In an extension of plans to widen patient choice, people with long-term needs, including palliative care, would receive NHS credit, equivalent to the cost of services provided, conventionally, by the health service. For a diabetic, for example, the sum would be about £2,000 per year.

Patients with such conditions would have a choice between a package of care from the NHS or credit that they could control directly. They could spend some of the money privately if they wished, provided they stayed within the budget. The credit would apparently be worth more for older and poorer patients, and the NHS would monitor the patient to ensure that the money was spent on health, not frittered away.

The proposal was tabled yesterday by Alan Milburn, the former Health Secretary, to a health conference in Washington DC. Mr Milburn told The Times that it was an early contribution to the ten-year policy debate, initiated by Mr Blair last week when he set up six groups to look at Britain’s long-term challenges.

The proposal is likely to be opposed by the Left, which will claim that only better-off patients would be capable of making their own care decisions.

Mr Milburn said that patients who were already being given the right to decide where they should be treated now wanted a say over the form of treatment they received.

“Patient choice is the start of a journey — not its destination. The next stop is where budgets are not just devolved to institutions but instead are put into the hands of individuals.”

In office, Mr Milburn extended the NHS direct payments scheme so that disabled and older people could take cash to buy their own care rather than the local council allocating it for them.

The new scheme would be available only to those with a chronic disease, since their needs are more predictable and their relationship with the NHS long-term.

The credit would not cover occasional or emergency treatment. It would be funded solely by government, out of general taxation, and would not be subject to the patient making a co-payment. Family doctors or other professionals would help the patients to decide whether to opt for a credit and, if so, how to spend it. Those who took the credit could spend it themselves or hand it over to a professional advocate to spend on their behalf.

Because the cost of each treatment would be recorded and monitored, patients would have strong incentives to opt for lower-cost prevention than higher-cost treatment.

Mr Milburn said he expected objections to the plan from people who felt that patients did not have the capacity to manage their own conditions. But, he added, all the evidence suggested that they did.

“I have never believed that it is ability that is unevenly distributed in society. It is opportunity. Opponents will say that people need both professional help and clear information if they are to make informed choices. And they would be right. Individual budgets will only work with collective support.”

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