#36 - 50 years of the NHS - a history of austerity, rationing and cuts.

Jan 1998


For this year's 50th anniversary of the NHS, Blair has announced a grand ceremony. In fact, this will not be just a birthday celebration, but a full-scale "re-launch", based on a white paper issued last December. The old NHS will be no more, say Labour's spin doctors, long live the "New NHS" - of course!

But in fact, all this show business around the NHS reflects a problem faced by the Labour party in their wholesale attack against welfare provision.

It was easy enough for Blair to whip up prejudices against the unemployed, accusing them of leading a "lazy and easy" life off taxpayers' money, in order to justify benefit cuts. Even among certain sections of the working class, Blair only had to revive the old antagonism between those struggling at work with worsening pay and conditions and those struggling on the dole with shrinking benefits. Of course, when Labour ministers turned their guns against single mothers and the disabled, a large section of the working class felt outraged. But at least, Blair seemed confident that he could rely on the support of middle-class voters, who did not feel directly concerned by the issue of benefits and could be kept happy by the promise of future tax cuts.

The issue of the NHS, however, is a different one. With the exception of its most wealthy layers, all sections of the population are heavily reliant on the Health Service, although not all in the same way. Some working class people may still be intimidated at the prospect of visiting a GP. Probably many more workers just cannot afford to take the time off that would be necessary to take care of their health, for fear of losing their jobs, not to mention the real financial overheads of getting medical treatment, despite the NHS's claim to be "free at the point of use". Higher earners and the middle class, on the other hand, thanks to better education and easier lifestyle, tend to use the services of the NHS proportionally much more than the poorest sections of the working class. Moreover middle-class voters often see the NHS not as a collective service, as most workers would see it, but as a service which is owed to them personally, because of the taxes and contributions they pay.

In the run-up to last year's general election, it was the discontent among middle-class voters over the dire state of the NHS which led Labour's propaganda machine to focus on health, in the same way and for the same reasons as it did on education. For a large part, Blair's success in raiding the traditional Tory vote in May last year, was precisely due to the Tories' cynical cost cutting in the NHS.

Labour's objectives concerning the NHS, however, are the same as for the rest of the welfare state. Savings and cuts are their primary agenda, whether the electorate - including middle-class voters - likes it or not. The problem for Blair, however, is that the middle-class electorate is more likely to express its discontent by switching back to the Tories, rather than just abstaining as many disgruntled working class voters will probably do. Hence the paraphernalia around the "re-launch" of the NHS this year, which is designed to paper over what is really intended to be another squeeze on the NHS.

The history of social welfare is one of permanent compromise between the capitalist class' greed for profits on the one hand, and, on the other, the need to ensure the availability of a workforce fit and willing to submit to capitalist exploitation. Never in history have the propertied classes introduced or maintained any form of welfare for the dispossessed outside these parameters. The on-going shrinkage of welfare provisions over the past two decades does not reflect the advent of a "new world" to which the working class should resign itself. It is not the world, but the social balance of forces which has changed. The massive unemployment caused by the capitalist crisis has weakened working class forces across the world, thereby giving the capitalist class the confidence to dismantle some of the welfare provisions they had tolerated in the previous period.

But even in periods when the balance of forces was more favourable to the working class, welfare provisions have always been tailor-made to fit in with the interests of capitalist profit. More importantly, the capitalist class has always conceived welfare provisions first and foremost as an instrument of social control, to contain the ability of the working class to oppose capitalist exploitation, rather than as a means to relieve the hardships of the working masses.

And this is what the long history of social welfare in general, and health provision in particular, has to tell us.

The roots of social welfare: the Poor Law system

It may not be "politically correct" to say this, but the truth remains that the roots of the NHS and modern "welfare state" must be traced back to the infamous Poor Law system inherited from the 17th century.

Already in 1572, a first act ordered the levy of a compulsory "poor rate" to allow each parish to cater for its own poor, so as to keep them away from the towns. Justices of the Peace, the JPs, who represented the landed gentry, were given the responsibility of organising the employment of the poor, so that they had to work for the "relief" they got (nothing new in Brown's so-called "New Deal" for the under-25s!). All this was institutionalised in the 1601 Poor Law Act, which created three categories for welfare purposes: the impotent (aged, sick, blind and demented) who were to be given institutional help in "poor houses", the able-bodied (adults and children), forced to labour in workhouses and the "persistent idlers" who were to be locked up in a "house of correction".

The enforcement of this Act, remained the exclusive responsibility of the Privy Council, indicating how important it was considered by the Crown. The gentry wanted the poor out of the way, but at no cost to their purse. So when it came to the implementation of the Act, JPs were reluctant to enforce it and each one of the country's 15,000 parishes interpreted it in its own way. In the small number of parishes where a workhouse was eventually built, all the poor were dumped in it, regardless of health, age or abilities. Elsewhere the unemployed remained the target of ruthless guerilla tactics, being chased to neighbouring parishes or even murdered. As to the sick, the quicker they died the better it was for ratepayers!

However, two centuries later, by the end of the 18th century, the Poor Law relief system had slowly evolved into a different kind of welfare - effectively a subsidy to complement the appallingly low wages paid to rural labourers. But with the growing numbers of poor, the cost of relief increased dramatically. This produced an alliance of vested interest against the whole set up, between the landowning class and the rising industrial bourgeoisie which saw the system as a brake on their ability to force the poor into their workshops.

