Delivering the NHS plan: next steps on investment next steps on reform (2002)

The government outlined progress against the NHS plan in the document Delivering the NHS Plan, published in 2002.

The document reiterated the government’s commitment to developing incentives which would support the delivery of better services for patients. The plan highlighted the fact that there was no national system of financial incentives to support the movement of patients between providers or to make the best use of capacity. While the department did not have plans to change the allocation of resources to primary care trusts (PCTs) on the basis of need, it highlighted the need for reform of payment mechanisms.  Instead of block contracts, providers would receive payment through the payment by results (PBR) system. PBR was based on prospective payments, ie a fixed level of payment calculated in advance of the care being delivered. PBR was introduced as an alternative to block contracts. Under block contracts, hospitals were paid a fixed rate to provide a broad range of services.

The plan stated that PCTs would be able to purchase care from the most appropriate provider, regardless of whether it was a voluntary, private or public sector organisation.  However, the department was clear that it would not introduce competition on price. On that basis, there was a commitment to use health resource group benchmarking to produce standardised tariffs for the same treatment regardless of provider and avoid competition on price. The intention was that commissioners would use the tariffs to secure services, ensuring greater national consistency in the costs of treatments.

The government outlined progress against the NHS plan in the document Delivering the NHS plan, published in 2002.

New national standards had been published for cancer and older people’s services, the Commission for Healthcare Improvement (CHI) had completed over 100 reviews of local NHS services and a new system of star ratings for NHS had been introduced by the NHS Executive.

Although CHI had only been established in 2000 and the National Care Standards Commission (NCSC) in 2002, the Department of Health proposed the establishment of a single new Commission for Healthcare Audit and Inspection (CHAI) which would bring together the value for money work of the Audit Commission, the work of CHI and the work of the NCSC. Regarding this new system of inspection the report noted that:

‘In order to ensure clearer public accountability we will strengthen the system of inspection for health and social services. The current system has evolved rapidly. But early experience is demonstrating that the arrangements are fragmented. This is burdensome on frontline staff and also creates a lack of clarity for the public. The Bristol Royal Infirmary inquiry recommended that the number of bodies inspecting and regulating health and social care should be rationalised. The inquiry also recommended that regulation of the public and private health sectors should be brought together. The government accepts these recommendations... Fragmentation not only makes for unnecessary bureaucracy, it weakens the system of inspection. It makes for confusion about how well the NHS is performing for those working in the NHS, for patients who use it and for taxpayers who fund it. We now propose radical change.’

CHAI would have responsibility for the inspection of both public and private providers providing health care. It would have responsibility for:

  • inspecting all NHS hospitals
  • licensing of private care provision
  • conducting NHS value audits on a  national basis
  • validating published performance data
  • publishing star ratings for all NHS organisations
  • publishing reports on the performance of NHS organisations
  • providing independent scrutiny of NHS complaints
  • publishing an annual report to Parliament.


In parallel, the government proposed that there should be a new social care regulator – the Commission for Social Care Inspection (CSCI) – that would incorporate the functions of the National Care Standards Commission and the Social Services Inspectorate. CSCI would:

  • inspect all social care organisations to ensure compliance against national standards
  • register services that meet national standards
  • carry out inspections of local authority social services departments
  • validate published performance data
  • publish star ratings for social service authorities
  • publish an annual report to Parliament.