes in our society. More of us living far longer. More babies with serious disabilities living through childhood and into adulthood. More geographical mobility, more ethnic and religious diversity, more people living by themselves, changing work and family patterns. As Rudolf Klein reminds us: 'In 1948 the NHS was an expression of social solidarity in a society marked by pronounced cleavages. It has now moved into an era where the NHS is still seen (and cherished) as a symbol of social solidarity but where society is much more pluralistic.'

So the NHS must respond to people's rising and increasingly varied expectations, rather than being left behind by them.

But we also need to put far more emphasis on prevention rather than cure. The public want it. Successive governments have talked about it.

But we are still spending less of our health budget on prevention  than almost any other developed country.

We now have an opportunity, with our reforms, to shift the whole emphasis of the NHS from acute care to prevention, to health and social care in the community.

At the same time, we need to do far more to reduce the glaring health inequalities in our country. Travel just eight tube stations from where we are here, in central London, to Canning Town in east London and, for every stop in the Underground, male life expectancy drops by roughly one year. Or consider the fact that, for every three parents from the best-off professional classes who lose a baby, five parents from the worst-off community will suffer a similar tragedy.

The NHS can't, on its own, cure health inequalities. But we can do more.

The pioneering work of two of the LSE's most distinguished thinkers - Richard Titmuss and Brian Abel-Smith - showed that the NHS all too often supplied 'poor services to poor people.'

As Brian Abel-Smith wryly commented

'If socialists believed forty years ago that all that was needed to equalise health status between social classes was to remove the money barriers to access to health care, they were seriously mistaken.'

The truth is that, despite the commitment of the NHS to equal access, the poorest people are still at greatest risk of falling ill - because of the well documented links between poverty, social exclusion and ill health - and they still tend to get the poorest services. The poorer the neighbourhood, the scarcer the GPs, the less frequent the preventative consultations - and the lower the public satisfaction.  The least well-off are nearly one-third more likely to need a hip replacement than the best-off - but they are one-fifth less likely actually to get it.

Over the next two years, we will not only invest £135 billion in the NHS, we will allocate it far more fairly than in the past. In 2002, when we updated the resources allocation formula, we found that the worst-off areas were over 20% below their target funding level. By the end of 2007/8, no area will be more than 3.5% below target. The communities with the greatest needs will be getting, on average, around £1,700 per head, compared with around £1,200 in the healthiest neighbourhoods.  And because that investment comes with more transparent financial system than ever before - we have a unique opportunity to ensure that the funding in the most disadvantaged areas makes a real difference to  those with the greatest needs, by ensuring that they get the greatest help.

The second reason why we must keep on with change and reform is the global transformation in healthcare that is taking place.

In a world where people travel far more, a world of the Internet, people's expectations of health services are no longer shaped simply by their own experience and that of their family and friends. They compare the NHS with what they see on holiday, or working, studying or living abroad. They know, immediately, that a new drug - not yet approved for NHS use - is available in France or Germany or, at least for those with insurance, the United States.

But healthcare is also being transformed in India and China. Indian entrepreneurs - already so dominant in e-commerce - are now setting out to create world-class health services.  A new pharmaceutical drug that costs some $1 billion to develop in the West can be created for around a tenth of that price in Asia. A bone marrow transplant that costs £2.5 million in the USA, costs just $26,000 in India. A recent McKinsey study predicts that, by 2012, India will earn over £2 billion in medical tourism.  But the internet combined with cheap air travel is creating a global market in healthcare for people who are willing to travel for their treatment.  Just as national economic policy has been profoundly affected by globalisation, so national health policy will be affected by developments abroad.

And the third argument for change is the simple fact that, with these new expectations and new drug treatments, the pressures on NHS spending are relentless.  But if we are to match people's rising expectations, finance new drugs and new treatments, and deal with deep-seated inequities within our system, then we have to get every penny of value from every pound we invest.