But before this alliance got anywhere, it took a change in the social balance of forces to take place in society - the emergence of the working class as a social force. The decisive factor was probably the "Swing Riots" in 1830-31, which, from a reaction against the introduction of threshing machines on farms, evolved into a powerful and radical movement for higher agricultural wages. Its radicalism was illustrated by a well-known letter circulated in Kent under the signature of "Captain Swing", the pseudonym adopted collectively by the leadership of the movement, which said: «We will destroy the corn stacks and the threshing machines this year, next year we will have a turn with the parsons and the third year we will make war against the statesmen». The riots were brutally suppressed, but they created a new sense of fear among the privileged.

The rebellion of the emerging proletariat was the stepping stone that helped the manufacturing bourgeoisie to conquer political power. The 1832 Reform Bill put its Liberal party representatives in the driving seat. The local cliques which had run the towns so far were replaced with corporations elected by the urban middle class. The 1833 Factory Act was a limited concession to fierce working class militancy in the North of England. It restricted the exploitation of children and, for the first time, established a body of inspectors to enforce the act. But having consolidated their position and secured social peace for the time being, the new Liberal masters wasted no more time. The following year, they turned against the poorest.

In 1834, the Poor Law system was amended so as to restore its original design - as a means to terrorise the dispossessed into submission. The Poor Law Amendment Act retained the traditional provisions for the ill, the aged and widows to institutional care administered by each parish. But it banned all forms of outdoor relief and subsidies to low pay for the able-bodied. Relief for them was to be dependent on employment in a workhouse and, as a deterrent, they were to be «subjected to such courses of labour and discipline as will repel the indolent and vicious». The workhouses - or Bastilles as they became known - became purely punitive institutions, but this time without leaving any space for the traditional cushion of village welfare.

There was an element of centralisation in this new Poor Law set-up. Its administration was left in the hands of locally-elected boards of "Guardians" who were to be constantly subjected to the scrutiny of a bureaucratic machinery led from London by a three-man committee, which was itself only accountable to the Privy Council. This ensured that Poor Law expenditure was kept to a minimum. However, it did not make the English rate payers more respectful of central government decisions and, for instance, outdoor relief, which worked out cheaper in the smaller towns, remained widespread.

The difficulties met in enforcing the new Poor Law reflected a much deeper problem in Britain that had still to be resolved - the chronic resistance of the propertied classes to any form of centralisation. By the mid-19th century, the authority of the state was still largely ignored, if not openly challenged, by the local privileged cliques. In this context the emerging caste of bourgeois statesmen who were trying to bring an element of rationalisation to the organisation of society - for the benefit of the capitalist system, needless to say - came up against formidable difficulties. No government was prepared to risk a direct confrontation with the local cliques by introducing, let alone enforcing, an element of compulsion into any legislation that was passed. So anarchy prevailed until major crises arrived which would force the central government into taking action.

Health and the centralisation of the state

Such was the case with public health. This area had been left completely untouched by the state since the 17th century. If there was any development in health care, it was primarily due to a new breed of philanthropists who were mostly influenced by the rationalism promoted by the philosophers of the French Revolution. Out of a mixture of social concern and scientific interest, they took upon themselves the development of voluntary welfare institutions, outside of any state or religious interference.

From their efforts came the voluntary hospitals of the 18th century, including the Westminster Hospital, Guy's, St George's, the London Hospital, the Middlesex Hospital, etc.. This was not limited to London either. Whereas a survey made in 1719 noted that 23 English counties had no form of hospital accommodation at all, by the end of the century nearly every county and all the larger towns had its own hospital.

All these hospitals were based on the free labour of doctors, and funded by public subscription, under the patronage of a few wealthy benefactors. But what was remarkable about them was, that in the absence of any state initiative, they offered an avenue for the development of medical science - a field in which Britain was already far behind countries like Italy or France. Progress, however, was very slow. And it took another century for a qualified medical profession to develop, on the basis of the training provided by some of the voluntary hospitals.

The 1834 Poor Law did add a state element to the healthcare system. It required each Board of Guardians to appoint doctors who would be in charge of taking care of the health of the local poor. In many areas, infirmaries were opened, as annexes to the workhouses, to take care of the sickest. The difficulty, however, came from the determination of the Board of Guardians to keep expenditure as low as possible. So the wages offered to Poor Law doctors were kept to the bare minimum, and their qualifications were not scrutinised. As to the Poor Law infirmaries, they were the last item on the priority list of the Guardians. As a result they remained little more than a dumping ground where the poorest were reluctantly permitted to spend their last days.

But in any event hospitals could at best treat individual illnesses. They could not deal with the squalid conditions which dominated in the towns, which were the cause of more disease than the worst epidemics. And it took the whole of the 19th century for central government to start in some way to break the local resistance of the bourgeoisie to state interference in public health.

Over this period, central government initiatives were merely taken in reaction to epidemics. As soon as the epidemic disappeared, so did the will to act. Thus in 1804, the threat of a yellow fever epidemic prompted the setting up of a Board of Health under the Privy Council, which disappeared within three years. Then came a series of four cholera epidemics, which killed a total of 130,000 people. This time all classes were affected by a disease which was transmitted by water rather than direct contact. It prompted a more vigorous response, with the setting up of another Board of Health in 1832 and 1200 local boards with the responsibility of acting on urban hygiene. However, once the last epidemic had died away, the element of compulsion which had been included in the 1832 Cholera Act was dropped. And nothing happened.

However large the casualties of the cholera epidemics, they were nothing compared to that caused by the domestic fevers like diphtheria, and rheumatic fever, and of course tuberculosis, which affected the working class districts of Britain. Death rates increased in the first part of the 19th century to the point where life expectancy went down to 30 years for skilled workers and 25 for labourers. And even these were only national averages: in the atrocious conditions of Liverpool, for instance, labourers died in average at the age of 15!

