Stephen Pollard: Labour chooses to deny choice to the rest of us

Iraq may dominate the news at the moment, but come the next election it will, as always, be domestic issues that set the agenda. So great is the concentration on Saddam Hussein that few people have noticed that on Tuesday Alan Milburn made an announcement which is potentially the most important since the creation of the NHS in 1948 – and certainly since Labour came to power in 1997. Mr Milburn, you see, proposed – promised, even – the introduction of an NHS voucher.

But nothing is ever straightforward with New Labour. Just as the Government looked as if it might be beginning genuinely to lay claim to the mantle of public service reform and the promotion of consumer choice, so the very next day Charles Clarke, the Education Secretary, announced plans to destroy any vestige of parental choice for some pupils when he revealed his plans to make it impossible for some parents to specify which school they want their children to attend. Nothing better illustrates the fundamental contradiction at the heart of New Labour – one step forward, one, sometimes two steps back.

Look at the positive side first, from Mr Milburn on Tuesday. As well as the expansion of existing schemes to allow patients on waiting lists to choose where they are treated, the Health Secretary also made a revolutionary proposal: "From December 2005, by when extra capacity will have come on stream, choice will be extended from those patients waiting longest for hospital treatment to all patients. They will be offered choice at the point the GP refers them to hospital. Patients needing elective surgery will be able to select from at least four or five different hospitals, again including both NHS and private sector providers."

It might be called an elephant, but if it looks like a duck and it quacks like a duck, it is a duck. Mr Milburn may shy away from the label "voucher", but that is what he has announced.

All patients will be given a choice as to where they are treated, and by whom – including private hospitals. They will be given what amounts to a voucher, as the cost of their treatment will be quantified and made available to competing health care providers: tariffs are to be set for procedures, and anyone who wants to will be able to compete for that business. And the patient will be given the choice as to where to go.

If the rhetoric is backed up by action, it is revolutionary stuff indeed. Once the genie of choice is out of the bottle it will be impossible to limit. Patients will soon get used to the degree of choice made available to them, and will start to want more, as they do in any market. As new healthcare providers will emerge to compete for this new business, all sorts of "add-on" packages will emerge. Healthcare delivery – and, with these add-ons, funding too – will be transformed.

All good stuff. But the key word is "if". It's usually a guarantee of disappointment to be seduced by the rhetoric. Take the vaunted foundation hospitals, supposedly independent entities operating within the NHS, free to decide how and where and if to offer a service. When first revealed, they seemed to be a major departure, giving entrepreneurialism its head in the NHS. But then Gordon Brown got hold of them.

A pre-requisite of entrepreneurialism is the ability to take risks – and, thus, to borrow. Since Mr Brown's intervention, vetoing their power to borrow and insisting that the Treasury approves all such financial decisions, foundation hospitals have little more independence than a centipede's 100th leg does from the other 99.

As if that wasn't enough of a warning, Charles Clarke's sledgehammer approach to school choice exposes the limits of New Labour's commitment. On Wednesday, the Education Secretary said he will allow groups of schools to establish combined admissions systems as a way of promoting "federations", to bring together successful and struggling schools.

But rather than being allowed to specify which school they want their child to attend, parents will have to apply for entry to the "federation" in their area. Headteachers, operating under a single governing body, will then distribute pupils across federation-member schools to ensure an even intake of different ranges of children. The bureaucrat, once more, will know best what is right for all children. In one fell swoop, Mr Clarke proposes to remove any semblance of choice for those parents affected.

The need for choice is as great in education as it is in health, yet when Mr Clarke's plans are implemented there will be less, let alone more, than when New Labour took office in 1997. Forget ideas as empowering as vouchers: under New Labour, even the most basic choice – expressing a preference as to which school you wish your child to attend – will be removed in areas with federations of schools.

New Labour, and the Prime Minister, talk a good game of choice. But when they step out on the pitch, they fail to follow through. It is now up to Mr Milburn to prove that he, and the Government as a whole, are capable of more than rhetoric.

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Stephen Pollard is a senior fellow at the Centre for the New Europe, a Brussels-based think tank