The Government cannot afford to delay essential reform of Britain's public services, David Cameron warned today.
As ministers prepared to publish legislation to radically overhaul the NHS, the Prime Minister said that failure to modernise was draining resources away from the public sector.
In a keynote speech at the Royal Society of Arts in London, he dismissed suggestions that services could carry on as they were as "a complete fiction".
The Government's plans for the NHS were denounced today by six health service unions - including the British Medical Association and the Royal College of Nursing - as "potentially disastrous".
But Mr Cameron insisted that change was essential.
"Every year without modernisation the costs of our public services escalate. Demand rises, the chains of commands can grow, costs may go up, inefficiencies become more entrenched.
"Pretending that there is some 'easy option' of sticking with the status quo and hoping that a little bit of extra money will smooth over the challenges is a complete fiction.
"We need modernisation, on both sides of the equation. Modernisation to do something about the demand for healthcare, which is about public health. And modernisation to make the supply of healthcare more efficient, which is about opening up the system, being competitive and cutting out waste and bureaucracy.
"Put another way: it's not that we can't afford to modernise; it's that we can't afford not to modernise."
With the Government also set to publish details of its school reforms next week, Mr Cameron cited the experience of Tony Blair, who found that delaying public service reform simply resulted in "institutional inertia" against change.
He acknowledged that in the past the Conservatives had not always shown sufficient respect for those who worked in public services, but insisted he would "revere, cherish and reward" an ethos of public service.
"I believe previous Conservative governments had some really good ideas about introducing choice and competition to health and education - so people were in the driving seat. But there was insufficient respect for the ethos of public services - and public service," he said.
"The impression was given that there was a clear dividing line running through our economy, with the wealth creators of the private sector on one side paying for the wealth consumers of the public sector on the other.
"This analysis was - and still is - much too simplistic. Public sector employees don't just provide a great public service - they contribute directly to wealth creation."
He denied he was planning "a kind of public service version of a laissez-faire economic policy" with the Government's reforms for schools and hospitals, "where winners are created at the expense of those who get left behind".
"The state has a hugely important responsibility to ensure clear, basic standards are met, the rights of users are maintained and independent inspection is carried out in our public services and we are in no way abrogating that," he said.
The Prime Minister also rejected suggestions that the Government was trying to do "too much at once" in pushing through change.
"Every year we delay, every year without improving our schools is another year of children let down, another year our health outcomes lag behind the rest of Europe, another year that trust and confidence in law and order erodes," he said.
"These reforms aren't about theory or ideology - they are about people's lives. Your lives, the lives of the people you and I care most about - our children, our families and our friends.
"So I have to say to people: if not now, then when? We should not put this off any longer."
Mr Cameron also explained comments in which he appeared to describe the NHS as a second-rate National Health Service as a slip of the tongue.
His slip-up came during a radio interview this morning on BBC Radio 4's Today programme.
Asked if he would apologise for using the term, Mr Cameron said: "I think if you listen to the interview, I immediately said we shouldn't settle for second best and that is exactly what I meant to say.
"I speak often quickly, I don't just have a pre-arranged order of saying things and sometimes you can get a little word out of place and I immediately said, if you listen to the clip, we shouldn't settle for second best, that was the point I was making."
To widespread guffaws from the assembled media, he added: "We shouldn't settle for second best is what I meant, it's largely what I said, if you skip over a quick word in the middle."
In a letter to The Times today ahead of Wednesday's publication of the Health and Social Care Bill, the heads of six health unions expressed their "extreme concerns" about plans to create greater commercial competition between the NHS and private companies within the health service.
The signatories, including BMA chairman Hamish Meldrum, RCN chief executive Peter Carter and the heads of health for the Unison and Unite unions, said: "There is clear evidence that price competition in healthcare is damaging."
It follows a report by the NHS Confederation which acknowledged the potential benefits of the changes, which will give GPs power over commissioning treatment, but warned they were "extraordinarily risky" at a time when the NHS is facing its toughest financial constraints for a decade.
TUC general secretary Brendan Barber said the Government's plans would lead to the "destruction" of quality services across the public sector.
"Ministers are using the challenge of the deficit to cover a fundamental transformation of public services, which voters would have rejected if it had been put forward at the General Election," he said.
"We are not talking about a few years of economy as the deficit reduces, but a systematic and permanent reduction in services.
"The Government's clear aim is a permanently smaller state, markets taking over from public accountability and privatisation's profit motive replacing public service - deficit reduction is just the cover story."