Britain - The "New NHS": superhighway to cost-cutting

Jan/Feb 1998

New Labour's ten-year plan for the NHS was announced in a white paper in December 1997, under the predictable title of "The New NHS: Modern and Dependable". Further details will follow in a green paper, called "Our Healthier Nation", to be published in January.

This could not be more timely. The NHS, flagship of the welfare state, symbol of alleged egalitarianism, if not "socialism", so dear to the heart of every vote-loving politician, is going to be frontstage this year, since it will be celebrating its 50th anniversary. Not a year during which the government would like, therefore, to be seen to be moving away from the stated principles on which the NHS is meant to be based.

For Blair, these first Labour NHS "reforms" since the '70s, are a central piece of legislation, for two reasons. First, as he acknowledges himself in the foreword to the white paper, "one of the main reasons people elected a new government on May 1st was their concern that the NHS was failing them and their families." But the second, much less presentable reason, is that the NHS is a major item on the government's social expenditure bill that Blair is so determined to slash. The latest reform plan conforms precisely to this latter unstated principle just as every past NHS "restucturing" has.

Glossy packaging and grey areas

So far, the white paper has been welcomed unanimously by the British Medical Association (BMA - the doctors' professional association), the Royal College of Nurses (RCN), as well as Unison, the union which represents most of the ancillary workers in the NHS and many nurses. Unison health spokesman, Bob Abberley went so far as to say that Labour "had performed the impossible and will make a silk purse out of a pig's ear of an internal market". So far, so good, for the government, anyway.

Taking a look inside this silk purse one sees Labour's usual list of "designer" pledges. £1bn is to be saved by cutting red tape and put into patient care over the next five years. By the year 2000, a 24-hour telephone advice line manned by nurses should become available throughout the country, while the NHS will be entirely wired through the Internet, the so-called "information superhighway". And by that time, everyone with suspected cancer will be able to get an appointment with a specialist after only two weeks wait...

But how can a government seriously expect anxious patients wondering if they have cancer or not, to wait "only" two weeks? And how can they set this as a "target" only for the year 2000, when such cases should be treated as emergencies, without further delay and whatever the cost?

Likewise, that patients should have direct access to a nurse's advice over a telephone line, cannot be a bad thing. In fact, in the era of the portable-phone explosion this is purely a matter of recruiting enough qualified nurses immediately - which should fit in very well with Labour's alleged aim to cut unemployment.

But glaring by its absence was one single word about recruiting more staff for the NHS in this white paper! This, when Labour, in their election manifesto even pointed to the fact that over the last 7 years, the numbers of nurses on the wards had gone down by 50,000! What this means is that more nurses will be taken away from nursing duties, when there are already too few of them. And what for, if not to create an additional barrier preventing sick people from turning up at doctors' surgeries or casualty departments? Of course, from Blair's point of view, this could be a method for reducing the NHS logjams. A method which would be in keeping with this government's policy in other areas and is even spelled out by the white paper when it says that "patients needs will be balanced with their responsibility to use services wisely". This amounts to blaming patients for creating logjams, that is, for being sick - just as "Welfare to Work" is really about blaming the poor for being poor and the unemployed for not finding a job.

And what is £1bn over five years, when it is estimated by the BMA that it would take at least £1bn per year just to stop the NHS from deteriorating further, let alone improve matters? Of course for the coming year, £1.5bn has been found - £1.2bn from Treasury reserves and £300m extra cash to stave off the winter crisis out of the defence and trade budget. Even this £300m is a "one off". So what about the future?

The white paper's "pledges" were clearly conceived for the newspapers' headlines, to put the NHS "reforms" in a good light by striking people's imaginations. In keeping with the contempt that they usually show for their own voters, Labour's spin-doctors are once again assuming that people are incredibly naive. For these "pledges" are only in line with all of New Labour's other promises - mere crumbs packaged in shiny paper in order to hide the real austerity measures which lie behind.

Indeed, what about the really important issues for the NHS? The overworked staff, the shortage of doctors, nurses, technicians, support workers? The patients on trolleys in corridors waiting for beds, the premature discharges? What will really be done about the madness of this "internal market", which Labour has promised to abolish? And what about the competitive drive for profits in hospitals and GP practices and the increasing role of private capital in health provision, which all undermine patients' ability to get proper treatment? How will the NHS get adequate funding, when public expenditure is being axed due to Labour's decision to stick to the Tories' spending limits? How will the waiting lists (over one million) and logjams be sorted out, without the poorest patients footing the bill?