Statisticians argue about productivity within the health service. As we explained in a report last week, the old measures - by failing to take account of improvements in quality and the increasing number of people's lives we are saving - understated NHS productivity. But even if the real productivity growth is around 1% - as we believe - rather than negative, it needs to be far higher.

The Four Strands of Reform

Let me now turn to the changes we are making in the NHS and how they will help us achieve our goals.

At the heart of our vision is a patient-led health and social care system which:

For the last five years, we have relied heavily upon national targets and a system of command and control. But heavy performance management demoralises staff and risks distorting priorities.  An NHS that is performance managed by Whitehall is inclined to face inwards towards the Department of Health, not outwards towards its patients and users.  Although it has been essential in getting improvements in the short term, it is not a long-term solution to public service reform.

Instead, we need to embed the reforms and change the culture as well as the system.  The best practice in almost every aspect of care that can be found somewhere in the NHS needs to become the norm everywhere. So we need to ensure that, throughout the NHS, there are the right incentives for continuous improvement, innovation and better value for money  - and we need to use the remaining years of very fast financial growth to create that new system.

That is what I mean by moving from a provider-led NHS to a patient-led NHS.

There are four elements to our reforms which work together to create the self-improving NHS we seek:

a) More choice and a stronger voice for patients

If we want to create a self-improving health service that designs its services around patients, rather than making patients fit in around the service, then we need more choice and a stronger voice for patients and users.

By the end of this year, every patient needing a hospital referral should be offered a choice of at least four - and that range will build up until, by the end of 2008, every NHS patient will be able to choose, for elective treatments, from any hospital, anywhere in England that can provide care to NHS quality and the NHS price.

Of course, people want their own local hospital to be able to offer good, safe, fast care.  But when we piloted choice for London patients who had been waiting over six months for an operation, two-thirds of patients offered a choice of hospitals used it. And those who said 'no' still liked being made the offer.

But it isn't simply that most people like being offered a choice. The London choice pilot cut waiting times for orthopaedics and ophthalmology, compared with trusts that did not offer a choice. Patients who didn't themselves exercise their choice also benefited, since their waiting times also fell. And there was greater equity of access across London. When choice was piloted for heart patients, again, waiting times fell dramatically.

As patients get more choice, hospitals get more incentives to improve. If better hospital food really matters to people - and we know it does - then hospitals will be judged accordingly. The same is true about cleanliness and infection rates, access to toilets and bathrooms, telephones and television, the helpfulness of staff, the sense - above all - that each patient is being treated as a valued individual, with dignity and respect.

Of course choice isn't absolute. It's choice within clinical guidelines and within available - increasingly available - resources.

And of course, choice isn't always appropriate - particularly for emergency care or highly specialised treatment. And some patients will continue to want their doctor to take the final decision.

But hospitals aren't only about A&E - and healthcare isn't only about hospitals.

So when it comes to elective treatments, like hip replacements and cataracts; when it comes to maternity services; when it comes to primary healthcare and the management of long-term conditions and the care of the elderly - the biggest challenge to health services all over the developed world and one where patients themselves have a crucial role to play - then the more we can offer people a real say in how their services are designed and delivered, the better.

But patients and users need a stronger collective voice, as well as more individual choice. We expect every healthcare organisation to engage with patients and the public so that their needs and experiences shape the way services are designed and delivered - especially Primary Care Trusts who have the job of analysing and understanding local health needs; planning, designing and securing services to meet those needs; and, crucially, shifting the emphasis from treatment to prevention and public health.  We want PCTs to put the people they serve at the heart of their work - to give them the power to influence what happens to them and to choose the services they want, whenever possible.

The comparison with Sweden is instructive. They invest around 9.4% of GDP in healthcare. A decade ago, they made a conscious decision to move care out of hospitals and into the communities. Over the past eight years the number of visits to GPs in Sweden has risen, compared to a drop in the number of consultant appointments. The Swedes have also managed to cut length of stays in hospital - today an average of just over four days, compared to nearly eight in 1992. In Britain - it is nearly six. Crucially the Swedes have invested in local health centres which provide a range of services, and have a flexible system of GP registration. All lessons we can learn from in the UK.

