Introduction and origins


It is almost 20 years since the Wanless report on the future funding of the NHS. As its 20th anniversary approaches, this study revisits the original – Securing our future health. It examines the origins of the Wanless review and takes something of an outline look at its methodology. It also attempts an assessment of its impact, in both the short and the long term.

The review is, however, a contested event, both in terms of its origins and its impact.

To some it is one of the most important documents in the history of the NHS, providing the massive boost in funding that hugely improved both the quality of services and access to them across the 2000s. Indeed, in some people’s eyes, it fundamentally changed the political argument over the NHS.

To others it was merely a ‘His Master’s Voice’ report, commissioned by Gordon Brown, then Chancellor, to deliver a predetermined outcome. A report to help justify what Tony Blair, the Prime Minister, had already made inevitable – a big increase in expenditure, and the associated tax rise to pay for that.

Some believe the report’s impact has been lasting. Others that rereading it is a somewhat depressing exercise. It is almost as if nothing has changed in the sense that some of its big themes – much improved health IT, far better workforce planning, better integrated care, a proper social care settlement – are still current and immensely pressing matters.

This study examines these and other issues, taking in the subsequent Wanless review of public health, while asking whether, if a government were to repeat such an exercise, there might be a way to amplify its impact.

It is important to note, however, that the government papers for this period are not yet available. So while there are plenty of references to published material, some of what is related here relies on memory, including that of the author. And honestly held memories can play tricks.

It is also worth underlining that this study does not seek to tell a full story of the management of the NHS, either at the time of Wanless or afterwards. The author has attempted that elsewhere. Some of the key events are, however, outlined because they are part of the context and helped shape the impact of the review (see also Box 1). But they are not a full account. The focus here is on the review itself.

We start with its origins … where there is more than one view of precisely how it came about.

Box 1: Timeline of the Wanless reviews and selected linked events

  • May 1997: Labour landslide. Tony Blair declares at the end of the campaign, ‘We have 24 hours to save the NHS.’
  • Late 1999: Gordon Brown, then Chancellor, and two key advisers, Ed Balls and Ed Miliband, devise a strategy for a long-term settlement for the NHS and the tax rise needed to deliver that. This strategy appears, however, either not to have been communicated to, or not understood by, Number 10.
  • January 2000: After a winter crisis in the NHS, the Prime Minister, Tony Blair, announces on the BBC’s Breakfast with Frost that all things being equal, Labour will increase NHS spending up to the European Union average.
  • March 2000: The Budget provides significant real-terms increases in NHS and social care spending, as Brown also announces he is commissioning ‘a long-term assessment of the technological, demographic and medical trends over the next two decades that will affect the health service… ’ This will become the Wanless review.
  • July 2000: Following the spending rise, the NHS Plan is published, producing the first waiting time targets and the promise of more staff, more buildings and a more responsive service.
  • January 2001: Anita Charlesworth appointed as the Treasury lead, with Derek Wanless subsequently recruited to head the review.
  • March 2001: Wanless’s appointment is announced in the Budget.
  • November 2001: Interim Wanless report.
  • April 2002: Final Wanless report – Securing our future health: Taking a long-term view. Spending commitment made and national insurance increase announced. The day after, Delivering the NHS Plan announces the introduction of more market-like mechanisms into the NHS.
  • April 2003: Wanless asked to conduct a follow-up review on public health.
  • February 2004: Securing good health for the whole population – the public health report – published.

A more detailed timeline of NHS policies can be found at The Health Foundation’s Policy Navigator ( and at the Nuffield Trust’s NHS Reform Timeline (

Origins version one: ‘The most expensive breakfast in history’

On Sunday 16 January 2000, in what rapidly became dubbed ‘the most expensive breakfast in history’, the Prime Minister, Tony Blair, went on to the BBC’s flagship weekend political programme Breakfast with Frost. Pretty much out of the blue, Blair declared that all things being equal, the UK would increase its health spending up to the European Union average by 2005.

The commitment was enormous. Roughly 2 percentage points of GDP. And next to no one knew it was coming. Not his Chancellor, Gordon Brown, who reportedly exploded at Blair, ‘You’ve stolen my fucking budget.’ Not, in any detail, his health secretary Alan Milburn. Nor Alan Langlands, then chief executive of the NHS. Simon Stevens, Milburn’s health adviser and a future chief executive of the NHS, learned about it via a pager message while visiting a Homebase store.

Journalists like me were stunned, scrabbling to work out just what this huge commitment would cost – not least because the EU average was likely to increase over the next 5 years. It was not that different in Number 10. Robert Hill, Blair’s health adviser, put in an urgent call from his home to that of Clive Smee, the health department’s chief economist, asking him to set out precisely how much this would cost and whether it even looked achievable given reasonable assumptions around economic growth.

