The internal market in healthcare was dreamt up in a radical bid to stop Margaret Thatcher privatising the NHS, according to a book by a leading adviser to the current health secretary.

Professor Chris Ham, a member of the Department of Health's newly formed strategy unit, interviewed all four Conservative health secretaries who served under Mrs - now Baroness - Thatcher for his study of NHS reforms under the last government.

Former health secretary Kenneth Clarke says the prime minister was 'sold on' introducing compulsory private medical insurance with high tax relief.

Mr Clarke says: 'Personally, I thought that approach to reforming the NHS was completely hopeless.' He believed it was 'bad tax policy' and more expensive than a publicly funded service.

'There was nothing fundamentally wrong with the NHS's basic premise that you provided treatment free at the time of delivery to everyone' and 'paid for it out of general taxation'.

According to Professor Ham, 'it was because of his reservations about moving away from tax funding' that Mr Clarke focused on delivery, not resources.

He decided on a managerial revolution to tackle 'the awful bureaucracy' of the NHS.

American economist Alain Enthoven, often credited with devising the internal market, was at first seen by Mr Clarke as 'a rightwing sort of eccentric who I don't agree with'. But he provided the 'germ of the idea'.

Mr Clarke gave GPs their own budgets to buy care from 'self governing hospitals'.

Professor Ham attacks politicians' reliance on focus groups to draw up health policy - an accusation often made of his present masters. He calls for 'a process in which the circle of participants is widened and public involvement does not simply involve politicians making an assessment of the electoral consequences of their actions and drawing on the results of focus group discussions'.

But former health secretaries say cliques and factions cut both ways. Stephen Dorrell, in office from 1995 to 1997, commented that 'the health service is such a large organisation it has its own private version of the chattering classes'.

The British Medical Association was more of a threat. Mr Clarke describes it as 'the most unscrupulous trade union I have dealt with'. l