This is precisely where the grey areas of Labour's white paper start. Beyond the platitudes and deliberate vagueness of the formulations, there can be no doubt as to what Blair is really up to - increasing the squeeze on the NHS, using the very same treatment as his predecessors. Ultimately Labour's "New NHS" turns out to be the continuation of the Tories old NHS, repackaged and presented in "new" jargon, but just as crippled by lack of resources as it has always been since its inception.

A history of chronic shortages

Indeed, shortages have been a chronic problem in the NHS since its launch, on the 5th July, 1948. There was some logic in this as its primary purpose was to provide health care for all at the lowest possible cost to the state. And the pressure was always towards reducing this cost, as much as was politically practicable.

Since then the whole history of the NHS has been one of economising by every successive government. Initial expectations had been that the affluence resulting from economic growth would eventually bring to an end the need for a state-run free health service. But economic growth was short-lived and affluence never materialised, at least not for the vast majority of the population.

So, health minister after health minister faced the "tough choices" of finding ways to finance the NHS, as the demands on its resources grew with new and expensive developments in medicine, like transplant surgery for instance. But even on simple things, like replacing the old Victorian hospitals with new ones or making sure each town had a decent hospital, the NHS never kept pace.

For instance, when the twelfth anniversary of the NHS, in 1960, found the then Conservative MP Enoch Powell head of the Health Ministry, he faced a situation of acute bed shortages. Not one new hospital had been built in the first twelve years of existence of the NHS. The fourteen New Towns, built post-war, had not one hospital between them. Mental asylums were still the Victorian institutions they had always been. Conditions were appalling.

Powell's solution was to double prescription charges to two shillings per item, while shifting a greater proportion of NHS funding onto national insurance contributions rather than from general taxation, which actually shifted the burden of paying for the NHS onto the shoulders of workers and away from the rich. As a result funding from charges and contributions combined rose to 22% of the total, twice the figure for the early years of the service. At least, however, this allowed for the building of new hospitals - the biggest building programme to date and a Tory one at that - but at a higher cost for working people.

As a result of chronic shortages, the NHS has never been a "model" of social justice, as it was often described. To increase provision in one blackspot, resources were cut in another. Moreover, the idea that the NHS is worse, that is, more inequitable, today than it was before the Tories came into office in 1979, is a convenient myth, but is not borne out by fact.

In 1977, the then Labour government commissioned the "Black Report into inequalities in health". This commission, under Sir Douglas Black, then a DHSS scientist, reviewed the health of the nation since the launching of the welfare state. When the report finally came out in April 1980, it was immediately suppressed by Thatcher's new Tory government. Its findings - that mortality rates for men and women aged 35 years and over in the upper classes had steadily diminished over the previous 20 years, but that these rates for the poorer classes had remained the same or got worse - were an indictment of the whole social system, as well as the NHS.

The report went even further, saying that, although community health and primary care were insufficient for the poorer sections of the population, their poorer health also had to do with low incomes, unemployment, environment, housing, education and lifestyles. The report's 37 proposals included a large increase in child benefit, a quadrupling of maternity grant, a new infant care allowance, free school meals for all, increased housing expenditure, pre-school education and free day care to mention just a few!

But naturally there was no question of Thatcher's government implementing any of the report's proposals - no more than its predecessors, Labour or Tory, had bothered to take such obvious steps. And no more than the present government will.

The experience of past "restructuring"

Today it is fashionable to restrict statistical exposées to the eighties. And indeed there are some shocking revelations, like the increase in prescription charges by 500% and the cut in long stay psychiatric beds by 27,000 from 1980 to 1990 while "community places" for such patients only increased by 5,840 in the same period. But reorganisations in order to rationalise and ration the NHS, so as to cut costs, have underpinned every single government's policy since the inception of the NHS.

The 1974 restructuring, for instance, was originally initiated by Heath's Tory government, which got a private business consultancy to make recommendations, giving the NHS a new corporate structure. But it was Wilson's Labour government, not Heath's, which implemented the changes. This resulted in new tiers of management, borrowing from then current business techniques.

Another important feature of Wilson's tenure, was his failure to confront private medicine. At the time, waiting lists were half a million long, with many patients waiting two years for non-urgent surgery. Just as happened in the eighties and nineties, private practice by consultants allowed queue jumping, because patients could pay for a private appointment with a specialist and then get placed on an operating list as an NHS patient by the consultant concerned.

A dispute developed over this whole issue - leading to the blacking of two private wards in London's Charing Cross Hospital. Consultants came under fire for their private practices - and when faced with an ultimatum by the government to abolish all NHS pay-beds, they took industrial action. For 16 weeks, they "worked to contract". In the end, they "won" their case after Wilson himself negotiated with them, over the head of his health minister Barbara Castle, agreeing to phase out pay beds over an undefined period instead of removing them all straight away.