On a Sunday morning, outside the Treasury, Smee was the only one likely to have to hand the most up-to-date EU expenditure data on which to do the numbers. In typically self-deprecating style, in his memoir Smee recalled that most of the more complicated calculations were done by his daughter’s boyfriend because he was the only one who knew how to use the compound interest function on his calculator. The results of these calculations, which concluded that on reasonable assumptions it was in fact doable, were put out late in the day in a press release.

Over the next couple of days, Gordon Brown sought to water down Blair’s declaration from what was plainly a commitment to ‘an aspiration’. But the Prime Minister, who went on to reinforce his message at Prime Minister’s Questions, had spoken. The die had been cast. And in the March Budget, the Chancellor duly delivered the first steps on that road. He pre-empted the longer term Spending Review planned for July by announcing spending increases averaging 6.1% a year in real terms over the following 3 financial years – easily the largest ever sustained rise in NHS expenditure. The average since 1948 had been 3.3%.

These increases were historically large. But they were not on their own sufficient to raise health spending to the EU average by 2005. In the same Budget, however, Brown also announced that he was ‘commissioning a long-term assessment of the technological, demographic and medical trends over the next two decades that will affect the health service’. The review was to report to him ‘in time for the start of the next Spending Review in 2002’.

This review did not yet have a chair, nor a title. But Securing our future health, as it would become, proved to be the first serious attempt by any government in the history of the NHS to have an independent assessment made of the service’s likely future needs, and likely cost, over the next 20 years.

That account is not just the received wisdom of how the Wanless review emerged. It is the view of many of the key players involved in health financing and policy at the time, who were interviewed for this study. There is, however, another – though not incompatible – version of its origin. One that sets it in a somewhat wider context, and to which we will come (see Origins version two).

The road to Breakfast with Frost

This account opened with the statement that Blair’s announcement came ‘pretty much out of the blue’. But that is not entirely so. In fact, it had a lengthy back story. At the end of the 1990s, the NHS was in a pretty parlous state. And it is easy to forget now the extent to which the NHS model – of a tax-funded, largely free-at-the-point-of-use, and pretty comprehensive service – was itself under fire from the mid-1990s into the 2000s.

The policy and politics of the 1990s

In 1991, amid immense controversy, the Conservatives had introduced the so-called and somewhat misnamed ‘internal market’ – otherwise known as the purchaser/provider split. The ‘providers’ were NHS hospitals. These were turned into less directly managed, and somewhat more businesslike, NHS trusts. The trusts competed for patients through contracts from NHS ‘purchasers’. The ‘purchasers’ were the then health authorities and so-called GP fundholders – those GPs who volunteered to take budgets with which to buy care on their patients’ behalf. The private sector was also free to compete for these contracts, although initially that happened on a very small scale.

Many, not just on the far left, suspected that this more market-like approach, and in particular the somewhat more businesslike way of running NHS hospitals, was merely the first step towards privatising them. Furthermore, after a huge injection of cash in 1991 to make sure the new ‘internal market’ did not crash and burn on day one, money for the NHS had become increasingly tight over the 1990s. To the point that in 1996/97, the year running up to the 1997 general election, NHS spending had actually been cut in real terms for the first time since the early 1950s.

For all the diminishing amounts of growth, John Major, the Prime Minister of the day, and his successive health secretaries Virginia Bottomley and Stephen Dorrell, all supported the NHS model. As did Ken Clarke, Chancellor for most of this period, and himself the former health secretary whose white paper Working for patients had introduced the purchaser/provider split. Indeed Clarke, when asked whether he had private medical insurance, had once produced the disarming declension, ‘I don’t have it. You don’t need it. We have the National Health Service.’ But Major’s government was beleaguered throughout by the ‘No Turning Back’ group of Conservative MPs, the guardians of what they saw as the Thatcherite flame. Both they and right-wing think tanks such as the Institute for Economic Affairs and the Adam Smith Institute were, over this period, propounding various models of health care that would have diminished or removed the tax-funded, free-at-the-point-of-use nature of the NHS.

The mix of a more market-like way of managing the service through the purchaser/provider split, suspicion of where the government was taking the NHS, and ever-tightening resources saw not just the usual suspects but mainstream figures in the world of health care start to wonder whether the NHS model was, in fact, sustainable.

In September 1995, Rodney Walker, the retiring chairman of the NHS Trust Federation which at the time represented most NHS trusts, argued that rising demand, medical advances and an ageing population meant the NHS would have to be reduced to ‘a safety net’ for the old and vulnerable. Walker was a highly enthusiastic advocate for the government’s more market-like approach to running the service. Even so, his stance came as a bit of a shock.

