Hansard archive: General practitioners’ pay in the new NHS

Approximate read time: 10 minutes

1. Key points

• How GPs should be paid was among the most contentious issues debated during the NHS’s creation.
• Supporters of a salaried element for doctors argued it would improve recruitment and provide greater security for newer doctors, especially those working in less populated areas. Opponents feared doctors would become salaried “servants of the state” and lose their professional independence. Such critics believed capitation payments better encouraged initiative and professional standards.
• The House of Lords initially voted to require GPs to be paid primarily through capitation fees, but the amendment was later removed after the House of Commons rejected it.
• The NHS therefore launched in 1948 with GPs remaining independent contractors. Eighty years later, capitation funding and debates about professional autonomy, incentives and state direction remain central to discussions about primary care.

2. General practitioners and the NHS today

Most general practices in England are run by a general practitioner (GP) partnership.^[1] Local GPs are small to medium-sized businesses contracted by the NHS to provide health services. In 2026, the government ran a consultation about two new locally commissioned contract types for the NHS in England with the aim of simplifying services and focusing better on local needs.^[2] Although these proposals do not affect or replace existing GP contracts, they illustrate a longstanding feature of the NHS where governments use contractual arrangements to pursue their wider health objectives.

3. Why are general practices contractors rather than salaried NHS employees?

The principle that GPs are contracted service providers in the NHS, rather than salaried employees, has a long history.^[3] General practice core funding is provided through ‘capitation’, a lump sum paid to care providers based on the number of patients in a population.

In 1946, the Labour government’s preferred doctor remuneration scheme was a mix of capitation and salary. However, the National Health Service Bill, introduced in 1946, did not contain provisions to this effect.^[4] The government said any such scheme would be left to regulations, which would be made in consultation with the doctors’ professional representatives. Rudolf Klein, in his history of the NHS, describes how the medical profession was worried about the government’s preferred approach. He observes that, whilst “this was not as threatening as the 1944 white paper, which had proposed full-time salaries for all doctors employed in health centres”, it did mark “a change from the Conservative plan, which had dropped any salaried element”.^[5]

The 1944 white paper had recognised that a salaried element would be contentious and would likely be seen as an infringement on doctors’ professional freedom.^[6] Doctors had long operated as independent businesses and any salary element raised more questions about the effect that would have on medical independence and whether doctors would become accountable to the state and not their patients.

At committee stage in October 1946 the House of Lords agreed an amendment about payment by capitation by 53 votes to 37, tabled by Conservative peer Lord Llewellin, that reflected these concerns. His amendment would have required general practitioners to be paid by capitation alone, unless exceptional circumstances justified a different basis.^[7]

The Lords debate on the amendment raised two principal recurring themes about doctors’ professional independence, their recruitment and incentives. Among peers there was general agreement that doctor remuneration and recruitment, together with the profession’s cooperation, was essential for the NHS to succeed at foundation. However, peers expressed different views about whether a pure capitation scheme, or a mixed salary and capitation scheme, would better maintain standards and help protect professional independence. Likewise, there was contrasting opinion about whether competition between practices benefited the patient and whether a salaried element represented a practical recruitment tool or a step towards the complete nationalisation of medicine.

4. Professional independence or ‘servants of the state’?

In 1946, there was widely shared suspicion that the Labour government’s long-term goal was the complete nationalisation of medicine. For example, Rudolf Klein wrote that “the BMA were quick to seize on the thin end-of-the-wedge argument: once even partial salaries were introduced, the way would be open to turn all general practitioners into salaried state bureaucrats”.^[8] Moving his amendment, Lord Llewellin described his concerns in a similar vein. He said that the most important relationship for a doctor was that with his patient and thought a salaried GP would eventually become a “servant of the state”.^[9] Lord Horder, “the outstanding clinician of his time and one of the personalities in medicine best known to the British public”,^[10] said he was sceptical of government commitments that a salaried doctor was not a step towards nationalisation.^[11] Lord Horder cautioned that the government needed to secure the medical profession’s support, because “it is for the state to help the doctor and not so much for the doctor to help the state”. He added: “the state is a comparatively recent innovator in the field of medicine whereas medicine is thousands of years old”.^[12]

