Hewitt refutes 'meltdown' claim but says NHS is still failing

Patricia Hewitt has been accused of unfairly attacking NHS staff after saying that the service "fails far too many people".

The Health Secretary made it clear that she intends to ride out the storm over NHS deficits, which have led to operations being delayed. Ms Hewitt used a speech to the London School of Economics last night to hit back at critics who have accused her of presiding over a "meltdown" in NHS care, and of putting at risk 5,000 front-line jobs in the health service as a result of cash shortages.

She said reforms were part of the solution to the ills of the NHS, not its problem. "While some parts of the NHS are world-beaters, the NHS as a whole is not," she said. "It still fails too many people, especially the poorest, most vulnerable and most in need. That's why we need a second stage transformation, giving patients better service as well as better value for money.

"We can't achieve these goals through national targets and command and control. We need to ensure that the system itself has the right incentives for continuous improvement and better value for money embedded into it."

The Liberal Democrat health spokesman, Steve Webb, said: "With this government, it is always the same. When things go well, they take the credit. When things go wrong, they blame front-line staff. These cuts are down to spectacular government mismanagement of the extra taxpayers' money that has gone into the NHS. The Government's reforms will simply increase the debts. Ministers do not have a clue how to handle hospitals pushed to the brink of closure."

Ms Hewitt will confirm today that GPs will launch a programme in January to allow patients a choice of four hospitals or clinics where they can go for treatment. Some may be some distance from home, but it is intended to speed up operations for those prepared to travel.

The Health Secretary is refusing to bail out hospitals faced with a deficit. She had ordered that within two years, NHS primary care trusts and hospitals should be in surplus or balancing their books. Her remarks risk infuriating her critics and patients whose operations have been delayed, but Ms Hewitt said that the reforms were exposing deficits which were previously swept under the carpet.

"Because the system is far more open, far more transparent than we have had it before, it is revealing underlying deficits that in the past were concealed. And because payment by results gives every hospital a real incentive to improve its clinical efficiency and its cost efficiency, the new system will help solve the problem of the deficits and raise productivity in the NHS," she said last night.

In a memorandum to Labour MPs, Ms Hewitt also rejected claims by a think-tank, Reform, that the NHS faces a deficit of nearly £7bn by 2010 unless a "productivity miracle" was achieved. The report, NHS in 2010: Reform or Bust, by Professor Nick Bosanquet of Imperial College London, warned that cost pressures on the health service such as extra staffing, prescribing and PFI schemes, would demand an extra £18.2bn of funding, while an extra £11.4bn was likely to be available.

There was more embarrassment for the Government at the weekend over a leaked NHS e-mail by Sarndrah Horsfall, the chief of staff to Sir Liam Donaldson, the chief medical officer, ordering a halt on new commitments to cover all programme budgets. The delays were ordered to save money as hospitals exceeded the Government's waiting times for operations.