Over the next two years, as we move under-funded PCTs rapidly towards target, they will have an even more important role in tackling health inequalities. They will be accountable for public money and responsible for keeping the NHS within its budget - a substantially increased budget, but nonetheless a budget with limits.

To do that, they need on the one hand to have the weight and expertise to challenge acute hospitals, to reduce unnecessary admissions and long hospital stays. On the other hand, they need to be supporting - but also challenging and holding to account - their local GPs, and working with both GPs and hospital clinicians and managers to get the best services for patients and the best value for money. That is why local consultations are now taking place in most areas about possible mergers and restructuring of PCTs - not as a distraction from the task in hand, but as an essential element of it.

Alongside strong PCTs, we need GPs with more responsibility, more accountability for the public money they are spending - but also more freedom to get the services that their patients need. Hence our commitment to extend Practice Based Commissioning to all primary care practices by the end of next year.

That does not  mean a return to GP fund-holding, as some fear. GP fund-holding had many disadvantages: a two-tier system, because only some GPs opted in; heavy administrative costs, as each GP fund-holder negotiated with each hospital; and a reduction in quality, as hospitals competed for patients on the basis of price. Practice-based commissioning has none of those flaws. But it does have the one big advantage of fund-holding - greater freedom and a real incentive to GPs to improve services for patients. As one GP, a previous fund-holder, told me: 'We decided to employ our own physiotherapist, which cut referrals to the hospital orthopaedic department. That saved money, so we employed our own physician, which meant fewer referrals again and more savings.'

By ensuring, as an absolute minimum, that every GP has an indicative budget from their PCT, and proper information about how their own referral patterns compare with other local GPs, we will give every practice a strong incentive - working with other GPs and the PCT itself - to improve support for people with long-term conditions, reduce emergency admissions and pull services out of acute hospitals and into the community, where they are most convenient for patients and better value for money.

GPs who manage their budgets well will have more freedom to innovate and invest.  GPs who don't will be held to account by their PCT.

And as funding for PCTs becomes fairer, we will also over time move GPs from budgets based on historic activity to budgets based on fair shares - again, tackling the injustice that all too often has seen the communities with the greatest health needs receive the worst health services.

b) More diverse providers.

So on the one hand, more choice for patients, backed up by stronger PCTs.

On the other hand, more diverse providers with more freedom to innovate and improve services. It is in this aspect of the reforms, on the provider side, that we have made most progress already.

We want to unleash the huge potential for innovation within the NHS, as well as outside it. I have come across countless examples of NHS staff who want to change the way they work to improve patient care but are too often frustrated by the way 'the system' works.

Three years ago, the creation of Foundation Trusts was hugely controversial. Today, I would be amazed if anybody seriously wanted to abolish them.  There are now 32 foundation trusts, serving a quarter of the population, with a turnover of over £6 billion. Nearly half a million people are members of foundation trusts - more members than the mainstream political parties. Foundation Trusts are using their greater freedoms to create new services faster - like Homerton Hospital with its plan for a world-class perinatal centre to help cut the shocking number of premature births in East London. They are involving patients far more actively in the decisions they make. And knowing they cannot rely on other parts of the NHS to bail them out, they are becoming more business-like and more determined to secure value for money.

The involvement of the independent sector - private and not-for-profit - has been more controversial still.

But the reality is that only in 2003, when we started to introduce patient choice and signalled the creation of the first independent sector treatment centres, which acted as a catalyst for change in the NHS, did we accelerate the pace at which waiting times were reduced.

In the overall scale of the NHS, the independent sector is small beer - even with the whole of the second wave of independent sector procurement, about 10% of electives and around 1% of the total NHS budget. But a small part of the NHS budget is enough to attract new providers, who will themselves bring more innovation and more competition to other independent sector as well as NHS organisations. And relatively small changes can have a big impact on the system as a whole.