Edwin Chadwick, since 1834 the head of the central Poor Law commission, was certainly not a friend of the working class. In Chadwick's view this situation was simply an appalling waste of money for the capitalist class, while providing a dangerously fertile breeding ground for heresies such as Chartism. So Chadwick embarked on a campaign aimed at getting central government to attack the problem at its roots, by creating an administration which would take charge of enforcing minimum standards of hygiene across the country. Once again he came up against the resistance of his own class: «I am crying out pestilence and for the relief of the masses but can get no one to hear of means which will affect the pockets of small owners... who set up the cry of self-government against any regulation which may lead to the immediate expenditure for putting in better conditions the houses for which they exact exorbitant rents».

By 1848, however, thanks to another cholera epidemic, Chadwick managed to get a Public Health Act passed. As the Times wrote cynically that year, «The cholera is the best of all sanitary reformers». Another General Board of Health was set up under Chadwick. As in 1832, the act provided for the setting up of local health board. However this was only to be compulsory where the death rate went over the 23 ‰ limit. Besides the larger towns were allowed to adopt their own regulations without being accountable to Chadwick's board. As a result, by 1854, only 184 local boards had actually been launched, and among them, only 13 had initiated water-works and sewage schemes.

But, for instance, all attempts by Chadwick to remove the provision of water in London from the hands of the existing eight water companies failed. It is worth noting that the solution proposed by this most reactionary but practical character was to... nationalise the water companies! Proof that it one does not have to be a socialist to see the dangers of leaving the provision of water in the hands of profiteers - something which clearly is beyond the understanding of today's Labour party! Only the refusal of the Treasury to provide the funds required aborted the plan and Chadwick himself was dismissed after intense lobbying by the said companies.

Chadwick's efforts were not wasted, however. A series of acts were eventually passed between 1866 and 1875 which made it compulsory for local authorities to take action against the main threats to public health, created sanitary authorities to enforce minimum standards for drainage, sewage, etc.., imposed the appointment of local authority medical officers and offered some loans for sanitary purposes.

The Liberal's welfare war machine

The authoritarian tone of the Public Health Acts of the late 19th century was, however, rather misleading. Although they were more widely implemented than any other acts before, it was often less due to the authority of the state than to the relentless campaigns of socialist agitators. The centralisation of the British state was still in progress, and in fact was only to be really completed, and even then within certain limits, through the general mobilisation of the entire economy during World War I.

By the turn of the century, the British bourgeoisie was faced with a combination of problems. On the one hand, there were a number of threats to Britain's imperial domination of the world market. Germany was threatening to take Britain's place as the world's largest industrial power. Sooner or later the existing division of the world between the two main colonial powers - Britain and France - was likely to be challenged by the German bourgeoisie. The Boer war had ended in "victory" for the British empire, in 1902, but a costly one after four years of war. Trouble of this nature could emerge anywhere in Britain's vast colonial empire, with or without the help of its German or French rivals. In any case, come what may, Britain had to gear up economically and militarily against its rivals.

On the other hand, there was the dynamism of the trade union movement which had proved most effective in the 1880s, and the increased politicisation of the working class exemplified by the setting up of the ILP. Yet putting the economic machinery of Britain in full working order required a large increase in productivity and manpower. Only the state could achieve this mobilisation, with the help of a certain level of goodwill on the part of the working class.

So a consensus began to emerge, at least in the top spheres of the capitalist class, that bold state intervention in social matters was becoming urgent. As early as 1895, Balfour, the Tory prime minister of the time, was quoted saying that «social legislation is not merely to be distinguished from Socialist legislation, but it is its most direct opposite and its most effective antidote» - a convoluted way of saying to Tory supporters that they need not be worried by the phrase "social legislation" and that there was a price to pay for diverting the working class from socialist ideas. Balfour's successor as Liberal prime minister, in 1905, Campbell-Bannermann went a bit further, arguing that «the vast majority of public opinion in this country fully recognises the usefulness of the unions as well as the great merit of these organisations in restraining social unrest and helping to preserve harmony between capital and labour».

This formed the basis on which, in the nine years from 1905 to 1914, an informal coalition between the Liberal government and union leadership prepared the country for the coming war, through a systematic and far-reaching rearmament programme accompanied by the setting up of an extensive social welfare system. Significantly, the driving force in this was Lloyd George, in his capacity as president of the Board of Trade, in other words the man in charge of liaising between the largest companies and the government.

One after the other, new laws were introduced. First the issue of children's welfare was tackled with the provision of school meals by local authorities in 1906 and the setting up of a medical inspectorate for children the following year. Then, in 1909 came the Old Age Pension Act, which provided a means-tested pension paid out of taxation, to the over-70s. Of course, few working class people lived to that age in those days and anyway the pension was so low that nobody could subsist on it without an additional income. But this pension was paid through the post office, rather than the Poor Law institutions, helping to establish the principle that paying a pension to old workers was giving them their due, not making a charitable gesture.

That same year, labour exchanges were set up for the unemployed. These exchanges did not prove very effective in helping the unemployed to find jobs. But they allowed the government to exercise direct control over the availability of manpower - which was to become decisive after the war broke out. They also provided a permanent framework of cooperation between the state machinery and the trade union apparatuses which were invited to appoint representatives to the managing committees of these exchanges.

Finally came the 1911 National Insurance Act, which introduced the first real national system of welfare provisions for the sick and the unemployed. Designed by the same Beveridge who was to be behind the welfare reforms of the Labour party after World War II, this scheme was financed by employees' and employers' contributions as well as government expenditure.

When it was implemented, in 1913, the scheme covered 2.35 million workers against unemployment, by providing them with a non-means tested benefit paid for 15 weeks through the 423 labour exchanges in operation by that time.

