Fundholding GPs, the Prime Minister and Stephen Dorrell, the Secretary of State for Health, attacked the plans, which mark a shift from the outright abolition of fundholding threatened in the past.
Mr Smith told The Independent in an exclusive interview that he wanted to proceed "by consent" in replacing GP fundholding with "joint commissioning", in which groups of family doctors would be expected to act together in planning services for their area. He made a distinction between single- handed GP fundholders, who would be told to join commissioning GPs, and fundholding groups who may be allowed to continue. "That is one of the reasons why it is important to try to take people with us. It is going to be evolution rather than revolution."
Mr Smith said there were circumstances in which fundholding could be allowed to continue, if it was with the agreement of the other GPs in the area. "Ultimately, if we had a number of GP contractors saying we are not going to go in with these locality groupings, we might have to say, `Sorry, you have to'. And there is provision if you have everyone else in a partnership who agrees and it is within the guidelines of the locality group for you to continue."
Mr Smith will seek to introduce an NHS Bill within the first year of a Labour government to change the present framework of 100 health authorities, possibly reducing their numbers, and turning them into more strategic bodies with responsibility for promoting public health and monitoring performance of GP commissioning groups. But he disclosed that he envisages using the Government's own NHS Primary Care Bill, which received a second reading in the Lords last night, to introduce pilot schemes for joint commissioning before the gradual change took place.
In a speech setting out his plans, Mr Smith told a London conference: "Our plans for GP commissioning would eliminate the two-tier system which GP fundholding has created and which has led to many hospitals imposing longer waits for treatment for the patients of non-fundholders. Local commissioning groups should also be properly accountable to local voices so that the views of patients and residents were taken into account."
Mr Smith yesterday committed Labour to matching the Tory's election pledge to spend an extra pounds 1.6bn on the NHS next year, if Labour won the general election. He refused to meet the Tory pledge to spend more in real terms every year over the lifetime of the next Parliament under the tight spending constraints enforced by Gordon Brown, the shadow Chancellor.
Mr Dorrell claimed that if Labour won the election, more than 50 per cent of family doctors who had chosen to manage their own budgets would have these budgets stripped from them. "They will be shackled - many against their will - into a form of chain-gang committee-based commissioning."
Mr Dorrell said there was a raft of unanswered questions following Mr Smith's speech.
He said it was unclear whether commissioning groups would be allowed to retain any budget savings and what incentive there would be for better purchasing.
Clive Parr, of the National Association of Fundholding Practices, warned there would be resistance from GP fundholders.
"A recent poll of fundholders showed quite clearly that the vast majority of fundholders oppose the concept of commissioning groups," he said.
Dr Judy Gilley, joint deputy chairman of the British Medical Association general medical services committee, said: "We would wish to see the evolution to local commissioning groups is voluntary, piloted and protects the best interests of fundholding practices as well as non-fundholding practices."
Labour's plans to reform the internal market include:
r Longer-term agreements of three to five years, to replace the annual contracting round;
r An end to individual patient invoicing and extra-contractual referrals procedures;
r The disappearance of many management tasks from GP practice level, health authority level and hospitals;
r Consideration of a reduction in the number of health authorities;
r A reduction to one-tenth of the present number of agreements and contracts in the health service.Reuse content