If reform had been put ahead of increased funding, the same NHS services could have been delivered for £90 billion a year, instead of the £110 billion they are actually likely to cost by 2010-11, the study found. Nick Bosanquet, Professor of Health Policy at Imperial College London and author of the report published by the think-tank Reform, concluded that the NHS is improving and delivering better services — but that the improvements have been bought at a huge and unnecessary cost.

By 2010 Britain will have the most expensive healthcare system in the world — excluding the US — absorbing nearly 11 per cent of GDP. The same results could be delivered for 9 per cent of GDP, which has proved perfectly adequate for other comparable countries.

“International evidence shows that reform can be a pretty powerful way of getting more output from existing capacity,” Professor Bosanquet said. “If we had had limited extra funds, plus reforms in the way the system works, we could have had a superb NHS for 9 per cent of GDP.

“Instead, we shall be spending 10.5 to 11 per cent of GDP — an extra £20 billion. That would be enough to fund the entire social housing programme.”

His paper, The NHS in 2010, is complementary about much that has been achieved in the NHS in recent years, but it will be seen as a direct challenge to Government claims that the additional funds poured in by the Chancellor — £40 billion over the five years from 2002-03 — were needed to turn the service around.

On Friday the chief executive of the NHS, Sir Nigel Crisp, said the NHS was making “fantastic progress” in reducing waiting times. Professor Bosanquet does not demur, but says that this is the result of reforms, not cash.

“The failure to use reform earlier means that waiting time targets will be reached much later and at much greater cost,” he said. “The six-month waiting time target could have been reached in 2004 instead of 2005 and the three-month target in 2006 instead of 2008; earlier results which would have benefited thousands of patients.”

This could have been done, he argues, if greater incentives for the core health service had been introduced along with the new treatment centres and the use of the private sector, which had not even been mentioned in the 2000 NHS Plan.

According to the report, the core of the problem is that the NHS has taken on huge extra costs, which by 2010 will be very hard to fund. Private Finance Initiative (PFI) schemes, extra staffing, the new GP contract and the Treatment and Diagnostic Centres will soak up funds that will also be needed for drugs recommended by Nice, implementation of National Service Frameworks (treatment guidelines) and other new therapies.

The share of the GDP spent on the NHS by 2010 will be “well above” the European average and more than 50 per cent higher than in Scandinavia and New Zealand.

“On a worldwide basis the public sector share of spending is likely to be the highest of any system,” Professor Bosanquet says.

He has a long track record of healthcare analysis. He is an expert in the productivity of health services, and has advised the Health Select Committee, the World Health Organisation, the World Bank and the National Audit Office.

The Government will find it hard to dismiss his views as those of a “Conservative Front Organisation”, as they did of an earlier intitiative by Reform advocating a different system for funding the NHS. He makes it clear that he is committed to the NHS and supports many of the Government’s initiatives, but, he concludes, “in terms of the UK’s longer-term social and economic challenges, the level of spending project for 2010 represents poor value for money ”.

As an example to show how reform succeded where extra funding failed, he cites waiting time targets.

By 2002 it was evident that targets for heart operations would be missed and the choice programme was introduced, first in London and later nationally. This provided incentives for better use of current capacity and waiting times quickly shortened — to the extent that the London Heart Hospital, bought by the NHS to provide extra capacity, has never managed to fill its beds.

“Greater competition also reduced waiting times for cataract treatments and hip replacements” he says. “Reform succeeded where funding had failed.”

Another example is in A&E departments, which have been given only an extra £30 million a year, yet have greatly improved waiting times by changing working practices.

Nigel Edwards, policy director of the NHS Confederation, said that the speed with which the Government had made changes to the NHS meant that some schemes would not be implemented in the most cost-effective form.

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