In cataracts, for instance,  independent sector providers have brought extra capacity, innovation, particularly mobile surgical units, and high levels of productivity.  This has helped to bring down waiting lists in this area to a maximum of 3 months by complementing the significant increases in procedures carried out by the NHS.

What we have done on hip replacements and other elective treatment, we will now do on diagnostics. One of the only ways we will achieve our 18 week pathway - 18 weeks, maximum, from GP referral to start of hospital treatment - will, be to achieve an unprecedented increase in diagnostic capacity, both in the NHS itself and in the independent sector.  We simply won't abolish waiting lists otherwise. So from last month, patients waiting more than 20 weeks for CT and MRI scans have been offered the choice of an alternative provider with spare capacity so their maximum wait will be 26 weeks. From next April, that will be extended to all imaging scans with the alternative offered at 16 weeks if patients don't have a date within 20..  And we are already out to tender for £1 Billion worth of additional diagnostic procedures of additional scans from the independent sector, which will help to double the number of MRI scans available to NHS patients.

More capacity is essential. But so is more innovation, along with more challenge - more competition - to inefficient and under-performing providers. And that will come from different NHS hospitals, from Foundation Hospitals, with their greater freedoms, and from the independent sector.

Foundation Trusts were created as a new form of public organisation. The social enterprises that are now growing in many other sectors of the economy offer another model of public organisation that is starting to spread, particularly within community health and social care. Some weeks ago, I met the social entrepreneurs Jo Pritchard and Tricia McGregor who, with the support of their PCT, are leading the creation of Central Surrey Health, a not-for-profit co-operative that would be owned by over 700 district nurses and other community staff to provide care within the NHS. They are very clear that, by combining the freedom and flexibility of an employee-owned organisation with the values of the NHS, they can match the care they give far more effectively to the personal needs of their users. I want to see more NHS social enterprises and in the new year I will be announcing how in health and social care, we can build upon the work of the social enterprise unit that I created at the Department of Trade and Industry.

Already, within Primary Care Trusts, there are many different models of service provision, with many PCTs taking the lead in creating new community hospitals, walk-in-centres open 7 days a week and improved inner-city primary healthcare practices. As we ask PCTs to strengthen their role as commissioners, they will be able to continue providing services as well. But there will also be room for new providers - for instance, in six areas where there aren't enough GP services and where PCTs, with our support, are inviting any interested party - GPs who want to expand, nurse practitioners who want to lead a service, the not-for-profit sector or private firms - to come forward with proposals. As with the new walk-in centres we have just announced in commuter centres, the only test will be who can offer the best services to patients, with the best value for money, all of it free at the point of need.

So in the new NHS, there will be an element of competition - on quality, effectiveness,  responsiveness to patients' needs. And as that drives the less good hospitals to improve - or sees their services replaced by better providers - it will be good for patients. And because competition and diversity of provision must develop on a level playing field, every organisation caring for NHS patients will have to meet minimum standards of safety, quality and conduct, enshrined in the national contract.

But we also want hospitals to collaborate - where appropriate, with each other, and with local GPs and PCTs. So the requirement to share information and work jointly to create integrated services will also be set out in the national contract. And although it may seem odd to expect organisations sometimes to compete and sometimes to collaborate with each other, it's worth remembering that this is exactly what happens in the private sector - with the most successful global organisations, often simultaneously, being competitors, collaborators, suppliers and customers of each other.

c) Money follows the patients

The third element of our reforms ensures that, as patients and users choose, money will follow - something in the past confined to those who could afford to pay privately.

Already, we are trialling payment by results for elective and emergency admissions in foundation trusts, for elective admissions in other NHS hospitals. From next April a single national tariff will cover planned, emergency and outpatient care in hospitals.

Payment by Results is essential to make patient choice work.

