Saturday, July 24, 2010


A few years ago, it became de rigeur for right-wing thinktanks to describe the NHS as “Stalinist”. It was a facile but suggestive insult, bringing to mind an authoritarian monolith in which secretive bureaucrats hustled captive patients off to suffer hideous operations with enormous needles. Aside from the fact this is not most people's experience of the NHS, it also peddled the bizarre suggestion that the waste and ineffectiveness of the NHS was due to its closure from market forces.

These same thinkers are now informing government policy, and despite promising no further reorganisations to the NHS, Andrew Lansley has just published a White Paper promising ... one of the biggest reorganisations in the Service's history! Under the title of "Liberating the NHS," he promises to give 80% of the NHS budget to GPs, abolish Primary Care Trusts and give all hospitals Foundation Trust status. This has been largely passed over by a media more interested in Northumbrian police stake-outs and paedophile child-killers, but we should care about it very much.

In fact, as Allyson Pollock's great book NHS PLC shows, the NHS has been gradually opening up to the market for nearly 30 years. The pharmaceutical industry takes around 15% of the NHS budget and private-sector companies are funded to provide clinical care, construction, IT and facilities management. Managers from construction companies are seconded to the DH to dream up PFI schemes, and Health Ministers leave office to advise venture capitalists how to get a slice of the NHS pie.

Once upon a time, the NHS was run very simply. Regional authorities were responsible for public health and analysing need, and district authorities provided healthcare in hospitals and the community. There was an integrated organisational and financial structure, which meant there was no need for invoicing or bills. Despite being under-funded, the NHS until the late 1970s was more economical, less wasteful and led to better health outcomes that at any time since.

The marketisation of healthcare began in 1983, when a supermarket manager called Roy Griffiths presented a report to Margaret Thatcher recommending that business-oriented managers took over the running of the NHS from doctors. Between 1986 and 1995, the number of general and senior managers rose from 1,000 to 26,000 and admin costs rose from 5% of overall spend to 12%. As more and more of hospital budgets were diverted to paying managers, hospitals looked to other ways of making money (inviting fast-food outlets into their "retails spaces," charging for car-parking, telephone calls, watching the television etc). Hospital meals and cleaning were outsourced to private firms, driving down quality in the process (the proliferation of superbugs like MRSA has been linked to the shoddy practices of some of these contractors). And the comprehensiveness of healthcare - all services being free at the point of entry - was eroded. Optical and dentist treatments became chargeable, responsibility for long-term care of older people was passed over to Local Authorities who could charge (except in Scotland, where "personal care" remains free), and "intermediate care" provided to rehabilitate people after a spell in hospital also became chargeable after six weeks.

When New Labour came to power, they added a new element to the market mix: the Private Finance Initiative, or PFI. This is where private-sector firms borrow money to build hospitals and schools, which are then leased back to the state under 25-30 year contracts. This idea was originally dreamed up by the Tories to help the ailing UK construction sector, which had ties to the Conservative Party. Although it takes capital spending off the balance books (because the money is raised by the private-sector), PFI has created a monstrous long-term financial burden to the NHS. It is expensive for three reasons: the private-sector pays more interest on borrowing than the government would; the lease payments are increased in order to generate shareholder profits; and the contractual arrangements require a huge bureaucracy. These rising costs were often paid for by closing hospital beds. But nothing could persuade the Labour government that this was anything but a great idea. As Tony Wood wrote in his panegyric to New Labour, "PFI contracts have mushroomed in areas ranging from education, transport and defence procurement to prisons and local library services. By September 2009, according to Treasury figures, over 900 projects had been signed, with a combined capital value of £72bn. In effect, the pace and reach of public-sector marketization has increased under New Labour: Major reconnoitred much of the terrain; Blair and Brown led the offensive."

This, as Seamus Milne says, is why we should care who provides healthcare. As the participation of the private-sector has increased in the last 30 years, costs have risen, bureaucracies have ballooned, and health outcomes have worsened. Andrew Lansley's "liberation" of the NHS will lead to more of the same. How will GPs manage multi-million pound budgets, in addition to their clinical responsibilities? How will they be able to have a comprehensive knowledge of the health market from which they must commission? The answer, of course, is by employing private-sector firms to do it for them. The private-sector will be responsible for buying and providing healthcare services; inequality will increase, as one's health increasingly depends on the business-orientation of one's GP (and this at a time when health inequalities have never been higher); and most crucially, costs will increase while budgets stagnate. This can only mean two things: that the NHS will increasingly charge for services, or that hospital trusts and GP consortia will be allowed to go bust.

These last two challenges point to why I don't think Lansley can get away with his methods of liberation. By and large, the public still accepts the principle that people pay for the Service through progressive taxation, and that services are free when people need them. People will not stand for paying charges as well as taxes, and (as recent experience shows) they will not stand for hospitals being forced to close. Furthermore, most GPs oppose the White Paper. A survey by Rethink a couple of weeks ago revealed that two thirds of GPs do not feel equipped to commission mental health services (as a joint commissioner of mental health services, I ought to declare an interest here).

The consultation period runs until 11th October. Tell the Government what you think by emailing, and oppose the Paper in whatever ways you can. Otherwise we should heed Seamus Milne's warning: "if the plans are take to their logical conclusion, by 2015 the NHS will be little more than a brand."


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