But later the same month, a study funded by the pharmaceutical industry to the tune of £100,000 concluded that the gap between demand and resources could not be closed by taxation alone, and that user charges and ‘a clearer definition of what services will be provided free at the point of use’ were likely to be needed. It painted several not very appealing scenarios of what that might involve.

Given its funding source, that conclusion was perhaps not surprising. What was surprising was that the review was chaired by Sir Duncan Nichol, the chief executive of the NHS at the time of the 1991 reforms, and who in 1994 had shocked some by joining the board of Bupa, Britain’s biggest private health insurer, as soon as the civil service rules allowed him to do so. Leading figures on the review included Chris Ham, a Professor of Health Services Management at the University of Birmingham and a future chief executive of The King’s Fund health think tank, while its deputy chair was Patricia Hewitt, formerly press spokesperson for the Labour leader Neil Kinnock in the 1980s and who, a decade after the report, would herself be health secretary. These mainstream figures were seriously questioning whether the NHS could go on as it was – and they were not alone.

Then, in 1996, less than a year before the 1997 general election, a group of influential figures formed the Rationing Agenda Group, partly funded by The King’s Fund, and whose members included distinguished health economists, GPs, consultants and other health care luminaries, none of whom would normally be regarded as being anywhere near the far right of politics. Its conclusion was that ‘rationing in health care is inevitable’ and that the public needed to be involved in the debate about how that was to be done. Public satisfaction with the NHS had been on a downward trend in the years after 1993, to the point where according to the British Social Attitudes Survey, almost 50% were dissatisfied with it and only just over 30% were satisfied.

At one point in the midst of this Alan Langlands, the chief executive of the NHS, felt the need to go on the record to attack these ‘doom and gloom’ merchants, declaring that he wanted to distance himself from the ‘ration and privatise brigade’. The climate was such that A service with ambitions, a white paper produced by the then Conservative health secretary Stephen Dorrell, equally felt the need to open with a lengthy defence of the tax-funded nature of the NHS, arguing that the model was in fact sustainable.

In summary, during the middle of the 1990s and beyond, the NHS model was not just under attack from those who had never believed in it, but was being questioned by some who would otherwise have been seen as its natural supporters. The argument became less heated after Labour won the 1997 general election. But for reasons we shall see, Labour’s first 2 and a half years in power had not laid it to rest.

Conservative policy in early 2000

At the time of Breakfast with Frost, Conservative health policy under William Hague as leader, and Dr Liam Fox as health spokesperson, was both to promise the NHS real-terms increases – although at unspecified scale – but also to provide tax breaks for private health insurance. On the morning of Breakfast with Frost, Fox was quoted in the Sunday Times as saying that ‘philosophically’ the Conservatives had ‘moved on’ from a fully comprehensive NHS, and that ‘insurance companies could cover conditions that are not high-tech or expensive, like hip and knee replacements and hernia and cataract operations.’ The aim, the Conservatives argued, being to increase health spending overall while having a larger private sector to reduce demand on the NHS. In other words, at the time of the famous breakfast, the NHS model was still under attack from the leadership of the UK’s main opposition party.

Labour’s record before the breakfast

Alongside this ideological assault sat Labour’s record since Tony Blair’s declaration ‘We have 24 hours to save the NHS,’ made on the eve of the 1997 poll that delivered his landslide. Once in power, Labour had repeatedly talked the language not just of improvement but of public sector ‘transformation’. But in its manifesto it had also promised to stick with the spending plans of its Conservative predecessor for its first 2 years. When these plans were announced, just ahead of the election, they were so tight that Andrew Dilnot, the director of the Institute for Fiscal Studies, suggested that Ken Clarke was ‘having a little joke’ at Labour’s expense.

The result was that money for public services, including the NHS, was seriously constrained. Thanks in part to the social security budget for once coming in some £2bn below forecast, Labour’s first big Spending Review in 1998 did deliver growth averaging 4.7% in real terms for the succeeding 3 years: above the long run average of just over 3%. Those increases, however, only started to flow in April 1999, a mere 9 months before the Breakfast with Frost. Furthermore, much of it was earmarked for centrally determined initiatives that were already under way – for example, the first walk-in centres, the creation of NHS Direct (now NHS 111), some refurbishment of A&E departments, cleaner wards, and the rebranding of the NHS so that it has a consistent logo. All but the last of these were intended to make the NHS more consumer friendly and accessible, while reducing the pressure on accident and emergency departments. But the result was the day-in-day-out services of the NHS, those in the GP’s surgery and on the wards, were still seen by clinicians to be under enormous pressure. Waiting lists were rising rather than falling – the money being so tight that Labour had had to translate an election promise to cut them by 100,000 into one that would be achieved not rapidly, but over the life of the parliament.

