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'The new NHS: modern, dependable' white paper

8 December 1997

In December 1997, following its landslide election victory in May 1997, New Labour published its white paper The new NHS: modern, dependable.

The internal market

The government set out its intention to replace the internal market system (established by the Conservatives in the National Health Service and Community Care Act 1990), with a system based on partnership working and performance management (although it planned to keep the purchaser/provider split).

The Secretary of State for Health, Frank Dobson, was Old Labour and had been critical of the Conservative government's reforms. However, the document, while denigrating previous policies, tacitly accepted many of them. The internal market remained, despite the previous manifesto commitment, and purchasing was rebranded as commissioning.

The white paper suggested that the internal market had forced NHS trusts to compete for short-term contracts and led to secrecy due to competitive interests. The government proposed publishing comparative information on NHS trust performance and committed to working towards longer-term funding arrangements.


The government proposed reducing the number of commissioning bodies from 3,600 to 500. It outlined plans to introduce health improvement programmes (HIPs), which were to be jointly agreed by planners and providers, and suggested that increased cooperation would replace competition.

Public health

The white paper also announced the health improvement programme (HIP), a programme led by health authorities designed to improve health and healthcare locally. Through HIP, health authorities would deliver on their public health targets.

The programme would detail how the most important health needs of local people would be met by the NHS and partner organisations. The programme would initially run for 3 years and would be reviewed annually.

The government also proposed a new statutory duty of partnership placed on local NHS bodies to enable them to work together 'for the common good'. It proposed a new duty on local authorities to promote the economic, social and environmental wellbeing of their areas.


On quality, the government intended to introduce national standards and guidelines, facilitate the development of local measures and establish the National Institute for Clinical Excellence (NICE) to produce clinical guidelines and audits for dissemination throughout the NHS.

Patients would be guaranteed national standards of excellence and there would be new incentives and sanctions to improve quality and efficiency. The white paper noted the high degree of national variation. For example, citing the fact that the death rate from coronary heart disease in people younger than 65 was almost three times higher in Manchester than in West Surrey.

The government would work with the professions and representatives of users and carers to establish evidence-based national service frameworks for major care and disease groups.


The government also intended to establish a new system of clinical governance in NHS trusts and primary care. A new Commission for Health Improvement (CHI) would be established to support and oversee the systems in place at a local level. The arrangements were intended to build on and strengthen the existing systems of professional self-regulation and corporate governance.

Primary care

The government planned to abolish GP fundholding and proposed the establishment of primary care groups (PCGs). PCGs would be responsible for a devolved budget and would be able to purchase most healthcare services.

PCGs would comprise all GPs in an area, together with community nurses, and would take responsibility for commissioning services for the local community. The PCGs would be accountable to health authorities (HAs), but eventually PCGs would become independent primary care trusts.

It was intended that, over time, PCGs would extend indicative budgets to individual practices for the full range of services. It would be open to the PCG to agree practice-level incentive arrangements associated with those budgets, where this helped to promote the best use of resources.

HAs would transfer their direct commissioning functions to PCGs. HAs would be responsible for:

  • developing PCGs, holding them to account and allocating resources to them
  • providing leadership on the ground
  • leading on formulating HIPs
  • assessing local needs and identifying ways of meeting them.

The NHS Executive regional offices would be responsible for holding HAs to account for their new range of statutory duties and for progress in their new strategic leadership role. Regional offices would also be responsible for ensuring effective arrangements for the commissioning of specialised services (such as bone marrow transplants).


Department of Health.
The new NHS: Modern. Dependable.
The Stationery Office; 1997.