Cabinet split over health plan

Health reforms today emerged at the heart of a tense row between Blairite ministers and Gordon Brown in the run-up to the summer spending review.

Allies of Tony Blair are pressing the Chancellor to use his five-year plan to commit the Government to a controversial blitz of new reforms.

The dispute over the National Health Service is being described as a " touchstone" which will determine whether the Government pursues a radical New Labour agenda if it wins a third term or retreats from contentious policies.

Mr Blair's supporters want to push ahead on a "choice agenda" by giving hospital patients more say in how and where they are treated. Crucially-they need the Chancellor-to agree new funding systems which would ensure money follows patients to popular treatment centres.

Some claim Mr Brown, backed by deputy premier John Prescott, is blocking farreaching ideas in favour of a more traditional Treasury approach of tying funds to targets and productivity.

The dispute mirrors a similar tug of war between the Blair and Brown wings over Labour's election manifesto. But insiders say the Chancellor's five-year plan was the real flashpoint and a far more pressing deadline.

"Although there has been a lot of attention on the manifestoit is actually a long time away," said a senior party figure. "The immediate fight is over the five-year plans which are getting very close and will set the tone for the election, the manifesto and far beyond.

"Effectively they will dictate whether we are to be radical, Blairite and New Labour - or the complete opposite."

Some Blairites claim Mr Brown is shunning long-term policies because he hopes to take over as Prime Minister after the election and does not want his hands tried with policies set by Mr Blair. "There may well be an element of his leadership ambitions at work here," said the source.

Health reforms have been a source of tension between the premier and the Chancellor in recent months. Mr Brown watered down plans for foundat ion hospitals which scraped through the Commons last year with a majority of just 17.

Health Secretary John Reid is a close ally of Mr Blair and backs the No 10 agenda of patient choice. He is developing new policies to reward hospitals which are popular with patients.

The funding overhaul would also dovetail with long-term plans to use ID cards to weed out so-called health tourists. In future, hospitals may only be paid for treatment if they prove that patients were entitled to receive it. Those that failed to check or to extract a fee would lose out financially.

Every Whitehall department will have to agree fiveyear plans with the Chancellor.