5. Salaries: Offering security or disincentivises?

In the debate, the government made the case that a salary would provide “a certain feeling of security” for doctors in areas with smaller populations.^[13] Leader of the House Viscount Addison noted that any such details were subject to negotiation anyway. He said “I do not think myself that it will be possible to devise a system whereby they can be standardised. In remote districts the basic salary will probably have to be higher than in some other places, and therefore you cannot prescribe a standard”.^[14] When he introduced his amendment, Lord Llewellin had stressed his scheme did not rule out a salary entirely, saying salaries were allowed for where the Medical Practices Committee (a statutory body that would be set up under the act) “recommend[s] to the minister that it is necessary to attach a salary in order to increase the number of medical officers in such area[s], the minister can approve and the salary automatically comes in”.^[15]

Peers raised the effect pay, and its level, had on doctor recruitment and retention. President of the Royal College of Physicians Lord Moran thought such conditions were key to attracting the “exceptional man” to the profession and keeping them invested.^[16] Lord Horder argued that salaries risked creating a ceiling on ambition and remained unconvinced that ministers’ assurances ruled out a future salaried service.^[17] Lord Moran felt the government had not provided sufficient justification for a basic salary. He said he wanted to see the remuneration proposals dropped in favour of capitation, which would maintain competition in the sector and keep up professional standards.^[18]

For the government, Viscount Addison told the House that he was involved in the negotiations for the original capitation scheme.^[19] Under this scheme, doctors providing care to workers under the National Insurance Act 1911 received approximately 50% of their income from capitation, topped up with additional payments.^[20] Lord Addison said he was “exceedingly disappointed at the way in which it has worked” and, unlike Lord Moran, he saw something “derogatory” about competition in medicine.^[21] He said this “system of payment has not been by any means beyond criticism, and in some places it has been attended by some very unfortunate results”. He said the government felt the proposed system was “a better way of paying people”.^[22] Lord Addison argued that “an element of competition” would be maintained, “which, so far as it is wholesome and proper, we ought to recognise and which none of us would wish to damage, and that is recognised in the capitation element”.^[23]

5.1 Did you know?

Lord Moran was Winston Churchill’s doctor between 1940 and 1965. Following Churchill’s death, he provoked controversy when he published ‘Winston Churchill: The Struggle for Survival,1940–1965’. Critics raised concerns about doctor-patient confidentiality. Others considered it Lord Moran’s duty to history to tell his story.^[24]

6. “A statement of faith”

The Lords amendment was rejected in the House of Commons and did not stay part of the bill that received royal assent on 6 November 1946.^[25] Explaining the government’s opposition to it when it returned to the Lords, Lord Jowitt, the lord chancellor, argued that “the method of [doctor] remuneration has always been left to regulations and settled, as it must be settled, in consultation with the profession”.^[26] In response, Lord Llewellin said there was “quite a lot to be said for” the flexibility negotiations provided. He added his party was reassured by government commitments following the amendment passing that any salary would be a minor element in any agreed remuneration package.^[27]

Lord Horder was less convinced. He said the government’s commitment remained a “statement of faith”, noting future ministers’ intentions could not be spoken for. He maintained the government needed to take the profession with it, and that doctors “remain not enthusiastic about this scheme in respect of their freedom and the way of doing their own work”.^[28] Lord Moran noted doctors remained suspicious “this basic salary” would become “a whole-time salary” and that this was a “condition of affairs whose effect upon the proficiency of the profession it will be impossible to calculate”.^[29]

7. “Dramatic concession”

The story does not end there, however. In April 1948, “when it seemed that the opposition of the BMA would prevent the NHS from getting off the ground on the appointed day”, Rudolf Klein notes that Nye Bevan, the health minister, “made what was apparently a dramatic concession”.^[30] Mr Bevan told MPs the government would “propose that it should be clearly impossible to institute a full-time salaried service by regulation alone. It would then need express legislation if it were ever proposed”.^[31] The National Health Service (General Medical and Pharmaceutical Services) Regulations 1948 set out that “general practitioners would continue to be paid on a capitation fee basis—and part-time salaries would be limited to new entrants to the profession for their first three years”.^[32] Klein said that “whether or not this represented a defeat for Bevan is arguable” but states that “the concession was certainly a victory for the doctors, in that it recognised the principle that the medical profession could veto any proposals to change the methods of remuneration: a phenomenon which appears to be international”.

Eighty years later, GP contracts remain nationally negotiated. Most general practitioners remain independent as contractors rather than NHS employees. Capitation funding remains central to general practice funding. While the policy questions facing the NHS have changed, debates about incentives, professional autonomy, workforce supply and the extent of state direction continue to shape discussions about how primary care should be delivered.

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Image from Magnific.