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The coalition is now split over national health policy

NHS reform becomes first public division as Lib Dem conference votes in favour of radical rewrite of

Controversial proposals to reform the National Health Service in England has become the first public split on policy between the two coalition parties, after the Liberal Democrat spring conference voted overwhelmingly in favour of an extensive rewrite of the bill.

While there have been numerous backbench revolts on certain issues, such as tuition fees, and areas in which the parties have codified their disagreement, such as voting reform, this is the first public division on policy.

Nick Clegg, who said yesterday he was "very relaxed and very positive" about the NHS debate, narrowly averted defeat by accepting two "rebel" amendments when it became obvious that they were going to pass.

The two amendments centre on limiting the role of the private sector in the NHS. The party votes for banning GP consortiums from taking decisions in private about spending NHS money, totally ruling out any competition based on price, banning private companies from taking over commissioning, allowing private health providers in only when it will not damage existing NHS services, and ensuring the role of local government in the consortiums.

This vote is a major development: it means that Clegg's party is formally committed to changing the Health Bill. Evan Harris, the former Oxford MP campaigning on the motion, said that the party expected Clegg and the health minister Paul Burstow to be bound by the vote. In a clear challenge to the leadership, Evans said: "We expect Liberal Democrats in government to follow what we overwhelmingly vote for."

This will pose problems for Clegg with his Conservative cabinet colleagues, as the proposed changes will not beaccepted happily by the Health Secretary, Andrew Lansley (who has also attracted the anger of doctors). Indeed, the whole bill – which proposes giving control of 80 per cent of the NHS budget to GP consortiums – is underpinned by a market-based philosophy.

This opens up an easy fault line for Labour, which can exploit the motion passed today by proposing amendments to the bill and challenging Lib Dem MPs to stay consistent with the decisions passed today and vote against the government.