Don't backpedal on health reforms


There's speculation around the Westminster Village that, humiliated at the polls, the Liberal Democrat leader Nick Clegg will demand more from his coalition partner, the UK Prime Minister David Cameron. The argument is that LibDem voters don't like the Conservatives' domination of the coalition agenda, so more Lib Dem policies need to be adopted. (Conservative backbenchers, by contrast, express astonishment at the idea that a party which has just been so heavily defeated have the right to demand anything of the Tories, who actually picked up local council seats, despite being in a strong position since the last round of local elections.)

Still, in Nick Clegg has his way, one of the prices that is being talked about is abandonment of the NHS reforms that have been spearheaded by the Conservative Health Secretary Andrew Lansley. There is even talk of Clegg becoming the Health Secretary as well as Deputy Prime Minister. Paying either price would be a grave mistake.

Before the election, the Conservatives did a lot of serious work on the reform agenda, specifically in health and education. The model is similar: basically, let anyone (not just public-sector bodies) provide the service, let customers choose, and let the taxpayers' money follow those choices. An internal market. The Conservatives worked out that they had to introduce these reforms quickly – Education Secretary Michael Gove was out of the trap like a startled whippet – because it would take years to get them working and show results.

We have wasted 15 years in health and education reform. Under Mrs Thatcher, the Conservtives developed the internal market model (for which the ASI can claim some credit in designing), and started to put it into place. But too late. When Tony Blair took office, he had to pay debts to his left, and gave those briefs to left-wingers who unwound all the Tory reforms. Five years later, with billions wasted in trying to improve these monolithic state monopolies, Blair was visibly regretting that, and started trying to re-introduce the internal market, against resistance from his party and his Chancellor.

Internal markets are the right way to bring competition, choice, and innovation into health and education. The last thing we should do is to give up on it now because of some short-term political problem in a minority party. If we backtrack now, it will be 25 years we have lost.