In addition over 12 million insured workers were guaranteed a means-tested sickness benefit, and a separate invalidity benefit. They could get free medical consultation from a list of local doctors. However, hospital treatment was not free, except for tuberculosis (for which the Act launched a massive building programme of sanatoriums). Nor were the wives and children of insured workers covered themselves.

This health insurance scheme was operated by a patchwork of existing "approved" societies from the benefit funds operated by some trade unions to private insurance companies and the mutual insurance funds widespread among the middle-class - and in that sense it was not yet an integrated central insurance fund. But by opening to workers the possibility of joining either through one of the "approved" societies or through direct contributions to the national system, it did increase considerably the numbers insured.

Through the Depression

The tightly centralised organisation of the war economy during World War I stepped up the intervention of the state in social welfare even further. Under war provision, all central government decisions were compulsory and local vested interests were not given the opportunity to play for time.

Thus a campaign was launched against the spread of syphilis, involving the setting up of discreet clinics in every municipal hospital where patients could get treatment anonymously. It was a resounding success and these clinics were to form the backbone of a network of Venereal Diseases Clinics which still survive today. If anything, this demonstrated in practice what efficiency could be achieved by a government determined to supply the resources and the authority to deal with any health issue.

The war had other consequences. It created a new image of hospitals, which had been largely considered up to that time as something for the poor. At the same time it inspired a new approach among many doctors who worked on the battle fields of the war - based on the idea that medical treatment could be more effective when applied within a collective framework where many different skills were available as well as equipment.

This new approach, together with the general aspirations for change which followed the end of the war, was reflected by the Dawson report, commissioned by the Liberal-Tory coalition which was then in power, and published in 1920. Following the Liberals' election pledge, in 1918, that health care would become independent from the Poor Law institutions, this report started from a statement of facts - that the existing infrastructure was inadequate to provide the population with the benefit of scientific medicine. A large programme of construction would have to be undertaken in order to develop a national health system aimed at integrating preventive and curative medicine within the same framework. Dawson adopted a model inspired from battlefield organisation. The base unit of the system would be health centres operating like wartime Casualty Clearing Stations, where doctors would assess the needs of patients, with the help of specialist consultants if required, and carry out basic surgery and laboratory tests. Then, if necessary, patients would be directed for treatment towards a second level of care based in hospitals. Public health and preventive medicine would fall under the joint responsibility of both levels of care. Doctors would become part-time employees of the state system.

While the Dawson report did leave wide open a large range of issues, such as the future status of voluntary hospitals or the mechanisms through which the whole system would be administered, it did set in motion an idea which, so far had been only found in socialist literature, that of a national centralised service capable of pooling together both the existing skills and the resources of the state machinery into a rational whole.

In the end, the planned reform fell through. The House of Lords took out of the draft bill all the provisions affecting hospitals effectively killing the bill. And anyway, by that time, the postwar economic crisis had settled in. The time for reform was over.

After this, the welfare provisions created by the pre-war legislation continued to be implemented with few changes. Still, by the end of the 30s, only 43% of the adult working population was covered by the limited health insurance introduced by Lloyd George. The few changes that were made were purely cosmetic. For instance, the Poor Law institutions were dismantled in 1930 and put under the control of local authorities. But they carried on playing the same hated role under another name, that of Public Assistance.

When this period came to a close, with the run-up to World War II, little progress had been made in terms of the health of the population. Social surveys conducted in 1930-31 showed that the proportion of town school children suffering from rickets varied from 75% in rich neighbourhoods to 90% in poor ones. In 1932, another survey carried out in parallel in Chicago and Liverpool, due to the similarities between the two towns, showed that infant mortality was 82 ‰ in Liverpool against 38 ‰ in Chicago. In this field social inequalities remained as wide as before the war: child mortality was three times higher among the poor than among the rich.

Of course, the material hardships created by the Depression had something to do with these appalling figures. But as the experience of World War I showed, even a bourgeois state was perfectly capable, provided it had the political will, of taking effective emergency measures which could relieve at least some of the hardship caused by a crisis situation like the depression.

In reality, the root cause of these degraded conditions was first and foremost political. The inter-war period had been marked by the defeat of the 1926 general strike and the subsequent weakening of the working class due to the rise of unemployment during the Depression. In most respects it was a period of reaction. In this context, much like what we have seen over the past two decades, the capitalist class felt confident enough to grant fewer and fewer resources to the working class while demanding more and more concessions from them.

The return of state intervention

From the mid-thirties onwards, and regardless of the speeches on appeasement made by politicians like Chamberlain, the state geared Britain up for certain war. There was no more questioning of the cost entailed. The British capitalist class was flooded with orders for procurement of equipment and the government took steps to centralise and rationalise many spheres of social life, in particular that of medical provision. Out of this emerged in deeds what had up to now only existed in words - the embryo of a national health service.

Even more remarkable was the speed at which this was brought about. In a matter of two years a nation-wide system of medical and health provision was set up. Compare this to the abject failure of all governments to resolve the problem of hospital queues since 1948 - a failure which is obviously not a question of resources but a question of choice.

Indeed, Chamberlain's Tory government, which carried out these changes in medical services was initially faced with a near catastrophic situation in health services - the catalogue of decades of neglect.

Richard Godber, who was to become a Chief Medical Officer of the NHS, helped run a major health survey in 1937, in which he noted that «the physical difficulties imposed by unsatisfactory buildings were less important than the defects in district services resulting from competition, if not overt hostility, between the several hospitals providing them.» Obviously the Tories who introduced competition between hospitals in the 90s decided not to learn from history!

This was the first time that such a comprehensive survey had been conducted and its results were quite shocking. Not just was there a serious shortage of beds but the contrasting systems and overt warfare between voluntary and municipal hospitals contributed to extreme maldistribution of resources. Municipal hospitals were left to care on a shoestring for the chronically sick and elderly infirm in large overcrowded wards which sometimes mixed children with gastroenteritis, chronically sick elderly and nursing mothers all together for lack of an alternative.