One consequence of this crisis-ridden period, exacerbated by Wilson's caving in to consultants, was a huge jump in the number of private hospitals being built, and a big boost for private medical insurance. By the time the Tories came into office, the numbers covered by private medical insurance had reached 6.4% of the population. There 149 private hospitals with 6,660 beds, while the number of NHS pay beds had only been reduced from 3,444 to 2,533. By contrast, over the same period, available "free" NHS beds had actually been cut by 35,000!

It then fell to the Tory governments of the eighties to carry on what had been already started by Labour, by putting in place reforms in the NHS structure which would allow further drastic cuts to be made. Tory governments in the eighties considered various alternatives, including shifting funding of a proportion of the NHS to private medical schemes. Tax incentives were offered to anyone opting out of the NHS to take full private medical cover. Private medical insurance became big business, with the rise of BUPA as market leader.

However private insurance failed to grow in the way it had been expected. In 1996, only three million people had full private medical insurance, a far cry from the 10 million "market" which had been predicted in 1990. In any case, it was soon considered unlikely that private insurance alone could solve the Tories' problems, since so many people would be excluded from this possibility - namely, the unemployed (over 3m and growing), the elderly and the low-paid.

So, first they focused on the privatisation of non-clinical areas of the NHS - like cleaning, catering and laundry services. They also began another restructuring of NHS management aimed at "getting rid of bureauracy". In 1982 the whole tier of Area Health Authorities was abolished. Then came the implementation, in 1988, of the findings of the Griffiths report which had recommended introducing general managers, some from outside the health service, in order to improve cenral management and provide a better framework for the achievement of "efficiency" savings. The new managers had a clear remit - to make cuts in expenditure wherever possible. Griffiths knew what he was talking about - in terms of cutting operating costs at the expense of services and workers' conditions - being himself the managing director of Sainsbury.

This was followed by the white paper "Working for patients" which was implemented from 1990 onwards. Thus was set up the "internal market", with independent hospital trusts, as well as other service "trusts". These were to compete against one another and "charge" the new fundholding GPs "competitive prices" for the medical services provided to their patients. As the exact costing of each item of service had never been an issue previously, a huge (and costly) process was initiated to determine these charges. In order to implement this and run the selling and buying of medical services by hospital trusts, new managers were recruited yet again, their numbers rising by 30,000 over the next three years! Obviously, there was a link between this "internal market" and private insurance, since to save private insurers the cost of providing their own facilities, they were invited to buy services from hospital trusts. This link was highlighted when Sir Douglas Nichol, the director general of the NHS and "father" of the "internal market", retired from his post in 1994 to take the second highest job with BUPA!

Once the "internal market" was set in motion, all that remained was to ensure that GPs did not send too many patients to hospital nor refer them to community services, like health visitors, community psychiatric nurses, etc., nor write too many prescriptions. Hence the further extension of "fundholding" over the next period. Fundholding gave GPs an incentive to economise, since if they did so, they could use the extra money gained as they saw fit, adding to the value of their practices - which they "own", and therefore can sell at any point.

A clandestine "internal market"

Labour has always said, and still does in its white paper, that it will abolish the internal market.

Yet, one of the points emphasised in Labour's new paper is to "benchmark" costs for items of service to set national guidelines for limits on these. This is obviously one way of putting pressure on the NHS to cut costs. But this could also be the next logical step, post-internal market, towards creating an "external market" this time, that is, by introducing charges for hospital and possibly other treatments or services. This may have been the intention of past Tory governments at various points, but for one reason or another they did not dare to do it. But Labour, through Health minister Dobson, has repeatedly refused to rule out charges at some future point. And the white paper is actually helping to create the material basis for this.

Labour's white paper says that it intends to replace the "internal market" with "integrated care". Except that the chief feature of this artificial "internal market" - the split between "purchasers" of health services (mainly GPs) and "providers" of treatments and investigations (mainly hospitals) will remain in place. Moreover, hospital trusts will remain as independent entities, under the direct authority of NHS headquarters, with their boards of directors in place (appointed by Labour instead of the Tories). In principle, Labour asserts that they will be encouraged to "share" their expertise rather than compete with each other.

But will this really happen? According to Labour's plans, contracts with purchasers will no longer be renewed annually, thereby reducing the red tape for hospital trusts. But these contracts will still remain, as "agreements" for increased terms of 3 to 5 years instead. One wonders why, then, if the "internal market" is to be ended, such agreements have to be negotiated at all? If expertise and skills are to be "shared", why is it that they are not to be pooled? Doesn't this mean in fact that hospital trusts will still be competing for contracts? Or is it that they will be "competing" for the right to stay open, and that the existing duplication of services will mean closures of some departments or even whole hospitals?

