60 Years of the NHS by Gary Fraser

2008 sees three score years since the NHS was founded by the post-war Labour government of Attlee and Bevan.  But, Gary Fraser argues, despite both Tory and New Labour governments assuring us that the NHS is ‘safe in their hands’, the sixtieth birthday of that great institution finds it under attack as never before.

Introduction

This year marks the sixtieth anniversary of the National Health Service. There is much cause to celebrate. Universal health care for every man, woman and child is one of the great political achievements of the past century. Furthermore, there continues to be widespread support for the principles of the NHS, namely that it should be free at the point of use and funded out of general taxation. However, at a time when people are marking the sixtieth anniversary of the NHS, it is also important to highlight that not all is perfect with the NHS. Two decades of neo-liberal reforms, by both Conservative and Labour governments have subjected the NHS to privatisation and to internal markets, a process referred to as ‘marketisation’. Many of these reforms have taken place bereft of a critical public debate. In 2004, the book ‘NHS Plc’ by Allyson Pollock was published. Pollock’s book offers detailed research and analysis regarding the NHS and the impact of neo-liberal reforms. The conclusions are alarming. The NHS is being subject to creeping privatisation, which is undermining the quality of care provided, and the creation of internal markets are destroying the public service ethos that should inform health care provision.

Making reference to Pollock’s book this article will examine these neo-liberal reforms in detail.

NHS Privatisation in Practice

The founding NHS legislation made the health service susceptible to market reforms by successive Labour and Tory governments. Inherent within the original NHS settlement was an attempt to balance the interests of both the public and the private sectors. The Labour government was under pressure from powerful interest groups like the British Medical Association to prevent the state from having a monopoly over health provision. As a consequence, GPs were allowed to remain self-employed small businesses or ‘independent contractors’, as were dentists, opticians and community pharmacists. The original legislation, the NHS Act 1946 and the National Assistance Act 1948, introduced two parallel systems of care. On the one hand the NHS would be a universal system ‘free at the point of use’ whilst under the National Assistance Act, ‘local authorities would provide a subsidiary system for those in need of care and attention’ (Pollock 2004). Unlike the NHS this was means tested and subject to statutory change.

Neo-Liberalism Phase One: The Tory Years 1979-1997

Despite the original inadequacies of the NHS settlement it was not until the 1980s that the NHS underwent a major transformation. The Tories introduced a series of reforms that created an internal market within the NHS. The health service was divided into service ‘purchasers’ and ‘providers’.

The ‘purchasers’ included health authorities and GPs whilst hospitals and community services became service ‘providers’. Moreover, ‘providers’ became organised into ‘Trusts’ and responsible for raising their own funding (Pollock, 2004). Unsurprisingly, market reforms created a business culture within the NHS with publicly owned institutions being asked to operate increasingly like private companies. The 1993 Patients Charter reflected this change of direction. The ‘patient’ was constructed as a ‘customer’ or ‘consumer’ of health care.

One of the main reforms to take place under the Tories was the removal of long term care of from the NHS, and from local authority control. The consequence was the creation of a predominantly private care industry. In 1979, the figure for the number of people in private sector care was 16% - by 2003 that figure was 69% (Pollock, 2004).  The privatisation of long-term care would be precipitated by the selling of care homes owned by the state at ‘rock bottom’ prices. Land associated with long-stay hospitals was sold to make way for golf courses, property developments and supermarkets.

The Community Care Act 1990 radically restructured the provision of care. The rhetoric was ‘care in the community’ but the reality was somewhat different. In the same period that ‘care in the community’ became prevalent there was an actual drop in the number of people in receipt of community based care. For example, between 1995 and 2000 there was a 22% drop in home helps and a 32% drop in the number of people receiving meals on wheels (Pollack, 2004). The Community Care Act helped to facilitate an offloading of responsibility for providing care from the state to the private sector. The project of ‘rolling back the state’ was complimented by an increase in the number of people receiving care in their own homes. This care was usually preformed by family and friends, particularly women. Describing this as an ‘invisible workforce’ a report by the Royal Commission on Long Term Care estimated that 5.7 million people are providing unpaid care with 800,000 working 50 hours a week or more (Pollock, 2004).

Neo-Liberalism Phase Two: Labour 1997-Present

On the eve of Labour’s election victory in 1997, Tony Blair warned the public that they had just 24 hours to save the NHS. Despite the successful ‘sound-bite’ the reality was rather different. Labour would stick to the previous Tory government’s public spending plans for the first two years in office, which the then Tory chancellor Ken Clarke said was extreme. The process of marketisation was continued unabated by Labour a process euphemistically referred to by the Labour government as ‘public sector reform’ and ‘modernisation’. Two particular aspects of Labour policy have contributed towards the internal privatisation of the health service- the Private Finance Initiative (PFI) and the contracting out of NHS workers to private companies.