By the late 30s the voluntary hospitals provided one third of the country's hospital beds. They had effectively become private hospitals which depended mainly on fee payment, mostly from insured patients, rather than on donations. And they were in deep financial trouble, forced to plead with the Ministry of Health for state grants.

There was, as the Trade Unions and Labour Party argued, a clear case for amalgamating voluntary hospitals and municipal hospitals into a single organisation, under state control. But there was strong resistance against this, from among others, people like Lord Nuffield of Oxford, who in 1939 had established the Nuffield Provincial Hospitals Trust, endowing it with one million shares in Morris Motors Ltd., in an attempt to prevent the voluntary hospital sector from falling into the hands of the state. Few people at this time had realised, as he obviously did, that profits could be made out of hospital care.

A drastic reorganisation of the country's health services was urgent. The war provided the opportunity. Chamberlain's government had already drawn up the plans for an Emergency Medical Service in fear of what air bombardment would mean in terms of casualties. And it was the war which revolutionised health and welfare provision. In effect the state took over direction of the medical and hospital sectors given the need to co-ordinate all hospital facilities in Britain and redirect all the human resources to all hospitals including those not previously attended by the specialists.

The Emergency Medical Service was organised on a regional basis laying the organisational blueprint for the 1948 NHS. Voluntary hospitals received grants first for providing for air raid casualties and later these were extended to provide for wider sections of the population. Although the voluntary boards and local authorities continued to be responsible for their hospitals, they were working under the supervision of the EMS as a national system. While the EMS saved the voluntary hospitals financially it effectively put an end to the voluntary hospital system.

By October 1939, the government had provided nearly 1,000 new operating theatres, millions of bandages and dressings, and tens of thousands of extra beds in "hutted annexes". Some of these remained in use for more than twenty years after the war was over. Three national services were set up which remained permanently in place after the war. These were the National Blood Transfusion Service, the Public Health Laboratory Service and the Hospital Laboratory Service. Local authorities were required to provide an ambulance service which rationalised the previous arrangements whereby ambulances were provided sometimes by the local authority, sometimes by the hospital itself or by a voluntary body. Public preventive health became a priority and between 1940 and 1945, 7 million children were vaccinated against diphtheria and smallpox.

War also had other consequences. For instance it precipitated development in the psychiatric services - since psychiatrists, notes the historian, Angus Calder, ironically, "had to decide who were insufficiently sane to perform or assist in the killing of men."

As the war progressed, free treatment under the EMS was gradually extended from direct war casualties to war industry workers, child evacuees, firemen and so on, until a 62-page booklet was needed to define who was eligible. The elderly and other sections remained excluded though. But war proved that a national health service could be run.

The wartime maturation of the postwar "welfare state"

Against this background, and with a consensus already developing over the need for a national health system, the Beveridge report emerged, in the form of a plan based on a comprehensive survey of all existing insurance schemes.

In fact, when it was finally published in December 1942, William Beveridge's plan merely expressed the current consensus that rationalisation and co-ordination of insurance schemes was necessary. It was certainly nothing revolutionary. For instance, it was meant to be paid for by the working class itself, through regular contributions.

This plan was based on three assumptions: that allowances would be given for all children; a comprehensive national health service would be provided and there would be insurance against unemployment. Each contributor would be covered for all his needs from maternity grant to funeral grant - the so-called "cradle to the grave" cover. Anyone who fell through the net would be entitled to free national assistance. Integral was the idea of a national minimum income which would ensure a decent level of subsistence to the poorest citizens below which no-one should be allowed to fall.

It was the idea of a national health service which gained the most attention however. A record 653,000 copies of this report were sold. Beveridge called for immediate steps towards its implementation and the creation of a new ministry of social security to organise it. After all, he said: «The purpose of victory is to live into a better world than the old world... Each individual citizen is more likely to concentrate upon his war effort if he feels that his government will be ready in time with plans for that better world... if these plans are to be ready in time, they must be made now.»

Poor Beveridge was labelled a "socialist bureaucrat" for his pains, by right wing conservatives. Beveridge was indeed a state bureaucrat, but one who considered that it was the duty of the state to patch up the inadequacies of the capitalist system, if necessary against the resistance of some sections of the capitalist class - not in order to put the system into question, but rather to allow it to continue to consolidate its domination over society in a period of potential instability. In that he was absolutely in tune with the then Labour leadership, and in fact with most of the wartime politicians. If Churchill seemed initially reluctant to Beveridge's plan, it was not because of its content, but because it focused peoples' attention on the post-war period rather than the war effort.

Once a consensus was reached over the basic principles, the details had to be worked out. A White Paper for the NHS was put out for consultation in February 1944 by the Conservative Health Minister, Henry Willink. It turned out to be a compromise and a step backwards from the centrally-planned and administered Emergency Medical Service of the war. Some thirty grouped local authority boards would take over municipal hospitals but voluntary hospitals would be able to make a contractual relationship with these for the "performance of agreed services set out in the plan". In fact, this was a similar idea to the internal market created by the Conservatives in the 90s. Besides, while GPs would be encouraged to group themselves in health centres provided by local authorities, they would retain privileges such as the right to keep private patients and to buy and sell their practices - although it was unclear in the document how they would be paid.

In the pre-election period after Labour had left the coalition government, further compromises were agreed with the GP-dominated British Medical Association (BMA), to allay doctors' fears that they would end up as salaried employees under local authorities. Willink conceded that health centres would only be experimental and that GPs would be paid by capitation fees, that is according to the number of patients they treated regularly, both inside and outside medical centres, rather than a fixed salary. A proposed Central Medical Board to control GPs' qualifications and the national redistribution of doctors to even out GP cover in the population was also withdrawn from the proposals. Concessions were also made to the voluntary hospitals, allowing them to retain a measure of autonomy.

