Blair creating a two-tier NHS, says key adviser

A study of the National Health Service ordered by Tony Blair has warned that the Government's flagship policy to free successful hospitals from Whitehall control is in danger of creating a two-tier system of health care.

Adair Turner, a former director general of the Confederation of British Industry, has warned the Prime Minister that plans already under way to create a network of prestige "foundation hospitals" could split the NHS if they are introduced too quickly.

Mr Turner, a member of Mr Blair's Forward Strategy Unit set up to provide "blue skies" thinking, has submitted his report to the Prime Minister on the long-term structure of the NHS.

Whitehall sources say Mr Turner's most controversial proposal is that every operation and treatment in the NHS should be given a "price tag" to help GPs and patients shop around for treatment at NHS and private hospitals. The move would pave the way for a further expansion of the private sector's role in performing NHS work.

He supports a long-term shift to much greater "patient choice", saying pricing individual treatments will allow money genuinely to "follow the patient". But the plan will be seen as a return to the internal market introduced by the Tories and scrapped by Labour when it came to power in 1997.

The proposal, from the heart of the Downing Street machine, will fuel allegations by trade unions that the Government is trying to bring in back-door privatisation of the NHS. Ministers insist they want to give patients more choice and say the Tories' internal market extended choice to some GPs rather than patients.

Mr Turner's report echoes fears expressed by the British Medical Association, that the independent foundation hospitals could relegate others to "second division" status. He warns that they will lure the best staff from other hospitals because they will be able to pay bonuses.

The adviser does not oppose freeing hospitals from central government control. But he believes that should be delayed until the extra billions injected into the NHS create the extra capacity it needs. He says the Government should prepare for radical, market-driven change but not fully implement it until capacity is boosted.

Downing Street refused to comment on Mr Turner's conclusions but said the Government would press ahead with plans outlined this spring for hospitals who achieve the top "three-star" performance ranking to qualify for foundation status. Ministers insisted that Mr Turner's findings go "with the grain" of their policies rather than against them.

The Turner review will not be published and it is understood he is doing further work on the NHS. It is the second wide-ranging study of the NHS since the general election last year. The other, by Derek Wanless, a former NatWest chief executive, led to Gordon Brown's decision to pump an extra £40bn into the health budget over the next five years.

To boost capacity, Mr Turner proposes each level of staff be given greater responsibility, with nurses doing some tasks performed by GPs, and GPs, in turn, relieving the pressure on hospital outpatients' departments.

Mr Turner is scathing about the use of information technology by the NHS following a series of expensive fiascos. He backs plans for a major upgrade to ensure computers through the system are compatible.