Margaret Thatcher becomes Prime Minister, following an election manifesto suggesting the government would simplify and decentralise the health service to cut back bureaucracy.
The Royal Commission on the National Health Service, chaired by Sir Alec Merrison, aimed to consider the best use and management of the financial and human resources in the NHS.
The government started to encourage the privatisation of ancillary services such as cleaning and laundry by sending a letter to health authorities encouraging them to tender contracts.
The 1981 budget statement committed to removing tax on medical insurance premiums paid by employers for the benefit of staff earning under £8,500 a year.
Following the Health Services Act 1980, the NHS (constitution of district health authorities) order created 192 DHAs to replace area health authorities (AHAs).
As the prime minister offered public reassurance that the NHS was safe, the Cabinet considered introducing private health insurance and increasing user charges.
