Who will defend the NHS?

The Labour Party has long presented itself as the principal defender of the NHS. Yet in one fell swoop, the Conservative Party outflanked it with an apparently unconditional guarantee that in government they would meet the 2019/20 £8bn funding gap identified in the December 2014 Stevens review: The NHS Five Year Forward View. Labour was left looking flat-footed: it has pointedly refused to meet the gap, pledging instead an extra £2.5bn to fund training and employment for an extra 8,000 GPs, 20,000 nurses, 5,000 care workers and 3,000 midwives. Even this, however, is conditional on receiving matching income, in particular from the so-called Mansion Tax to be imposed on homes worth more than £2m, and a levy on tobacco companies to guarantee a week’s turnaround time for cancer tests and results. The reality is that the NHS is not safe in Labour’s hands: its pledges during the election campaign to end privatisations are just lies.

The Stevens review, in fact, calculates the NHS funding gap as £30bn by 2019/20. However, to make it politically palatable, its author, who is head of NHS England, a former president of global health division of UnitedHealth Group, and before that, adviser to Tony Blair on health policy, decided that £22bn of the gap would have to be met by ‘efficiency savings’ which in turn would require an annual 2% improvement in productivity. There is absolutely no way that this target can be met. The best achievement over the last 20 years has been 1.5%; the average over the five years of the Coalition government has been 0.5%. If the NHS maintains its best achievement, the funding gap will be £16bn by 2019/20; if it improves productivity at its life-time average of 0.8%, the gap will grow to £21bn.

These gaps exist because the NHS needs to get an extra 4% funding a year just to stand still – the consequence of rising investment in technology and drugs, and because people are living longer. The Coalition has limited annual budget increases to 1% over the last five years. The consequence has been savage cuts to funding for standard medical procedures – the so-called tariff. The tariff for hip operations has been slashed by 20%, tariffs for treatment of glaucoma and tuberculosis by 70%, and for sickle cell anaemia by 85%. Cuts to the 4,500 tariffs have slashed £2bn from hospital funding over the last five years. 14 hospitals are expected to end 2015/16 with debts over £20m and 34 more will have deficits of up to £8m. The overall deficit will approach £2bn.

Labour leaders have been left looking ridiculous with their complaints that the Tories’ funding commitment – shared with the LibDems – has no source. What the Tories have proved is that deficit reduction is driven by political need, not by economics. When necessary, it becomes a straightjacket – to impose savage reductions in state welfare. But all this can be dropped in favour of electoral considerations. In its determination to prove its credentials for the ruling class, Labour will not abandon deficit reduction to fund the NHS properly for fear of being called profligate. Instead, Shadow Secretary Andy Burnham told the Financial Times that there was a need to ‘reset’ the public’s expectations of the NHS, saying ‘Everyone wants people to have good service but it is about balancing it with only taking what you need and what is appropriate for your need. That message, I think, has been lost as we’ve driven the NHS more as a consumer service.’ We need to be clear: this is code for the introduction of rationing. Burnham is calling for restraint when the Economic Intelligence Unit shows that Britain is 17th amongst OECD countries for health care spending per head of population.

It gets worse. Taken literally, Labour’s pledge for the NHS will have little impact over the next Parliament. 8,000 GPs cannot be delivered overnight – they require seven years’ training assuming there are sufficient training places; nurses and other health care professionals need three years. The only way that sufficient numbers of clinical staff can be recruited in the short term is from abroad, in particular from economies where health services are being run down by austerity – Greece, Spain and Eastern Europe. This has the added benefit in that the training costs have been borne by the migrant’s country of origin. Under its commitment to ‘controlled immigration’, Labour will require such migrants to speak English – ridiculous given that this is a basic recruitment requirement. However, it is useful as a direct appeal to the racist vote.

Labour has made the growing privatisation of NHS services into an election issue. Its stance is one of complete hypocrisy. It says it will repeal the 2012 Health and Social Care Act – without a further top-down re-organisation of the NHS. This is an impossibility. The commissioning structures, part of the seven layers of organisation that the Act introduced, will all have to be dismantled if the Act is repealed. Labour says the purpose of the Act was to promote competition within the NHS. While this is indeed the case, abolishing the Act will not abolish competition within the NHS or make the NHS exempt from EU competition rules. As the think tank Kings Fund argued in a review of the question:

‘… a new government would at a minimum need to establish the Secretary of State for Health’s (or perhaps another government body’s) direct control over foundation trusts and provide that ‘contracts’ between NHS commissioners and NHS bodies providing services to patients took the form of NHS contracts, rather than contracts that were enforceable in law.’

Ending competition would require the abolition of foundation trust status, the flagship of the last Labour government’s NHS reforms. This is because they are organisations which are no longer directly run by the NHS and are instead accountable to an independent board. There is no indication that Labour is prepared to do this, or to tear up existing commercial contracts if it forms the next government.

Labour is making great play about the number and scale of commercial contracts that have been signed by NHS trusts since the passage of the 2012 Act. These include the recent £780m NHS contract – described as the biggest-ever privatisation of its services - to help hospitals tackle the growing backlog of patients waiting for surgery and tests. The contract includes three companies – Circle, Vanguard and CareUK – which have already been heavily criticised for the poor care they delivered to NHS patients. Then there is the £1.2bn contract for cancer and end-of-life services in Staffordshire. Although individually these contracts are huge, they are still smaller than the last Labour government’s Independent Sector Treatment Centre programme, which by 2009 had fleeced the NHS of £1.5bn and which in some cases were disastrous for patients. The reality for private companies is that if there is not adequate money going into the NHS they cannot make sufficient profits. Circle bailed out of running Hinchingbrooke Hospital, Serco pulled out of all its NHS contracts, and Virgin is making significant losses. Privatisation has its limits – profitability.

Whatever it says about privatisation, Labour remains committed to the Private Finance Initiative (PFI). Challenged on this, Labour’s Shadow Minister of Health Liz Kendall told The Guardian ‘I don’t believe PFI is the cause of the NHS’s problems’. Yet it is a significant cause of the financial deficits faced by most NHS Trusts, with contracts costing the NHS up to £2bn a year. It has proved a disaster for Bart’s Health, the largest NHS trust in the country, with a debt approaching £100m and having to pay £109m in PFI charges on a development 25% of which has had to be mothballed because of lack of money. Challenged over the use of PFI, Labour politicians like Kendall and Burnham have constantly dissembled: there is no intention to buy them out. Instead more and more NHS money will be ploughed back to the banks which are behind the PFI consortia.

The reality is that this part-privatised NHS cannot be simply abolished, and like a parasite, privatisation will continue to thrive within the body of the NHS whatever government is elected. There are no short cuts: defending the NHS requires popular action against the banks and monopolies behind NHS schemes, against private health care parasites, and against the boards of NHS trusts and commissioning groups which are allowing these Trojan horses to take over services essential for the working class.


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