13 January 2006


Key Points


§         Following a series of policy announcements, the positions of the Government and the Conservative Party on the economy, health and education are almost indistinguishable and fall a long way short of adequate reform.


§         On the economy, both parties accept a steeply rising tax burden in this Parliament with its consequent damage to productivity and growth.  The Conservatives have spoken of a “slightly lower” tax burden than the Government’s but this ambition may be impossible given their commitment to a tax-financed NHS and to greater equality of incomes.


§         On the NHS, both parties rightly support competition from private sector providers (with the Conservatives aiming to go further than the Government) which will improve NHS productivity and so help the service meet its short term financial problems.  But both have ruled out alternative methods of funding healthcare, with David Cameron’s announcement on NHS funding echoing Gordon Brown’s arguments made at the time of the Wanless Review in 2002.  Limiting the source of finance to taxation would entrench the centralisation of the system and put the service’s long term quality and equity at risk.  Speaking before taking up their present positions, both Patricia Hewitt, the Secretary of State for Health, and Stephen Dorrell, the co-chairman of the Conservative Public Service Improvement Group, have supported co-payment in healthcare.


§         Both parties oppose the two key elements of education reform: allowing parents to use the funds provided for their children’s education in any state or independent school and giving schools freedom of management, including over admissions.  As a consequence the defects of the education system – the absence of choice for parents on low incomes, the lack of incentives for poor schools to improve, the inadequate provision of vocational learning and ubiquitous bureaucracy – would continue.  More positively – in a welcome change of policy from the Conservative Party – both support tuition fees at their current level.


§         The exception is policing where the Conservatives have already signalled a drive for radical reform based on greater accountability.  Such a reform would reduce crime and address the problem of anti-social behaviour raised by the Government this week.


§         The Conservatives’ theme is that because “Britain is changing”, so must the Party.  But the challenges to be faced in this Parliament – in particular better quality public services for all, competitiveness, greater opportunity and social mobility – demand more radical thinking.  It has been suggested that the Party’s strategy is to adopt cautious positions now in order to win the credibility and support needed to put forward more radical policies later.  In the meantime, however, the Party’s positions give support to the opponents of reform, making a shift in a more radical direction much more difficult.


§         For all parties, the prize of reform remains public services that are both excellent and affordable combined with a lower tax burden due to greater value for money.  The coming slowdown in public spending means that such an agenda is timely and necessary.  The state of public opinion – certainly unclear on the specifics of reform policies but dissatisfied with the current political debate and interested in new ideas – suggests that more radical reform would be good politics as well as good policy.















Tax burden to rise to 38.6 per cent of GDP at the end of this Parliament. 

A “slightly lower” tax burden than the Government. 

Tax reductions promote productivity, growth and higher revenues.  Spending discipline would allow the basic rate of income tax to be reduced from 22 per cent to 17 per cent by the end of this Parliament.

Public spending

Public spending to stabilise at just above 42 per cent; five percentage points higher than in 1999-00. 

Improving public services requires “investment” as well as reform

Spending discipline – Reform’s “Growth Rule”, which limits trend departmental spending growth in real terms to 2 percentage points below the growth of the economy – would allow real terms growth in spending while reducing risk to economic growth. 





Use of the independent sector

In short term, 10 per cent of all elective operations to be carried out in the independent sector

Government should “go further” in use of the private sector.

Real competition from the independent sector, with the great benefit of higher productivity, requires up to 30 per cent provision by new providers.


Tax-financed NHS with current levels of charges

Tax-financed NHS with current levels of charges

Even with maximum increases in health spending, a tax-financed system is already failing to fund new and innovative areas of treatment.  Mixed funding is needed to meet modern demand.





School autonomy


“Trust schools” to have important freedoms after LEA and Departmental approval.  Department still to exercise central direction


Statutory ban on selection


“Trust schools” to have important freedoms after LEA and Departmental approval.  Department still to exercise central direction


Statutory ban on selection

All schools able to set their own admissions policy, set teachers’ pay and conditions, manage their own assets and set their own curriculum.



Choice of school within catchment areas defined by local authorities.


No choice of independent school.

Choice of independent schools (“pupils passport) under review but almost certain to be abandoned.

Funding follows the pupil into state or independent schools.  Vouchers to include capital funding to allow new provision. 


Local authority planning of school places abandoned







Anti-social behaviour

“Respect Action Plan” based on new penalties and powers for police and  councils.


Safer Neighbourhoods teams in each ward of the country by 2008.

“Broken windows” beat-based policing.


"Real Respect" agenda, including plans to set up Social Enterprise Zones, a new National School Leaver Programme, support for voluntary sector.

“Broken windows” beat-based policing with zero tolerance of minor offences.