But what remained was the principle that there should be a national health service, comprehensive and free of charge at the point of use, available to everybody regardless of their means, and which would not just treat disease but also promote good health.

Labour's version of the NHS

The 1945 general election was won by Labour with a majority of 142 seats. In the light of their big mandate, the programme they put forward was so moderate that the Economist wrote in November 1945: «an avowedly socialist government, with a clear Parliamentary majority, might well have been expected to go several steps further... If there is to be a Labour Government, the programme now stated is the least it could do without violating its election pledges.»

This, because the nationalisation policies stuck almost exactly to those areas which the Conservatives had also agreed for the purposes of reconstruction - namely rail transport, coal, electricity and the Bank of England. The only exception was steel and iron. The former owners were more than generously compensated for the worthless shares of derelict industries which they had owned. The general structure of the nationalised industries largely remained and the government appointed to their governing boards the same owners and managers who had been in charge before.

The setting up of the new NHS offered, on the other hand, tremendous possibilities. The centralisation of all health resources could have provided the basis for planning of investment, research and extensive public health initiatives including on prevention, occupational health and safety, health education and hygiene. Putting the whole system under the scrutiny of the working population, as a means to build a real-life assessment of needs, would have provided the most reliable basis for planning ahead. But to do all of this, the Labour government would have had to be prepared to confront the various forces opposed to such planning, that is, the more powerful members of the medical profession, the employers who did not want health considerations to interfere with their interests, but also the local authority politicians, who were against relinquishing their powers. For the new Labour leadership, there was never any question of such a confrontation.

Within nine months of Labour's coming to office Nye Bevan, the so-called "father" of the NHS, published the Health Services Bill in March 1946. Actually it was largely based on the Conservative's 1944 White Paper, though it contained a few important changes which caused huge antagonism amongst the medical profession and delayed the implementation of the Bill for over two years.

Bevan was right to say that Willink's plans for the hospital sector were a dog's breakfast, but though he said that Willink «had run away from so many vested interests that in the end he had no scheme at all», he, himself proceeded to court one such vested interest, and relentlessly at that. This was the top layer of consultants from the three specialist Royal Colleges, concentrated in the more prestigious voluntary teaching hospitals. In order to get them to support the nationalisation of these hospitals, Bevan in effect increased their potential empires through unification of all hospitals, and gave them a generous system of merit pay awards, the right to retain private beds in all hospitals and the option of combining private work with NHS work. He was able therefore to achieve the redistribution of specialists throughout the hospital system since they had everything to gain by agreeing to this.

The massive revolt in the ranks of GPs against being taken on as salaried employees in any shape or form, caused Bevan to run even further away from this vested interest than Willink had. He gave up any idea of forcing them into the position of salaried employees. They retained their independent contractor status and capitation fees. Bevan thereby endorsed and widened the split between general medical practice and hospital practice.

The consequences of this split should not be underestimated. The spread of consultants throughout the country excluded GPs from hospital work. Before this, they had anaesthetised and operated on their own patients. Now they could only refer their patients for treatment by consultants to hospitals. The standard of hospital treatment for patients might have improved, but the standard of treatment in the community fell as the isolation of GPs increased and their status in the profession fell. In a sense, GPs had shot themselves in the foot by opposing being taken on as employees of local authorities, or better, central government. Their hostility to this, but above all, Bevan's caving in to it, meant that the health service contained a fundamental flaw which prevented its full integration.

The overall structure therefore consisted of three divisions, each with its own administrative structure: firstly, the hospital sector, which was itself divided since the teaching hospitals were to retain an autonomous status; secondly the general practitioners, opticians and pharmacists; and thirdly, the community and public health services, including school health, which remained controlled by local government.

This was the form in which the NHS was born, on the 5th of July 1948. There was not one new doctor or nurses job created. It was a massive new organisation which came into being using all the resources which already existed as a result of the wartime measures. Bevan handed over symbolic keys to the NHS on the steps of the Park Hospital in Trafford - where, exactly 40 years later, in 1988, a lottery was launched to keep the hospital going!

The medical profession comes back to haunt Labour

Doctors, as a top layer in the NHS, held key positions in both the management and provision of the service. Since each successive government inevitably sought savings out of the huge and growing NHS budget they came into regular conflict with doctors who consistently used their key position to maintain and bargain for ever-improving conditions for themselves.

Although the independent contractor status of GPs was the most glaring inconsistency in a health service which claimed to be comprehensive and integrated, no government ever chose to put this into question. The reason for this, was that every government recognised that GPs were an important force in the rationing of health care. They acted as the "gatekeepers" to hospital treatments since patients could not refer themselves to specialists. It was GPs who, as it were, policed the queues waiting for treatment by deciding who joined them and in what order. The less interested they were in their patients, the less time they spent with them, the fewer investigations they asked for, the less demand would be placed on expensive hospital treatments. So it was always in governments' best interests to leave the GPs' capitation fee in place, so that they maximised their lists but did not therefore have the time to maximise their care.

Of course not all GPs were content to be little more than gatekeepers to hospitals. They were more and more isolated. Said one, in 1964: «at the moment the GP is more of the waste product of the medical schools than the end product. As a GP one cannot help but feel that the NHS is a consultant's charter, and there is no incentive for the GP to practice good medicine.» Attempts to address this problem had been made. In 1953, a Royal College of General Practitioners was set up to raise standards, but in fact standards were, nearly 20 years later, not much better in the practices in the poor areas. The GPs were paying for their refusal to become state employees in loss of prestige but even worse, patients were paying for it in lack of proper family medical care.

