A welcome admission on the NHS (if somewhat overdue)

Trying to reform the National Health Service is the most daunting challenge that any government can face. The good news is that Tony Blair seems finally ready to acknowledge that self-evident truth.

Trying to reform the National Health Service is the most daunting challenge that any government can face. The good news is that Tony Blair seems finally ready to acknowledge that self-evident truth.

Downing Street must steer a perilous course between a political Scylla and Charybdis: neglecting the pressing financial needs of the NHS on the one hand, and the need for structural change on the other. Importantly, the Prime Minister's address to the Royal College of Surgeons did not seek to suggest that Labour has found a panacea for all the NHS's woes.

Mr Blair's admission that "we probably underestimated the scale and depth of some of the problems" on arrival in office in 1997 is welcome, if woefully overdue. His party had plenty of time to examine the many problems of the NHS during the long years in the opposition wilderness. It did not need to wait for three years in office before revealing its plans for change.

But what counts now is the meat. Mr Blair is not giving up on the NHS; the principle behind it remains as correct today as it was half a century ago. He was right to be immovable yesterday on the thorny question of tax breaks for the private sector. The £700m cost would, in his phrase, be "a deadweight cost", weighing the whole NHS down. Alan Milburn, the Secretary of State for Health, has played an important part as the architect of these reforms. But Mr Blair's involvement is more than just cosmetic. The problem may be that, although Mr Blair talked about the need to ask "fundamental questions", those questions are not yet fundamental enough.

In looking to the longer term, it is unclear whether state funding will be sufficient; other sources of income will have to be found, and we should look to Europe for answers.

For now, however, the dampening of expectations ("We cannot conjure up out of nowhere the extra heart and cancer specialists we need") is right: people will be angry if they are disillusioned once again by a failure to deliver change. This has been a hard lesson for New Labour to have learnt, but it seems that the party has finally taken it to heart.

Mr Blair was warmly applauded by his audience yesterday. But the customers of the NHS - in other words, the entire nation - will no doubt be more critical before joining in the applause. There is little doubt, however, that this Government is trying hard, and matching its efforts with billions of pounds of new cash. This much, at least, is welcome.