The NHS battleground

Speaking at Guy's and St Thomas' Hospital in Westminster, Mr Blair said patients would be able to choose which hospital to be treated in, and waiting times would be measured from GP referral, rather than when names are put on hospital lists.

Health Secretary John Reid will provide more details in a White Paper published today.

Mr Blair said he aimed to "completely recast" the welfare state created in 1945 in order to provide choice to the users of state hospitals and schools.

There was a recognition that the money was delivering real improvements in the capacity and quality of public services, he said.

"Now, on the basis of this clear evidence of progress, is the time to accelerate reform," he said.

"We are proposing to put an entirely different dynamic in place to drive our public services, one where the service will be driven not by the Government or by the managers but by the user - the patient, the parents, the pupil and the law abiding citizen."

Mr Blair said: "In simple terms, we are completing the recasting of the 1945 welfare state to end entirely the era of 'one-size-fits-all' services and put in their place modern services which maintain at their core the values of equality of access and opportunity for all, base the service round the user, a personalised service with real choice, greater individual responsibility and high standards, and ensure in so doing that we keep our public services universal."

The Conservatives would subsidise the few opting out of public services at the expense of the many, scrap targets and drastically reduce funding, the Prime Minister said.

In contrast, the Government would put "levers in the hands of parents and patients so that they as citizens and consumers can be a driving force for improvement".

"The choice we support is choice open to all on the basis of their equal status as citizens, not on the unequal basis of their wealth," he said.

Mr Blair said the Government had achieved much in improving the situation it inherited in 1997.

"We have raised capacity to a new plateau," he said. "And it is from this plateau that we can climb to the next vital stage of public reform, to design and provide truly personalised services, meeting the needs and aspirations of today's generation for choice, quality and opportunity, service by service, on which to found their lives and livelihoods."

Mr Blair said: "It is now accepted by all political parties that the economy and public services will be the battleground at the next election.

"That in itself is a kind of tribute to what has been achieved. The territory over which we will fight is the territory we have laid out."

'Patients have right to choose': Tory leader Michael Howard promised a new approach to the NHS yesterday, saying Labour's policies had been tried and had failed.

Mr Howard unveiled the Conservatives' new right to choose, pledging a Tory government would transform the health service.

Under the plans, patients would be able to choose the hospital that suited their needs rather than the one that suited the Government.

Hospitals would be given the freedom to determine their futures, to hire the people they wanted and to increase capacity to meet demand. A Tory government would also scrap central targets.

Setting out his plans in a speech in Westminster, Mr Howard said: "We utterly reject the idea that political dogma or ideology should stand in the way of what works.

"If the private sector can help drive up standards, let's use it. If the private sector can relieve pressure on the NHS, let's use it.

"The public and private sectors can achieve more by working together than by working apart."

Mr Howard said that despite record spending under Labour, millions of people were still on hospital waiting lists and more people were being forced to pay for treatment.

Deaths from "superbugs" had doubled and there were now three new managers for every new doctor.

He said: "Labour has spent without reform. And it is the very poorest in our society who are suffering the most. We need a new approach."

People wanted to make their own choices and have control over the services they used, he said.

"Our policy will eradicate the inequalities that exist in our two-tier health service, where the rich get what they pay for and the poor have to shut up and take what they are given," he said.

A key component of the Tory plans would see people given access to private health care - free of charge - if that was where they wanted to be treated and there was no extra cost to the taxpayer.

Under his plans, independent healthcare companies offering treatment at the same cost as the NHS would be 100 per cent funded by the state for operations on NHS patients.

Companies that charge more than the NHS tariff would receive 50 per cent of the cost of state provision of the same treatment, with patients making up the difference from insurance or their own funds.

Tories believe that the proposals would cut NHS waiting lists and encourage private companies to invest in facilities to expand the overall health care capacity available in the UK.

Labour mouthed the mantra of choice, said Mr Howard, but it meant choice on its terms, whereas the Conservatives would introduce real choice in the NHS.