Back then much less data were available on NHS performance. But the state of the service can be illustrated by one reputable estimate that up to 500 cardiac patients a year were dying from their condition while on the waiting list. Over the 1990s, nurse numbers had fallen by 40,000 – a 10% reduction. In early 2000, more than 130,000 patients were waiting more than 6 months for an outpatient appointment once they had been referred by their GP. At this stage, the NHS did not even count the subsequent wait for diagnostic procedures – the scans, X-rays and tests that might well be needed at an outpatient appointment before definitive treatment was decided on.

At their worst, such waits could run to months. And once past that stage, with the patient on the inpatient list for definitive treatment, almost 70,000 were waiting more than a year. The result was that some patients were waiting more than 2 years from GP referral to treatment although the NHS had no real idea of how many, other than it was clearly many thousands, and – more likely – many, many thousands. As polling for the NHS Plan was later to underline, waiting times were the public’s number one concern about the service.

Furthermore, at the end of the 1990s, the first data on the outcomes of care internationally started to become available. On certain key aspects, these showed that the NHS was not doing well. Back in 1994 the Organisation for Economic Cooperation and Development (OECD) in one of its regular economic surveys had judged the NHS to be ‘a remarkably cost-effective institution.’ It had, since the later 1960s, spent appreciably below the EU and OECD average. By 2000, however, as the new information on outcomes became available, the OECD sharply changed its tune. It highlighted poor cancer survival rates. It suggested that other outcomes – for example for heart disease and diabetes – did not look good. It noted the apparent underinvestment in doctors and buildings. It added in the long waiting times and concluded that the NHS was probably underfunded.,,

Since its foundation, the NHS has always had a tendency to have ‘winter crises’, as do many other health care systems. But the winter of 1998/99 proved a really tough one, and in summer 1999, at its annual conference, the British Medical Association (BMA) launched a stinging attack on the government’s health priorities and its management of the service. The charge was that the government was indulging in spin over substance and had distorted priorities by rebranding the NHS and creating walk-in centres rather than getting money onto the wards and into GP surgeries. That contributed 2 days later to Blair’s famous aside about ‘the scars on my back’ from attempting to improve public services. He followed that by his party conference speech in the September about ‘the forces of conservatism’ that were holding back public service reform.

Over the same summer, Alan Langlands, the NHS chief executive, held an executive away day at which he told colleagues that things were so bad that to get the NHS back to a high quality service it needed not 4 or 5% real-terms increases but growth rates of 7 or even 8%.

In October, Frank Dobson, Labour’s health secretary since 1997, who had proved adept at extracting at least some extra cash from the Treasury in these straitened times, was persuaded – to his later regret – to leave the post to run for mayor of London. As one of his final acts he sent Blair a personal note – outside of the official channels – telling him, ‘If you want a first-class service, you are going to have to pay a first-class fare.’ While also, in Dobson’s inimitable phrasing, ‘giving him plenty of examples of things that we were crap at’. Dobson says that was ‘probably the most important thing that I did as health secretary, full stop’. A couple of years later, the Wanless review having delivered, Blair went to the trouble of sending Dobson, now a backbencher, a note saying, in Dobson’s recollection, that ‘it would not have happened, but for your note triggering it off’.

In Downing Street, Robert Hill, Blair’s health adviser, had also become convinced that the NHS needed a serious and lasting injection of funds. ‘Over the preceding 2 years I had written a series of notes pointing out the dire financial straits of the NHS. We were constantly having to shove stop-gap amounts of money in, and having fairly constant battles with the Treasury on that, including a huge row over the funding for statins when the national service framework for heart disease was introduced. They resisted that like mad. My role was to convince the PM that this was not the department doing a bleeding stump act. That there was a genuine problem here, and that we can’t go on like this.’

For these and other reasons, Blair knew that the service needed a serious injection of long-term funding, while believing in his bones that the NHS, like much of the rest of the public services, needed reform. Alan Milburn, Dobson’s successor, shared those views. If anything even more strongly.

Alan Milburn arrives

Milburn was a rising star, already tipped by some as a possible successor to Tony Blair, which did nothing to endear him to Gordon Brown, who believed he had a deal under which he would take over as Prime Minister if Labour won a second term.