Police reform

Amalgamation of the 44 existing police forces to 22 or less.  Merging of forces of less than 4,500 officers.

Government’s plans on mergers opposed.  No immediate move to amalgamation.


Police accountability.

Police accountability at, most likely, local level.  Economic regulator to ensure value for money.



§         Both David Cameron and Tony Blair have rightly made competitiveness a key goal.  In a speech on 14 December 2005, David Cameron said that the need for a competitive economy is “one of the six big challenges Britain faces”.  But the policies of both parties – relatively high levels of taxation, compared to other countries and to recent years, and further increases in regulation – will undermine competitiveness and slow economic growth. 


§         The better alternative is to advance public sector reform within an envelope of controlled real-terms public spending increases – the Reform Growth Rule – so as to improve public services while keeping them affordable.


§         The Conservatives are right to offer a lower level of taxation but a policy of “slight” tax reductions, as proposed at each of the last two general elections, runs the risk of being the worst of all worlds: giving credence to the allegation of “cuts” without enabling the Party to offer significantly higher economic growth.


§         The current state of public opinion is more sceptical of the value of public spending and more supportive of tax reductions than any of the political parties:


          An ICM poll for Reform in December 2005 found that 61 per cent disagreed that the “extra spending over the last few years has resulted in real improvements in the NHS” against 33 per cent who agreed.  50 per cent disagreed that the “extra spending over the last few years has resulted in real improvements in state schools” compared with 35 per cent who agreed. 


          The poll also showed that 69 per cent agreed that “if the Government reformed public services and cut waste it would make services better and reduce tax at the same time” against 27 per cent who disagreed.  57 per cent agreed and 38 per cent disagreed that “if taxes are cut the economy will grow faster, which will mean higher living standards and more money available for public services”. 


§         For further information, please contact Corin Taylor, Reform’s Economy and Welfare Research Officer:


§         As at the last general election, both parties support competition from private sector providers to the traditional NHS, with the Conservatives wishing to go further.  Such competition will release the extra productivity that the service needs to meet its tight financial position from 2008 onwards.


§         Both parties are mistaken to commit to a system financed by taxation alone.  Apart from the consequence of rationed services and greater inequity, tax-funded systems are inevitably centralised.  The role of taxation in healthcare financing should be to guarantee access for all in society and to support their choices.


§         Both Stephen Dorrell, co- chairman of the Conservatives’ new Public Service Improvement Policy Group, and Patricia Hewitt, Secretary of State for Health, have recognised the case for co-payment in healthcare:


“Reform of the public services involves reassessing the balance between individual and collective responsibility, and accepting that some matters that were regarded in the post-war world as the responsibilities of the taxpayer will increasingly have to be regarded as responsibilities that the individual at least shares with the taxpayers ….  I end with a rhetorical question: does anybody seriously believe that the issues I have raised in connection with dentistry and universities are unique to those services?” (Stephen Dorrell, Hansard, 24 May 2005, Col. 592).


“We are committed to general taxation being maintained as the principal source of funding health services.  However we believe it is not possible to expect the continuing gap between resources and demand to be closed through increased tax funding alone.  Increased tax funding may play a part, but it seems that the gap will be effectively reduced only by a combination of strategies which include a clearer definition of what services will be provided free at the point of use and raising the proportion of healthcare funding provided by individuals through options such as user charges and /or patient co-payment” (UK Health and Healthcare Services – Challenges and Policy Options, Healthcare 2000 [Patricia Hewitt as Deputy Chairman], 1996).

 §         Andrew Haldenby, Director of Reform, said:

           “While the Conservative Party’s new health policy would ease the National Health Service’s short-term financial difficulties, it would jeopardise the service’s quality and equity in the long term.


          “In the short term, David Cameron implied that the Party would go further than the Government in commissioning private sector companies to treat NHS patients.  This is essential if the service is to negotiate the next few years when spending increases will slow but cost commitments – including extra staff, prescribing and PFI projects – will accelerate.  A £7 billion deficit is projected in 2010 unless productivity improves dramatically and competition from private companies is the key to that productivity improvement.


          “Cameron rightly pointed to the rising costs facing all healthcare systems due to improvements in medical technology and ageing populations.  But a service funded by taxes alone, as Cameron proposed, cannot hope to meet these costs; indeed, the NHS is already struggling to afford the latest cancer medicines.


          “Without additional sources of funding, such as compulsory insurance, the level of rationing in the NHS will sharply increase and advanced treatments will be available only to the most well-off, which is hardly in line with Cameron’s vision of a compassionate Conservatism.  The party’s policy would keep the quality of the NHS below that of the mixed funding systems of France, Germany and Switzerland; it should reconsider” (The Sunday Times, 8 January 2006).




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