Brown at odds with Blair over PFI in health sector

Gordon Brown put himself at odds with Tony Blair last night with a strong defence of the limits of market forces in the National Health Service.

The Chancellor said there should be no objection in principle against the private finance initiative expanding into areas such as the renovation of schools and colleges, urban regeneration or running prisons. But he struck a very different note from Mr Blair and the Secretary of State for Health, Alan Milburn, in a call for the Government to retain a "clear and robust" recognition of PFI limits.

Highlighting hospital funding, he said: "We know that the consumer is not sovereign: use of health care is unpredictable and can never by planned by the consumer in the way that, for example, weekly food consumption can." In a speech to the Social Market Foundation in London, Mr Brown said: "With the consumer unable, as in a conventional market, to seek out the best product at the lowest price ... the results of a market failure for the patient can be long term, catastrophic and irreversible.

"If we were to go down the road of introducing markets wholesale into British health care we would be paying a very heavy price in efficiency and equity and be unable to deliver a Britain of opportunity and security for all."

He said: "In health, price signals don't always work, the consumer is not sovereign, there is potential abuse of monopoly power, it is hard to write and enforce contracts, it is difficult to let a hospital go bust."

Mr Brown said, though that Labour had to make a "radical break" with the old left's opposition to market forces, without losing sight of the party's traditional values.

"To hold to old, discredited dogmas about what should remain in the public sector and how the public sector operates, or to confuse the public interest with producer interests, makes no sense, and, as technologies and aspirations change, would lead to sclerosis and make it impossible to obtain our enduring goals," he said.

In his party conference speech last year, the Prime Minister made clear his determination to press ahead with radical reform of the NHS. He said the Government still had not been "bold" enough over reshaping the health service.

Mr Milburn, who had a bitter showdown with the Chancellor over the funding of the new wave of foundation hospitals, has consistently echoed the Prime Minister's tough message.