A maximum 18-week wait from GP referral to hospital treatment by 2008 is unquestionably the most ambitious target yet set for the NHS. It is a reflection of the growing confidence of ministers that the NHS can deliver on the pledges made when Tony Blair launched the NHS Plan in 2000.

In the past year alone, the number of patients waiting more than six months has fallen by 60 per cent and on present trends no patient will wait longer than this by the target date of December 2005.

With hospital waiting lists heading in the right direction, both main parties have shifted their focus to developing the NHS as a modern, consumer-oriented service fit for the 21st century. The Government has to fight on two fronts - against the Tories who pledge greater patient choice, greater private sector involvement and less red tape and against the Labour left, which claims that patients are not interested in choice, only in a high standard of local service, accessible and free to all.

On choice, Labour is offering patients the pick of any hospital in the country, NHS or private, provided the hospital does not charge more than the NHS tariff for the treatment . The Tories go one better, by matching this commitment but offering patients with cash to spare the additional option of subsidised private treatment, where the cost exceeds the NHS tariff.

The amount of the subsidy has been set at 50 per cent of the NHS tariff, translating to £400 off the Bupa price of a cataract operation (50 per cent of the £800 NHS cost) reducing the private cost from £2,400 to £2,000. This will still leave private treatment as the preserve of the middle classes, a point John Reid exploited yesterday by promising that under Labour's proposals "no one will gain unfair advantage in medical treatment because of their financial position".

But the bigger drawback of the Tories' proposals is the £1.2bn (by the party's own estimate) deadweight cost of subsidising existing private health users - a sum that will not buy a single extra hip replacement or cataract operation.

The Tories also go one step further on the supply side. Private hospitals would be given the right to bid for NHS work if they can meet the NHS tariff. Labour's policy of bulk buying operations to meet short-term capacity problems leaves the initiative with the public sector. The Tories claim their approach of levelling the playing field between private and NHS hospitals would stimulate greater involvement on a long-term basis by the private sector.

Labour is sweeping away a swath of centrally imposed targets and extending patient choice to include the 17.5 million people with chronic conditions who will be offered more support to live at home.

The emphasis will be on local control, with all hospitals offered the chance to apply for foundation status but with a requirement to meet a handful of national targets on waiting times, public health and social care.

The Tories again claim they will go further by ending central control, removing all nationally imposed targets and stripping away the red tape, which they say is stifling innovation.

Doctors and managers have complained about how bureaucracy in the NHS stops them from doing their jobs. But that was a legacy of the centralising tendency of the former health secretary Alan Milburn. Labour MPs on the left, such as Frank Dobson, another former health secretary, argue that people do not want choice, only a good local hospital. But Mr Reid's riposte is that this has not been achieved in 60 years. In the absence of centrally driven targets, choice backed by a system of payment by results, is seen as the driver to change and increase standards.

A difficult question is what happens to hospitals that lose out when patients start voting with their feet. They will not qualify for foundation status and will lose funds. So the failing hospitals will get worse. Labour's plan provides for "remedial action" for failing hospitals, including franchising and ultimately the replacement of their entire management. But if none of these measures work, Mr Reid is open to idea that some may have to close, if that is the effect of the choices exercised by local people. That may prove the real test of Labour's plans.