As to the other major element in the "internal market", GP fundholding, the white paper says that it is to disappear. But the present 3,500 GP fundholders along with the non-fundholders will now have to join 500 consortiums of GPs and community nurses, called "Primary Care Groups", who would together control the whole budget for purchasing and providing all health care for larger local populations of around 100,000. However, all GPs would remain "independent contractors" within these Primary Care Groups. Like every past government, whether Labour or Tory, this one is just as keen to avoid being accused by doctors of trying to turn them into NHS employees. As if there was anything wrong with being an employee of the NHS!

But this is not really ending fundholding, is it? Rather this is merely increasing the size of "fundholding" units, in fact! Perhaps this may eliminate the unfair advantage that patients of fundholding practices previously had, of a shorter wait for hospital appointments, but in the absence of an increase in resources, this is likely just to spread these long waits for referrals more equitably! This will not end the incentive for these giant fundholding units to restrict treatment and select patients on the basis of cost, as was the case with individual and group fundholding practices. GPs will retain their present incentive, both individually as "independent contractors" of "Primary Care Groups", and collectively as decision makers within these groups, to ration health care, through their control on who gets expensive referrals to specialists and hospital treatments and investigations. And as community services, which used to be a separate entity, come under the control of "Primary Care Groups", they too will have an incentive to perform the same rationing exercise.

Moreover, in time these "Primary Care Groups" will be able to apply for trust status themselves, thereby gaining a higher level of financial autonomy. If they have by this time taken on a significant share of day case surgery and other functions also provided by hospital trusts - something the government intends to encourage - they will actually be in competition with hospital trusts for contracts for this kind of service. From the point of view of the government, this means the prospect of further possible cuts, and savings, from day care facilities in hospital trusts. But from the point of view of health care, this is actually bringing back the now allegedly defunct "internal market" to a new level of intensity, since it would introduce another degree of competition, which did not exist before, this time between hospital trusts and GPs in Primary Care Trusts.

Yet more cost cutting instead of funding

One thing on which the white paper is adamant, it is its denial that the NHS might require more funding from taxation. The pressures, according to the paper, are "exaggerated". And it brings in Nye Bevan, the official founding father of the NHS, who is quoted saying, in 1950, that "expectations will always exceed capacity". How convenient! No need to bother about the present widespread shortage of funding, the NHS will generate what it needs all by itself, in due time.

Since every second paragraph in this paper talks about improving cost-effectiveness, efficiency, quality and performance, this must be, in Labour's view, the main source of additional funding for the NHS. Behind this is yet another exercise in finger-pointing, this time at the NHS staff. If the NHS was not coping then it is because they were not performing properly, not because there were far too few of them! If budgets over-ran, as they did, it was not because of inadequate resources but because they were misused! Undoubtedly the internal market created a large measure of bureaucratic parasitism (although certainly not from NHS staff), but to Labour's own admission, only £1bn over 5 years can be saved by cutting this bureaucracy - hardly enough to make up for the chronic shortage of funds in the NHS!

Labour is also relying on other sources. It is probably true to say that new medical technology can allow cheaper surgical treatments today , which can be performed under local anaesthetic. For Labour this becomes a justification for pushing more surgery to day case handling or out of hospital trusts altogether, to community hospitals run and operated by GPs. But this devolution of responsibility to a less costly alternative also creates extra risks, given the shortages of skilled personnel and after-care.

Indeed, it has been proposed that nurses take over certain responsibilities from anaesthetists - both in assessing patients' fitness for anaesthetics and administering these in straightforward surgical cases. Anaesthetists are opposed to this, naturally, as it undermines their position. But perhaps nurses should be too, since similar experiments in other countries, like the USA, have shown that the incidence of post-operative complications has risen as a result, although it has not led to more deaths on the operating table... yet.

In any event, it is hard to see how all this could significantly reduce hospital waiting lists. From already over a million, waiting lists have increased by 14% in the year to last September, while the number of people waiting more than a year for their operations had increased by 25% over the previous three months. The government has pledged that by the end of March 1998, no-one will have to wait more than 18 months for an operation. This 18- month wait was the limit already set by the previous government's Patients' Charter, which is therefore now endorsed by Labour, as if this was an "acceptable" level!