Milburn had been minister of state for health between 1997 and late 1998 and closely involved in some of Labour’s lasting initiatives: the creation of what became a proper NHS inspectorate in the Commission for Health Improvement (now the Care Quality Commission) and NICE (the National Institute for Health and Care Excellence). He had, however, spent the intervening 10 months as chief secretary to the Treasury, a role that had given him a good idea of what might be possible financially. Milburn was also aware of private Labour party polling showing that support for the NHS was diminishing, particularly among the young. He believed both that some pretty fundamental reform was needed in order to produce better outcomes, and to make the service less paternalistic, less institutionalised, and more consumer oriented. But he also believed that he was unlikely to get that until sufficient extra money was on the table to allow the argument with staff to be one about reform, not the shortage of money. Milburn adopted a high-risk strategy.

2 days after his return to health he told the regular dinner of the ‘top ten’ – leading figures from the medical royal colleges, the BMA and the like – that the NHS was in ‘the last chance saloon.’ If it did not modernise, he said, it would die. In public he talked up figures showing huge variations in the cost of treatment around the country, large variations in outcomes, and indeed of patients’ chances of dying in hospital, depending on where they were treated.

There was a twin-track approach here. By highlighting the service’s variations in performance, and by implicitly attacking the BMA for obstructing progress, Milburn hoped to foster a greater pace of change. But by emphasising the service’s inadequacies he hoped also to loosen the Treasury purse strings. Blair, as we have seen, had already agreed that the service needed much more money. And in the November and December of 1999, there were heavy public hints from both Blair and Milburn that more money would indeed be forthcoming.,

The problem – entirely unsurprisingly – was that the Chancellor wanted to control all of this. Whatever other ministers might think, including the Prime Minister, he regarded public spending as entirely his bailiwick. He was already working on both what the March Budget might contain, and on Labour’s second comprehensive Spending Review due for the July of 2000, which would set out the spending plans for all departments for the next 3 years.

Early in Milburn’s tenure in an, at the time, off-the-record conversation (though to be fair Milburn does not recall this), he told this reporter, ‘It’s not him I need to convince,’ – gesturing towards Brown’s Treasury – ‘It’s him,’ – gesturing towards Number 10. In his memoir, Blair says he had ‘a conversation or several’ with Brown during this period about greater spending but ‘he was fairly adamant against doing anything big’.

Winter arrives… And so does Winston

The final and perhaps decisive step in the lead-up to Breakfast with Frost was the winter of 1999/2000. A later analysis by the Department of Health was to conclude that the NHS in fact did better that year than the year before. But that was not what it felt like at the time, and certainly not what the media headlines said.

As December turned into January there was a moderate outbreak of flu, something Labour had managed to escape during its first two winters in government. It was well short of the official definition of an epidemic. But alongside it went a 15-year high in other respiratory illnesses. The result was long trolley waits in casualty, cancelled operations and a shortage of critical care beds. A consultant from the Royal London made headlines by going on television news between Christmas and January to warn that seriously ill patients were being shunted around the country to find a critical care bed, and were thus at serious risk. Alongside this was the damaging story of an Ipswich hospital hiring a freezer lorry because its mortuary was full. The most distressing story – again the subject of headlines widely– was that of Mavis Skeet, a 78-year-old woman with throat cancer, whose operation was cancelled four times in 5 weeks, to the point where it became inoperable.

The final straw was Robert Winston. An internationally regarded fertility specialist, Lord Winston was the most famous television doctor of the day. Not only was he a Labour peer, he was seen as close to the Blairs. He gave an interview to the New Statesman that made the papers the Friday before Breakfast with Frost. He relayed the experience of his 87-year-old mother on a mixed sex ward after a 13-hour wait in casualty. ‘None of her drugs were given on time, she missed meals, and was found lying on the floor when the morning staff came on… she caught an infection and now has a leg ulcer.’ That was, he said, ‘normal’ adding that ‘the terrifying thing is that we accept it.’

On top of the personal story, however, was a much broader attack on Labour’s performance and tenure. The government, he said, had been deceitful in its claims to have abolished the internal market. It was providing funding ‘not as good as Poland’s’, while it was attempting to blame everything on its Conservative predecessor. Phrases like ‘we haven’t told the truth’ littered the article. The way the NHS was funded might even have to change, he said, if Britain was to have a health care system to match that of even of its less well-off neighbours.

Combined with the other terrible headlines, this was devastating stuff. That winter was dreadful. Indeed, Milburn is on the record as saying that he might not have survived that winter had he not returned, only recently, to health having had that crucial break at the Treasury in between. By now, thanks to the service’s performance and the arguments about whether the NHS was sustainable, only three of the main national newspapers were still, in their leader columns, supporting the NHS model – as opposed to some other arrangement involving more charges, private insurance, or social insurance, or at least that a debate should be held about it.