Their incomes were less than consultants, but they were also paid out of a pool which averaged out what each GP spent on his expenses. If a GP spent a lot on staff, premises and equipment he would only get a proportion of this refunded. The incentive was to have long lists and spend nothing on them. Which is what many GPs in fact did. Others left the country. In the early sixties it was said that six hundred GPs were leaving their practices per year.

It was during that period that one of the more spectacular conflicts took place, between the GPs and Wilson's Labour government. In 1965, they revolted against the pay award that Labour Health Minister, Kenneth Robinson proposed for them. They mounted a provocative campaign of resignations - 18,000 out of 22,000 handed in resignation notes.

The problem was that if general practice was to shrink, hospital consultations would have to make up for this, and the example of the US showed that if patients themselves shopped around for specialist care, health costs spiralled. GPs kept medicine cheap (and horrible) but nevertheless... Three main proposals were discussed to resolve the problem: increase capitation fees; turn GPs into salaried employees (this was never seriously considered); or bring in a fee for each service provided.

The outcome was as usual, a compromise: Health minister Robinson retained the idea of special extra payments for immunisations, cervical smears and a few other items. GPs got a basic practice allowance, extremely generous loans to start up in group practice premises, improvement grants for surgeries, reimbursement for support staff, the attachment of nurses and others paid by the local authorities, post graduate education, and financial incentives to practice in under-doctored areas. A training scheme for new GPs with payments for trainers was begun. In the end, all in all, this new contract amounted to a 33% pay rise to be given in two halves.

Private practice and the NHS

If it had been the case that hospital consultants were crying for patients, because they were also paid by capitation fees, or that hospitals were empty, they might too have rebelled. But consultants got a fixed salary and a large one at that. And there were already too many patients on hospital waiting lists as it was.

So consultants were happy: they even appeared to be the most ardent supporters of the NHS. Hardly surprising since they were the main winners out of it. Not only had their status increased, but they were allowed to carry on with their private practice using NHS beds, operating theatres and diagnostic facilities for their private patients. Sixty per cent of them worked only part-time in the NHS. But then they also had the use of the plethora of full-time junior and senior doctors and the skills of the nursing staff to care for their private patients, and the authority to impose this.

It was only when drastic public spending cuts were again on the agenda, after the oil crisis in the early seventies, that a serious confrontation with this specially privileged layer occurred. By this time the chronically overlong waiting lists were going above the half-a-million mark with many patients waiting over two years for a consultation or operation. Consultants used this situation to increase their private practice even more, by encouraging queue jumping while using NHS facilities for these patients who then got priority treatment.

While the Heath government of the time had already proposed a huge reorganisation of the NHS in order to rationalise it, as well as a new contract for consultants, it fell to another Labour government, that of Harold Wilson's which won the 1974 general election, to impose it.

Wilson's minority Labour government came in, promising that it would end prescription charges, ban private practice in NHS hospitals, and get consultants to work full-time in the NHS, as well as end the bias towards hospital medicine by strengthening local authority control.

Junior doctors who were organising their own first ever strike over hours of work were just as disgusted as nurses and other hospital workers by what they saw as abuse of the system by consultants. As part of an unprecedented wave of action over a long list of grievances by health workers, two private 20-bed wards in the brand new Charing Cross Hospital were effectively blockaded by the nurses' union. Barbara Castle, the Health minister renewed Labour's pledge to ban private beds and managed to stop the strike from spreading.

At that time there were just 4,500 private beds, about one percent of the total NHS beds, treating about 120,000 patients a year. The government offered consultants an extra 18% on top of their pay in order to bribe them to take full-time contracts with the NHS. They refused this and took industrial action, cancelling out patient clinics, and walking out of theatres when their time was up, even when a patient lay waiting on the operating table, already anaesthetized. They argued predictably that their independence as a profession was in jeopardy.

Labour's policy, confirmed at their party conference in 1975, was the complete abolition of private practice as a long term aim. And, at a time when NHS spending cuts were on the agenda, Castle could not very well justify the existence, let alone the development of private medicine at the expense of the NHS budget. So her document on the phasing out of pay beds was really an attempt to limit the future expansion of private medicine in the NHS.

Eventually a compromise was reached after two months of industrial action by doctors, which had closed wards and even many casualty departments. Wilson dealt with it himself, behind his own health minister's back, with the help of Lord Goodman, then advisor to the largest private medical insurance company, BUPA (British United Provident Fund). 1000 private beds would be removed in six months but the rest would remain for the time being and no time scale was actually set for their removal. Castle's proposals to licence private beds outside the NHS to ensure the total never exceeded the 1974 level was thrown in the bin.

This dispute achieved for the government quite the opposite of what was intended, at least by Castle and a section of the Labour party and trade unions. It sparked off a huge growth in private sector medicine, outside the NHS, with the building of 149 new private hospitals within the next fifteen years, which replaced the few pay beds lost and added thousands more. Hospital consultants were able to continue part-time if they wished and some who agreed a full-time contract nevertheless carried on private practice anyway. Membership of private insurance schemes like BUPA rose by 60% to 3.5 million. This was driven partly by the incomes policy of the government, since private companies offered free health insurance to managerial employees instead of pay rises. But it was also because the NHS was perceived not to be providing the prompt health care that patients expected.

By the time the Thatcher government had taken over the expansion in the private sector was more or less reaching its limits. So much so that the Tories' proposal to shift a proportion of NHS funding to private medical schemes was shelved. Those who could be in schemes were already in them and, with unemployment topping 3m and low-pay increasingly becoming the order of the day, the number of people who would still have had to rely on the NHS without additional insurance cover was too great to make this choice viable.