Of course, cutting waiting lists would require increasing the number of beds and operating theatres besides the recruitment of staff immediately. But that is nowhere on offer in the short or medium term and in fact is likely to remain unresolved in the long term too, since the NHS budget is determined, as is all public spending, not by the needs of the population, but by the spending levels tolerated by the capitalist class. And the white paper only echoes this golden rule of government.

What is left then, in terms of funding, is resorting to private finance. The white paper only mentions the government's "Private Finance Initiative" projects in passing. But since May 1st, PFI has been relaunched despite the severe criticisms levelled at it by Labour in opposition. It is through PFI that hospital building schemes are meant to be financed. This is designed to take spending on capital projects out of the public sector borrowing requirement and therefore provide a loophole for the government as far as keeping within spending limits is concerned.

The white paper remarks that the "inherited logjam in PFI has now been broken". It is via this scheme, that the "biggest new hospital building programme in the history of the NHS" is going to be initiated. Not that they have decided yet which hospitals are a priority. And they are also thinking of extending public-private partnership into other areas, like information technology and community health services. But there are well-known trade-offs to such methods of raising finances for public services, as was shown by the backdoor privatisations of the 80s and the inroads made as a result by the private sector into the NHS. Except that today, Labour's plans in that respect are on a much larger scale. They will effectively allow private contractors to own, run and maintain hospitals, on a profit-making basis, while the government will pay the bill by installments, so to speak, through a lease-back arrangement, generally over a ten-year period. For patients, this is a recipe for disaster, just as the privatisation of trains services, carried out through comparable arrangements, has been a disaster for commuters - except that in the case of hospitals, lives are even more at stake!

A problem of social organisation

So, in a nutshell, what this white paper is really about is more of the same, but using different, "people-friendly" names and in slightly different forms. Labour is utilising the changes made by the Tories and developing them further. Moreover they now intend to implement changes which were on the Tories' agenda but never carried out. For instance, a 1994 NHS booklet carrying the title "Towards a Primary Care-led NHS" advocated GP-led purchasing of all hospital and community services with the health authorities gradually withdrawing from the direct purchasing of services. Is this not almost exactly what Labour's white paper advocates with the Primary Care Groups?

Devolving responsibilities as Labour intends to do - most prominently to nurses who will do more and more - is not aimed at improving care, but at cutting costs. In addition it is in itself a form of rationing, given the more limited framework in which nurses must operate in terms of provision of care. Limitation of access for patients, and an extension of private provision, with the bonus to commercial enterprise that this represents, are the order of Labour's day, just as they were during the eighteen years of Tory rule. Labour calls this "building on what works". Yes, what works to reduce expenditure, and what will hopefully work to pull the wool over the eyes of the electorate - this is what they mean.

Labour alleged intention to replace the "internal market" with "integrated care" is a farce and a lie. Of course an integrated NHS would work better. But that would mean breaking down the remaining barrier between primary care and hospital care, whereas Labour plans to separate them further by introducing competition between them. It would mean putting all NHS staff on a salary, including GPs and having the latter working in clinics which are an integral "part" of the hospitals network, with a direct line into services provided there - but Labour won't confront the vested interests of business- aspiring doctors. It would mean having a really unified management body - not separate, more or less rival bodies, as has always been the case despite various rationalisations, partly at least to preserve the cushy positions they offered. Yet none of this is on Labour's ten-year plan agenda.

That Labour can or will bring us a "New NHS" which is "modern and dependable" is clearly out of the question, not when their primary objective is to reduce its cost regardless of needs.

Moreover, as the Black Report of 1980 showed, merely "proving" common sense, society's health does not hinge only on the NHS but on general social conditions, especially the standard of living of the population, its employment, conditions of work, environment and the choices available to people, as a result, on how to live their lives. How could Labour start improving society's health, when their entire policy involves cutting the standard of living of the working class, for the sake of creating a "flexible labour market" for the capitalists?

In the last resort, health is not a technical issue that can be resolved simply by producing glossy white papers, nor even by implementing recommandations, such as those in the Black Report. As many other things, like education, transport, housing, etc.., it is primarily a question of social organisation. Because the profit system cannot get enough short-term profits out of the massive material and human resources required by scientific research, the development of medical knowledge and technology remains paralysed, while what is already known is often impossible to put to use for lack of adequate resources. Because capitalist exploitation, and the resulting living conditions, generate more diseases, crippling conditions and malfunctioning among people than viruses do, they impose the need for disproportionate resources to be allocated for health care.

This is why under the present class system, the National Health Service can only be an unmanageable mammoth - in most respects as irrational and wasteful as the social organisation in which it operates. But that is certainly not a reason to allow bourgeois politicians like Blair to undermine society's health further by rationing care, crippling the NHS and turning it into a milch cow for private profiteers.