But it does far more than that. For the first time in nearly 60 years, Payment by Results means that every hospital will understand how much it is spending to provide a particular treatment - and every hospital will have an incentive to become more efficient. That is particularly important, given the deficits we now face in the NHS. Last year, overall, they amounted to less than half a per cent of the total NHS budget. Three-quarters of NHS organisations is in balance or surplus, with most of the deficit concentrated in about 40 organisations, just 7% of the total number. But we have to get them under control, and the reforms will help us do just that.

Historically, hospitals were given an annual block grant, based not on the work they did, but on what they got last year. Efficient hospitals, who did more, did not necessarily get more money. Inefficient hospitals did not necessarily get less. There was no real incentive to improve. If you failed to balance the books, you got bailed out. If you ran up a surplus, you had it taken away.  The random pain and distress of keeping patients on their waiting list was the way in which the NHS managed within its budget.

The old system was neither fair or efficient.  And now it will change.

Payment by results is not causing the deficits we now see in a minority of hospitals and other NHS organisations. But because the system is far more open, far more transparent than we have had it before, it is revealing underlying deficits that in the past were often concealed. And because payment by results gives every hospital a real incentive to improve its clinical effectiveness and its cost efficiency, the new system will help to solve the problem of the deficits ... and, even more important, to raise productivity across the NHS.

Of course, we still have much to do to improve the design and operation of PBR. At the moment, the tariff doesn't properly reward specialist services, meaning that some of our best hospitals can't develop a business plan for Foundation Status and it has the potential to hamper innovation when the early adopter costs of a new procedure are higher than the current NHS average. That is why we are proceeding carefully with PBR, testing it this year and moderating its impact over the next two years. And that is why we are working with NHS clinicians and leading thinkers to ensure that PBR and the tariff system delivers efficiency and excellence as we move forward.

Like much of the reform programme, payment by results can sound technical and dry. But let me illustrate how, by giving patients more choice, allowing providers more freedom to innovate and challenge each other, and ensuring that money follows the patient, we are creating the in-built incentive for improvement that I talked about earlier.

A few months ago, I met an utterly dedicated - and utterly frustrated - orthopaedic surgeon. He told me that out of the 40 hours he is paid as an NHS consultant, he spends about 6 hours actually operating.  He waits while a patient is prepared and anaesthetised. He waits again after the operation until the next patient is ready. If he's lucky, he operates on two patients each morning and another one or two in the afternoon. You can imagine my fascination, then, when I learnt about another orthopaedic specialist, John Petri, who moved to England after working in France. Here, with twice as many surgeons and anaesthetists for about the same number of patients, he found waiting lists. In France, there were none. So he insisted on importing the French practice - organising two operating theatres in parallel, so that he doubles the number of patients he can treat.

Mr Petri's example hasn't yet been followed by his fellow-surgeons. But it shouldn't require an individual surgeon to have to demand a re-organisation that ought to be standard good practice, bringing faster treatment to patients now waiting in pain.

Each element of our reforms brings benefits. But together, as patients exercise more choice, as different hospitals challenge each other to provide the best quality, as payment by results exposes differences in practice and therefore in cost, so every clinician, every manager and every organisation will have an inbuilt incentive to compare themselves with the best, to innovate and improve, to give patients the best possible care - and taxpayers the best possible value for money.

d) A new regulatory framework

The fourth and final element in our reforms is a framework of regulation and decision-making that guarantees safety and quality, ensures proper stewardship of public funds and reflects our commitment to equity. It also needs to ensure good information is available for patients, carers and staff to support choices in healthcare.

That is why we are now reviewing how we regulate and inspect health and social care services, how we protect essential services - including A&E - that might otherwise be jeopardised by weaknesses or changes in other services such as orthopaedics and trauma, how we deal with organisations in financial trouble and how we reduce the bureaucracy of inspection and regulation while improving safety and quality for patients and the public. These are all vitally important questions which we are working on, with the help of many other experts. But you'll be relieved to hear that I don't propose to deal with them today, although I will come back to them on another occasion soon.

A health care market?

