The Politics Behind the Conservative ‘Internal Market’ in the 1990s

Abstract

Paton shows how the first ‘market reform’ to the National Health Service (NHS) in the UK, the Conservatives’ internal market, was born almost by chance, after a political crisis. The technical problem which it was said to address—failure to reward hospitals appropriately for workload irrespective of where patients came from—was misdiagnosed, and could have been solved in a rational manner much more easily. Instead, seeking to turn a funding crisis into a political opportunity to promote market reform, the Conservative government created an expensive ‘purchaser/provider split’ between hospitals and other providers, on the one hand, and ‘purchasing’ health authorities and GP Fund-holders, on the other hand. This merely translated the problem into a different language. By 1995, allowing local purchasers to play at markets was seen to be destructive of the rational planning of clinical services, and the emphasis changed from the market per se to ‘primary care purchasing’. Paton analyses policy in terms of three variables—rationality; comprehensiveness; and degree of pluralism in policy-making. He depicts the Conservatives’ internal market as comprehensive in design but arational. It was also ‘elitist’ in that the policy was opposed by many interests which were now excluded from the policy process.