Time for breakfast

On the Saturday 15 January 2000, according to Blair’s account of his time in office, he had already decided to make a commitment ‘to raise NHS spending to roughly the EU average.’ He says he worked through the possible permutations of what that would mean with Robert Hill, his health adviser – although Hill has no clear memory of that. ‘I talked again to Gordon,’ Blair says, ‘who became more adamant [against doing anything big]. But I was convinced, as a matter of profound political strategy, that the decision had to be taken and now.’ To signal such a commitment would have its own determinative impact, he says. He also took the view that with Milburn now at health, ‘we had a chance of getting the reform’.

So the next day Blair went on Breakfast with Frost and deliberately said it. In Blair’s words, ‘It was a straightforward pre-emption.’ And to reporters like me on the day, it was clear that it was a bounce on his Chancellor. By early afternoon it was possible to talk to Simon Stevens, Milburn’s special adviser, who had caught up with what was going on, and to Robert Hill in Downing Street who said ‘we’ll get you those figures’ as I was giving him my understanding of them. No amount of phone calls, however, managed to raise the Chancellor’s advisers. These days Ed Balls, Gordon Brown’s most senior special adviser and a future Labour Cabinet minister and shadow chancellor, agrees. ‘It did come out the blue for us [at the Treasury]’. But that leads us to the other, and not incompatible, version of the Wanless review’s origins.

Origins version two: ‘This did not happen because of one interview on the Frost programme’

Towards the end of 1999, the Treasury was already working towards the March 2000 Budget and Labour’s second comprehensive Spending Review, due in the July. Gordon Brown, Ed Balls, Ed Miliband – Brown’s other top adviser – and indeed the Treasury more broadly, knew something had to be done about the NHS.

Thinking, on a jet plane

‘We had levered some more money into the NHS in the first comprehensive Spending Review in 1998,’ Balls says. ‘But we were continually moving short-term sums of extra money in to deal with winter pressures and the like, and we needed to get something that changed the paradigm in terms of modern health spending.

‘There was more that we could do within our fiscal rules. But unless you could make the case for more taxation there was only so far that you could go. So, by the end of 1999, we felt we had got to the end of the road. If we were going to fight the [2001] election on “schools and hospitals first”, which was our plan, we did not feel as though a 3-year settlement for health in the 2000 Spending Review would be enough. We needed a paradigm shift. And our view was that you had to make the case for the need before you could go on to the argument about tax.

‘So what we needed was a long-term vision of the sort of health service we wanted, and fight the election with that plan. But have a financing review which has not yet reported, but will report after the election. And then after the election you say, “We have a mandate from the election to deliver our 10-year plan, and the financing report, which was in our manifesto, says this is what is needed…”, and therefore we get on and do it.

‘So, at the end of 1999, Ed [Miliband] and I were flying out to New York for an international meeting and talked all this through before we met Gordon and Bob Shrum [the long-time Democrat political consultant]. We came up with a twin-track approach. Which was first to push the perspective about the National Health Service into a longer time frame, and then to start a pre-election debate about the funding of the National Health Service – one which could figure in the manifesto for the general election, but which would not be concluded until we had a mandate to deliver that manifesto in the second term.’

It was tax, not just spend

As far as Ed Balls is concerned, that was the origin of the Wanless report. A report that would make the case for much more generous funding for the NHS and which would, in turn, justify the tax increase needed to achieve it. And that too is the view of Ed Miliband, Brown’s other key adviser and future Labour party leader. Miliband also – quite independently – remembers that long plane journey and the lengthy discussion ‘about how do you argue for the proper financing of the health service?’

‘And I remember Gordon saying, “You can’t just come out of the middle of nowhere and say this is what we are going to do. You have to methodically go out there and make the case for it.” We needed a review.’

Wanless, Miliband says, ‘certainly did not happen just because of one interview on the Frost programme. For the Treasury to be volunteering to spend a lot of money on the health service is quite an unusual thing. But that was the case. It was long planned in the sense of making this argument about financing the health service properly, and then raising the taxation needed for that to happen.’

Nick Macpherson, the Treasury’s director for public services at the time and later its permanent secretary, confirms that by the end of the 1990s the Treasury was well aware that the NHS needed more money, but was also thinking about how to raise the revenue to pay for it. There had been some growth in NHS expenditure since Labour took power, Macpherson says, ‘But I think it is fair to say that the outputs of the service were not consistent with the vision of a New Labour government, elected with a huge majority, which was promising not just to change public services but to transform them.’

In the late 1990s there had been a big surge in revenue. ‘But by the early 2000s the days when we were awash with tax revenues were beginning to recede. So if you were going to give the NHS more resources over the medium term, which I think everyone agreed was almost certainly necessary, you needed to get public opinion on side.