We are often accused of introducing a 'market' in to the NHS. But although I have described, very fully and I am afraid at some length, the changes we are making, I have not once used the word 'market'.

I do not believe that we are turning the NHS into a market, and nor do I think that we should. Indeed, it would be a pretty odd kind of market where the user cannot pay and the providers cannot compete on price.

Yes, we are giving patients and users more choice. Yes, we are giving providers more freedom to innovate and, where it is appropriate, to compete against each other. And where we mean 'competition', we should say so, instead of pretending that 'contestability' is something different. Yes, money will follow the patient. But why should choice, innovation, competition and financial discipline be confined to private markets? Why should the use of the private sector, when it gives us new hospitals, when it benefits patients and the public, have to mean 'privatisation'?

What we are creating - not only in health and social care, but in education and many other public goods - are not markets, but modern public services. And I believe we do ourselves a disservice when we use the jargon of markets, instead of coming back to our values, the values of public service, and the goals we seek to achieve on behalf of all those we represent.

I began this lecture by talking about the choice we face between two forks in the road.

I know that change is difficult. I know that staff across the NHS would cheer if I said that we were going to stop now. Reform isn't easy. But if we give up now, if we take the route of least resistance, then we will come to the end of 2008. We will have increased NHS funding faster than ever before. We will, of course, have got some improvements. But we won't have transformed the service. We won't have increased productivity at the rate we must if we are to free resources for new drugs and new treatments. We won't have created the self-improving system that we need when the growth in funding resumes a more normal course.

Worst of all, having asked people to pay more for the NHS, and having failed to deliver the transformation we promised, we will open the way to those who do not share our values or our commitment, either to the NHS or to the most disadvantaged in our community. If we don't make changes, radical changes, others will - but they will do so in ways that wrench it from its founding values.

That path I reject.

But if we stick to our course of investment and reform - the path I have set out today - then the NHS will provide better, faster, safer care. We will respond to the challenges of rising expectations, technology and new demands. As we increase NHS funding to nearly 10% of our total national wealth, we will be able to show that the NHS is doing more, far more, in return.

By the end of 2008, we will effectively have abolished hospital waiting lists. Patients and users will have more choice and control over their services. In place of the old monopoly, we will have a far greater variety of hospitals, GPs and other services - public, private and not-for-profit, all part of the NHS family - with more freedom to innovate and more incentive to respond to people's needs. Poor services will be taken over or replaced by better providers. Strong Primary Care Trusts - the local NHS - will work with GPs, patients and users to get the best from acute hospitals and to reshape services in the community.

We will view the National Health Service not just as hospital buildings, but as a network of services, helping us to stay healthy as well as treating us when we are ill.

As we finally put right the historic under-funding of the NHS, the NHS will combine its founding values - equal access to care based on clinical need, not ability to pay - with a modern commitment to personal service, continuous improvement and better value for money.

Again I quote Rudolf Klein, when he said: 'The challenge therefore is to devise a health care system which will accommodate the new pluralism while still embodying the ideal of social solidarity, a system which satisfies the aspirations of patients transformed into consumers while also remaining faithful to the notion of mutual support symbolised by the NHS.'

Here at the London School of Economics, we hear the echoes of many great pioneers of the welfare state, the Webbs, Tawney, Titmuss, Abel-Smith.

They fought to translate their values into practice. So must we.

Now is not the time to turn our back on our path of reform as well as investment. Because now is the best - indeed, the only - opportunity we will have in my lifetime to secure a health service that is true to its founding values, but fit for modern demands.

The reform programme over the next 24 months will shape the NHS for the next 20 years. Two years to safeguard the NHS for the next 20.

In doing this, I believe we will win a far bigger argument - one that faces progressive Governments the world over.

That collectively funded public services can meet the needs of both individuals and wider society.

That the State can be a dynamic force for good.

That we can achieve more together than we do alone.

If we can achieve this goal, we will ensure that the NHS is seen not only as a monument to past successes, but as a living symbol of what we can achieve in future.