Brown announces dramatic U-turn in healthcare as New Labour think-tank deserts the party

Gordon Brown is to announce a dramatic change to the principle of publicly provided healthcare by offering cancer patients private treatment if none is available on the NHS.

The Prime Minister will unveil plans tomorrow for greater involvement of the private sector in the NHS in a policy statement entitled Building Britain's Future.

For the first time, the state will pay private doctors to see cancer patients who are unable to access NHS specialists within the Government's two-week target.

The move, which the opposition parties will claim is a climbdown and bears a strong resemblance to the Tories' former "Patient's Passport" policy, marks an attempt by Mr Brown to portray himself as a radical reformer after years of opposing Blairite reforms to public services.

Meanwhile, last night the Institute for Public Policy Research, the think-tank most associated with Mr Blair's glory years, said that it is turning its back on the party – dramatically declaring that the New Labour project is "dead".

The IPPR, which launched the careers of David Miliband and Patricia Hewitt and marks its 21st birthday tomorrow, says the Government under Mr Brown is no longer offering the fresh and progressive ideas that won the party three election victories.

This shows the ideological struggle Labour will confront if it is to stand any chance of winning the next election, and the challenge Mr Brown faces if he is to convince his party he is making progress.

Alan Milburn, the arch-Blairite former health secretary who clashed with Mr Brown over the privatisation of health services, announced yesterday that he was standing down as an MP at the next election.

Mr Milburn, whose review of inequalities commissioned by Mr Brown will be published before the summer, said he was quitting to pursue "other challenges".

The IPPR's co-director, Lisa Harker, said that all three parties have failed to acknowledge the challenges of the economic crisis, climate change and the loss of faith in politics.

But she added: "New Labour is dead. Old Labour is dead. Potentially progressive Conservatism is dead. None of these provide answers. What is required is a radical shift.

"It is a myth that we are now in any sense a New Labour think-tank, but that does not mean we want to be a New Tory think-tank. What we are trying to push are radical and progressive new policies to anyone who shares our values.

"New Labour has achieved a great deal, more than it's given credit for, but it is becoming clear that most of the ideas that drove that agenda are reaching the end of their useful lives."

As Mr Brown battles to regain the initiative, an education White Paper launched by Ed Balls on Tuesday will unveil measures for more one-to-one tuition for schoolchildren.

The Building Britain's Future document will promise a shift from public service targets driven by Whitehall to the "entitlements" of patients and parents.

Government sources said that if a primary care trust cannot provide a cancer patient with a specialist doctor on the NHS within two weeks of a referral by their GP, the trust will have to pay for a private consultation for the equivalent cost.

In practice, however, 97 per cent of NHS trusts in England meet the deadline, which means that this would apply only to a few hundred patients.

But what is more significant is the tearing-up of the principle of public provision of healthcare for acute treatment. At present, only elective surgery such as hip replacements and cataract surgery are provided through private treatment centres.

Mr Brown made a key speech six years ago, making it clear that he was wedded to the principle of a publicly provided NHS. He said: "Equality of access can best be guaranteed not just by public funding of healthcare but by public provision."

The two-week target was first introduced for suspected cases of breast cancer in 1999, and extended to all cancers in 2000.

But despite steady improvements in survival rates since 2000 for most of the 21 common cancers, research published in 2007 found the UK's five-year survival rates were still below the European average, which the Government's "cancer tsar", Mike Richards, put down to delays in diagnosis.

The publication of the "Cancer Reform Strategy" in 2007 extended the target again, this time to include all breast referrals, regardless of whether cancer was suspected.

Cancer causes more than 150,000 deaths in the UK every year, and two in five of the population will develop cancer in their lifetimes.