PFI was first introduced by the Tories in 1992 and opposed by Labour. However, when Labour came to power in 1997 PFI, rebranded as PPP (Public Private Partnerships), became central to the new government’s public sector reform agenda. Labour politicians often boast that as a consequence of PPP there has been the largest hospital building programme ever in mainland Britain. What they omit is that it also led a programme of hospital closures. Many local services were closed as service provision became increasingly centralised. Pollock notes, that PPP was paid for by major cuts in clinical budgets and the largest service closure programme in the NHS history (Pollock, 2004).

The other huge downside for the NHS of PPP is long term cost. PPP is a consortium of bankers, builders and service operators who raise money on the government’s behalf and in return they get a contract to design and build a hospital and operate the supporting facilities for 30 or more years (Pollock, 2004). PPP works like a mortgage. For example, the Royal Infirmary in Edinburgh is owned by a consortium of 4 companies that includes the Royal Bank of Scotland. By the time the debt is paid off the hospital will have cost a grand total of £990 million. If the same hospital had been built under the old public procurement borrowing system it would have cost only £180 million (Monbiot, 2000).  

Hospitals are responsible for paying off the PPP debt from their annual income. As a consequence, money is being spent on debt repayment instead of essential health care. PPP hospitals are also more expensive because the private sector cannot borrow as cheaply as government to finance construction work. Furthermore, PPP consortiums include additional costs - for example, servicing new bureaucracies which are needed to monitor contract costs. Hospital trusts that pay for PPP/PFI out of their existing operational budgets have been forced to save costs by building smaller hospitals, decreasing the number of beds and introducing charging for car parking (Pollock, 2004).

Alongside a reduction in beds and declining standard in health care, Labour’s market reforms have led to a reduction in staff and the creation of a two-tier workforce. Labour have presided over a culture of ‘contracting out’ NHS staff to the private sector. ‘Contracting out’ has led to increased impoverishment for many in the workforce. Cleaners, porters, and caterers who once worked in the NHS now work for private companies - 70% of ‘contracted out’ workers are women. A 2001 study of outsourced hospital workers in East London found that almost all those interviewed earned less than £5 per hour. Furthermore, workers employed in the private sector have received reduced benefits from holidays to pensions (Pollock 2004).

Conclusion

The sixtieth anniversary of the NHS presents an opportunity to reflect on the contemporary state of the health service. Socialists need to engage in a concrete analysis of the NHS and contemporary policy discourses. It would be a mistake to dichotomise policy developments into a simplistic private versus public debate. The reality on the ground is much more complex.

What has happened under Labour is not an outright privatisation of health care. Instead Labour has introduced a mixed economy into the NHS. Labour’s neo-liberal agenda has been implemented with limited public debate. As a consequence, there is no democratic mandate to transform the NHS from a welfare orientated service into a commoditised good that is subject to market conditions. A recent survey by YouGov revealed that 73% of respondents disagreed with more ‘competition’ in the NHS. The same survey also found that 89% of the public agreed with the statement that ‘public services should be run by the Government or local authorities, rather than by private companies’. A study this year by the Work Foundation highlighted that 85% of people believed that public services should be funded by the taxpayer and free at the point of use. Yet, despite public opposition to privatisation a study by Oxford Economics in 2007 revealed that £44 billion worth of public services are now delivered by bodies outside the public sector. 

The story of the neo-liberal agenda in heath care is a story of winners and losers. The winners are the private companies that form the PPP consortiums like the Royal Bank of Scotland. The other benefactors have been the insurance groups, private hospital and nursing home owners, nursing agencies, pharmaceutical companies, property development companies and facilities management companies. In short, big business! The losers are those who work in the health service, particularly those who have been ‘contracted out’, patients who have had to suffer cuts in essential health care accompanied by the closing down of local facilities and a reduction in beds.

One of the biggest losers is the taxpayer who will have to pay for PPP for a generation. Developments in regards to NHS policy remain uneven. In Scotland, there has been a change of administration at Holyrood with the SNP being elected on a left of centre mandate. One of their commitments has been to end PPP. However, their alternative proposal, the Scottish Futures Trust, does not represent a return to the public sphere. Moreover, the trade union movement has failed to offer a detailed strategy on how to reverse the process of ‘marketisation’.

There is also the prospect of the Conservatives returning to power at Westminster. This would undoubtedly see market based approaches continue in the NHS and the role of the private sector expanded and accelerated. Moreover, both Labour and Conservatives are keen to see the ‘voluntary’ or ‘third’ sector play more of a role in the public services delivery market. In this context, ‘social enterprises’ could be placed in a position to provide services for the NHS.

There are many aspiring ‘social entrepreneurs’ who would no doubt welcome cuts in NHS spending. Recently, the Tories launched a Green Paper entitled Voluntary Action at the social enterprise Sunlight. Sunlight provides everything from health care to a radio station. For David Cameron, social enterprises have the potential to become a model of providing public services without the public sector. The Green Paper ‘Voluntary Action’ outlines an extended role for social enterprises and the voluntary sector in detail in providing public services.

This should sound alarm bells ringing for the left and all those that want to see public services like the NHS publicly funded and democratically controlled.       

References

Monbiot, G, (2000), Captive State, Macmillan, London, UK

Pollock, A, (2004), NHS Plc, Verso, London, UK