‘So, from a Chancellorial and Treasury point of view this wasn’t simply about announcing spending increases. It was also about trying to create a bit of a public debate to facilitate serious revenue measures that would help finance the health service in the medium to long term. Like a lot of the reviews that Mr Brown had commissioned, and there had been quite a few of them by then, the review process was designed to try to create an emerging consensus.’

By 2001, Macpherson says, Milburn and Blair were developing much more of a reform agenda for the NHS, ‘But I don’t think the Blair gang ever really got their head around the revenue which would be necessary to finance it. So that was part of the thinking underpinning Wanless.’

Love’s Labour’s Lost: Number 11, Number 10 and the Department of Health

The Treasury was, of course, interested not just in more money for the NHS but in the modernisation of its operations to provide better and more productive services. And in the Blair government, there was, of course, the second power base in Gordon Brown’s Treasury, which had already introduced hundreds of targets for public service improvements through detailed departmental public service agreements, including for health. At the same time, Blair, as we already have seen, was deeply committed to public sector reform in general, and of the NHS in particular.

One factor in this, Balls says, was the Treasury’s relationship with health. ‘With some departments, our relationship was very bilateral. With trade and industry, for example, and with the regions and transport. In the case of education, Tony had things he cared about and Gordon had things he cared about, and Gordon always had a good relationship with Blunkett [David Blunkett, Labour’s first education secretary]. Whereas with health, from a policy point of view, the health department was really run from Number 10. We’d discuss things with Jeremy Heywood [the Prime Minister’s principal private secretary and future Cabinet secretary] and Robert Hill [Blair’s health adviser], and we would have left it to Hill to sort the department out.’ Which is also a polite way of saying that Alan Milburn and Gordon Brown were not exactly soulmates.

‘We were in this conversation with Number 10 about all this already. We were wanting to focus on what kind of long-term health service are we trying to achieve? What goals do we want to achieve? What outcomes do we need? And how do we get the financing to do it? And Tony knew that is what we wanted to do. It was what he wanted to do.

‘And then suddenly, out of the blue, on the Frost programme, he says this thing about getting us up to the EU share.’

Ed Balls’s theory is that Robert Hill had written Blair a policy note saying, ‘We really should be ambitious in going for the EU share of GDP.’ ‘Tony reads it and goes on the Frost programme and says it. And maybe he said it because he wanted to be on the lead on health for the Budget, and maybe it was just in his head and he said it… and who cares?’

Hill is not entirely sure about that, and the government papers that would make it clear are not yet available. Hill says: ‘I was asked to write a note ahead of the interview, but I wasn’t really given the context, and I was not privy to the way the Prime Minister’s mind was working. I had previously briefed the PM on the percentage of GDP that various European nations were spending on health. But my recollection is that this was more in the context of bolstering the case for upping our game on health spending, rather than understanding that we were specifically considering going for the EU average. I genuinely can’t remember whether I put the EU figures in the note ahead of the Frost programme. Certainly there was no modelling.

‘When he said it, I was surprised by the precision of the commitment. I certainly wasn’t sitting there thinking Oh, right he has said it – good. Tick. If I was expecting anything, it was that he might commit a Labour government to more substantial real-terms increases in NHS spending year on year. If I’d been expecting the commitment to the EU average, I wouldn’t have needed to put that call in to Clive Smee.’

Furthermore, in sharp contrast to Ed Balls’s recollection, Hills says he was unaware of the Treasury game plan that became the Wanless report, it becoming clear only after Breakfast with Frost with ‘the Treasury becoming more open about the Wanless project’.

What is clear is that, in Ed Balls’s words, Blair’s announcement was both annoying and frustrating. ‘Gordon was grumpy about it: “Why is he doing it on the Frost programme when we are trying to do it in the Budget?”.’

‘The reason we were frustrated was twofold. One, he made the measure of success the input, not the output. And our whole strategy was to have the money following the goal. The goal should be about the ambition of our health agenda, and there is nothing galvanising or dynamic about the EU share of GDP. It is an input. It doesn’t say anything about why, or how well it is spent.

‘And secondly, we always knew that to win this argument, we had to put in place the reforms and accountability which would persuade people that the money would be well spent – and the problem with that announcement was it was not really attached to any reform. In that sense it was a bit old fashioned. Let us set an input spending target rather than focus on the outcomes you wanted to get for that. So it was a bit jarring for our political strategy. But you know – on the balance of this – while we were annoyed about it, we then thought fine. This was going to help shake things up. He was throwing health into a longer term perspective. So it was consistent with everything we were trying to do.

‘But I would have had some slightly difficult conversations with Jeremy [Heywood] about why is he doing this? Why didn’t we talk about this in advance? Why was there not a bit more conditionality?’

