Steve Richards: Health reforms are the real faultline under the Coalition

One Lib Dem member tells me their opposition to the NHS changes is as important now as their stance against the war in Iraq

Nick Clegg is becoming an interesting interviewee, a hazardous role for a leading politician. The hazards are greater when navigating around the minefield of the NHS reforms and the potentially dangerous "pause" that was announced last week.

On the BBC's Today programme yesterday Clegg opened the door slightly to the private discussions he had held with his close ally Norman Lamb. Clegg said he had talked about the reforms every day with his political friend, a sign of the anxious intensity that has belatedly arisen over the issue. On Sunday, Lamb threatened to resign unless changes were made. In the Today interview Clegg went on to reflect on an amendment that Lamb seeks, one in which GPs would have the right not to join newly formed consortiums. Revealingly, Clegg pointed out the potential difficulty with Lamb's proposal by suggesting that a two-tier health service might surface. This is the view of the Health Secretary, Andrew Lansley, who must regard the "pause" with growing alarm.

At this early stage Clegg did not state which side he is on in regard to this minor internal debate. He merely outlined the downsides as well as the benefits of the change as advocated by his colleague. The small practical example highlights the complexity of relatively modest change for the Coalition as it seeks to address the politics of the NHS reforms and the substance. Pauses are rather like referendums. They bring fleeting calm and then can be the cause of convulsions greater than those they sought to address.

In this case, once a mountain of interconnected proposals surfaces, it becomes extremely difficult to alter the contours. Lansley should have been told to go back to the drawing board immediately after the election. It is not his fault that he did not do so. In the early autumn of last year, a period of almost unprecedented hyper-activity at the top of a government, David Cameron and Clegg were behind Lansley. Cameron was partly excited about what he assumed would be the familiar and, for him, comforting political choreography, the Coalition and the Blairites marching together once more. To his alarm the Blairites oppose the NHS eform. Last autumn Clegg saw the NHS reforms as a neat fusion of his party's support for localism and the Tories' enthusiasm for market-based solutions. To his alarm, parts of his party are less reassured by the coming together. The early enthusiasm and late panic is already causing a degree of chaos as the NHS wonders what will happen next.

Clegg's challenge involves much more than an uneasy navigation between Lansley, Lamb and his own views on the issue. On yesterday's Today programme, he was justified in asserting his party's resilient commitment to the Coalition, a resilience that has been too willingly robust at times. But he cannot claim that his party is united in relation to the NHS.

One of the more thoughtful Lib Dems tells me their opposition to the NHS changes is as important now in defining the party as their stance against the war in Iraq. Yet at the top there are ministers who were enthusiastic about the changes in the first place, including their minister at the Department of Health. Next, there are those like Lamb who want a slower pace of implementation and other relatively moderate changes.

The view of their party as expressed at their recent conference in Sheffield is opposed for more fundamental reasons. The former MP, Dr Evan Harris, argues that the proposed reforms contain "gross breaches" of the coalition agreement with what he calls "a total absence of locally elected representatives on commissioning bodies, and the proposed abolition of those commissioning bodies, the primary care trusts".

But the motion that was carried in Sheffield went much further, calling for repudiation in the Bill of the proposed NHS market and a redefining of the role of the regulator of NHS foundation trusts. Specifically, the motion called for an enterprise commission, statutory safeguards to prevent the undermining or fragmentation of remaining NHS services, finances, research and training. The motion also sought much stronger democratic oversight and accountability at a local and national level of the commissioning decisions of GPs. Apart from that, the Sheffield conference thought the Bill was terrific.

The divisions within the two parties over the NHS are as significant as those between them, but it is safe to conclude that Clegg cannot live with minor changes alone to Lansley's Bill. Into this mix comes the referendum on the Alternative Vote. Sometimes in politics two entirely unrelated events collide. The "pause" in the NHS Bill coincides with the referendum next month. Never before has a campaign been viewed with such indifference and yet will have such explosive consequences. If there is a "No" vote the stakes over the NHS become much higher. Already the Liberal Democrats have changed their publicly declared pre-election views on the deficit, VAT and student fees. On the whole they have done so willingly. If they lose the referendum I wonder how many of them would put up with anything less than a major overhaul of the NHS reforms. It is hard to imagine the Liberal Democrats going into the next election without electoral reform and as willing accomplices to a largely unaltered revolution in the NHS.

We should not forget that the stakes are high for David Cameron, too. How curious it is that when a controversy erupts over coalition policy, the focus is on Clegg rather than the Prime Minister, in this case a leader who declared his political purpose could be summarised in three letters, NHS. Evidently, Cameron believed until the last few months his purpose was being served through the reforms.

The precise impact on the Coalition of a referendum and the reform of a reform is impossible to forecast. For now, I make a single prediction. The forthcoming changes to the NHS Bill will involve the appointment of more bureaucrats to regulate, mediate and to protect us from the potential consequences of the original reforms, the "building blocks" which Clegg revealed in his Today programme interview would still be in place. The Conservatives' vision of a "post bureaucratic age" will involve the appointment of more bureaucrats. They would be wiser to scrap the Bill and start all over again.