And, Balls says, it was unusual. Despite what their staff dubbed ‘the TB/GBs’, ‘for all that is said about Blair and Brown, we very rarely surprised each other. There was genuinely a conversation about how things were to be done. If there was a disagreement it was normally resolved before things went out. A bit of give here, or a bit of give there. There was not normally ‘out of the blue’. Tony rarely saw Gordon interviews and thought Oh God, why has he said that? – or vice versa.’

Alignment at last

What immediately followed Breakfast with Frost, according to Blair, was ‘a few days of tin-helmet time with Gordon’ but the announcement ‘allowed me to get on with the other part of the plan: to work with Alan on a serious proposal of reform’.

What eventually emerged, to go with the March Budget, was a formal statement from Blair the day afterwards. It announced work on a multi-year plan for modernisation and reform of the NHS.

Ed Balls says the Treasury team pressed hard for that. ‘We needed something that showed we had ambitions which went beyond the 2000 Spending Review, and it needed to be big and significant, so the PM agreed to do the statement on the 10-year plan the day afterwards.’ The Prime Minister fronting the statement, with the Chancellor sitting ostentatiously alongside him, was ‘symbolic and important’, Balls says, underlining the scale of the ambition.

In the wake of Breakfast with Frost, however, some commentators viewed that announcement much more cynically. Brown had found the money, or at least the first tranche of it, but Blair was in charge of spending it. If the project failed, Brown would know, and would make sure that everybody else knew who was to blame.

In his statement Blair spelled out the manifold challenges that the NHS faced, promising action. He invited the BMA, the royal colleges, the unions and others to help devise by July ‘a detailed 4-year action plan for the NHS’. That did indeed become the ‘big tent’ operation that produced the NHS Plan, subtitled A plan for investment. A plan for reform – although by then it had morphed into a 10-year plan. Its promises included a more responsive service and more of pretty much everything – staff, equipment, hospitals, students – while setting Labour’s first targets for cutting waiting times. It also announced a new ‘concordat’ with the private sector, without that new relationship being very precisely defined. And, of course, in the Budget the Chancellor had announced the as yet unnamed Wanless review.

Blair and Brown were now, at least temporarily, aligned. The strategy that would lead to the tax increase necessary to hugely improve the NHS, and increase health expenditure up to the EU average, was in place.

* See, for example: Glaziers and window breakers: former health secretaries in their own words. 2nd edn. The Health Foundation, 2020 (; Never again? The story of the Health and Social Care Act 2012, 2012; ‘The world’s biggest quango’: The first five years of NHS England, 2018 (both Institute for Government and The King’s Fund); and finally, The five giants: A biography of the welfare state, William Collins, 2017.

At the time I was public policy editor at the Financial Times.

The only remotely comparable independent exercise was the Guillebaud report of 1956. Set up by the Treasury in the hope it would recommend cost constraints at a time when NHS expenditure appeared to be out of control, the report concluded that to be anything but the case. Instead, it made recommendations that ‘will tend to increase the future cost’. Unlike Wanless, however, it did not make long-term projections of likely future costs.

§ ‘Internal market’ was always a misnomer. In theory, and indeed at the time in practice, the private sector competed for NHS contracts although to a very limited extent.

Known in the jargon as a ‘quasi-market’ because, while it had elements akin to a private sector market, patients – of course – did not themselves pay.

** I remember declining to take part in a BBC programme whose thesis was that privatisation of NHS trusts was inevitable. My view was that it was possible, but not inevitable.

†† Seven out of ten felt waiting times were too long in polling for the NHS Plan. See Annex 1, The NHS Plan. Department of Health; 2000 (

‡‡ For example, Blair had already set up a cancer action taskforce. See:

§§ Labour had abolished GP fundholding, but not the purchaser/provider split. Health authorities had morphed into Primary Care Trusts which continued to commission care from nominally competing NHS trusts and the private sector, even though they had had a duty of cooperation placed on them.

¶¶ The three were The Guardian, the Daily Mirror and the Financial Times.

*** The fiscal rules were that Labour would borrow only for capital investment, financing current expenditure out of tax and other revenues. And that it would keep public sector debt at a ‘stable and prudent level’, which it defined as less than 40% of GDP. Both rules applied on average over the economic cycle, rather than having to be met each and every year.

††† This chimes with Gordon Brown’s account in his memoir My life, our times. Vintage; 2017 (p 163).

‡‡‡ Gordon Brown, in his memoir, ibid, (p 164) says that, ‘Tony had announced the gain – the spending increase – without announcing the pain – the tax rise.’

§§§ One other exception was Blair’s announcement in March 1999 that the government intended to abolish child poverty over 20 years.

Previous Next