A "free" NHS?

It had been originally said that the NHS would actually be a cost-effective service which would ultimately save money. Beveridge had anticipated that the development of a health service would ultimately reduce the number of cases needing treatment and improve the health of the nation on an absolute scale, therefore allowing the NHS to be itself scaled down.

Of course this was assuming that time, progress and history stood still. In fact in 1946 when the NHS bill went to parliament the estimate of the total cost annually was £110m. This was re-estimated at the beginning of 1949 upwards, to £248m. But the actual cost in 1949/50 was £305m, and the following year £384m.

Alarm bells rang. The NHS was turning into an insatiable monster, gobbling up public funds uncontrollably and something had to be done. One commentator, Dr Roberts of Addenbrooke's hospital, argued that the rate of increase in expenditure would lead to national ruin, but he said too that: "The alternative is hardly less comforting. It is that a limit be set by shortage of personnel and materials. This means that medicine will be rationed and controlled and there is no reason for supposing that nationalised medicine possesses any moral superiority rendering it immune from the vices which rationing and control invariably bring in their train. Medicine is not above economic law but strictly subject to it."

So the choice for the establishment was either ration and cut the NHS and end up with an unfair service or end up with a bankrupt state. Of course what neither Dr Roberts nor Bevan, who claimed to be on the political left, ever suggested was a third alternative: that of taking what was needed from the profits of the capitalist class.

The British Medical Journal blamed the crisis of funding on the patients who they said had «run riot at the chemists shop», getting large supplies of aspirins and laxatives and two pairs of glasses where one would have done. But when in 1950, Hugh Gaitskell, then Labour Chancellor, claimed he had no alternative but to bring in legislation making charges for drugs, spectacles and dentures possible, it was due to choice, not to necessity: the Labour government chose to spend money instead on conducting a war in Korea. In response, Bevan and Wilson resigned from the government. The NHS was now only free at the point of use as long as you didn't need spectacles or dentures. Charges for these two items were imposed in May 1951.

Prescribing was the next target under the Tory government which took over in October 1951. The NHS drugs bill had risen by 45% during the first five years of the service. So this fact was used to justify slapping on a prescription charge of one shilling per item, which had no relation whatsoever to an actual item on a prescription and was just an additional tax, going into the total NHS fund.

Portraying the NHS as a voracious beast was easy of course, and a fine way to justify public spending cuts especially with the now rapid progress in the field of pharmacology, surgery and other medical sciences, which opened up the possibility of new and effective treatments for patients. So in May 1953, the Tory government commissioned Cambridge economist Claude Guillebaud, to look into the finances of the NHS. However, to the dismay of Tory ministers, he found that the NHS was not "overspending" at all, that compared to the previous five years of its existence, net expenditure on some services had actually dropped and that as a proportion of gross national product, the cost of the NHS had fallen from 3.51% in 1948 to 3.24% in 1954.

Despite Guillebaud's report, the government still tried to find ways to cut spending. However since the report was made public, the resistance to cuts or increases in taxation was such that nothing was actually done in the end until 1960, when Enoch Powell took over as Tory Health minister.

Powell promptly doubled prescription charges and increased the NHS funding coming from National Insurance, so that this amount was doubled to 22%. This meant that a 10-year hospital building programme, which he grandiosely announced at the same time, would be paid for by workers and patients. Yes, even the money for direly needed hospitals - not one new building had been erected in the first ten years of the NHS - had to be squeezed out of the income of the working class. "Free" never meant you got anything for nothing, when it came to the NHS!

There was, however, a short respite when prescription charges were abolished under the incoming Labour government in 1964, but this had been an election pledge and it did not even last their whole term. By 1968, the sterling crisis and devaluation was used as a justification for their re-introduction. And though Labour again promised to abolish them when they returned to office in 1974, they did not and these charges have spiralled ever since, increasing by 500% during the 18 years of Tory government from 1979 to 1997. Today the relation to the price of items on prescriptions is just as abstract, and in fact the £5.85 charge is often much greater than the cost of the drugs prescribed.

The milch-cow of the pharmaceutical industry

It was under the tenure of Labour's Kenneth Robinson, in the 60s, that a comprehensive review of the relationship between the NHS and the pharmaceutical industry was made. At the time of the launch of the NHS, in the 40s, the pharmaceutical industry was just beginning its growth. At the time, it would have been both easy and logical to nationalise the industry and bring all pharmacists into the NHS as salaried employees. The government did not even attempt it. Pharmacists were left as independent small contractors, assured, like GPs of a clientele which would rely on them to supply their prescribed medicines for which they in turn would receive a dispensing fee.

What led ultimately to this review of the pharmaceutical industry, was probably a string of problems exposed first of all by the Thalidomide disaster in the late fifties and early sixties as well as financial concern over a growing drugs bill to the NHS. The growth in the industry since the sixties has of course been phenomenal. In 1965, the total output of the industry in Britain was about £250m. By now, this figure has grown a hundredfold, which is, even taking inflation into account, enormous.

Over the 17-year period considered by the 1965 review, the cost of medicines to the NHS quadrupled. This was put down to the fact that an increasing proportion of the drugs in use were new, and therefore covered by patent protection for the first years after their launch on to the market and therefore being sold at the maximum price that could be obtained. These are the so-called proprietary or brand name medicines, as opposed to generic medicines, which can be produced by any company as their patents have expired and can therefore be sold at prices which undercut the original brand. Since every new discovery is in the hands of one monopoly company or another, this means that the NHS theoretically has to pay the initially high market price.

As early as 1951, it was agreed that attempts should be made to regulate the prices of such medicines, by examining the costs to the companies involved and their profitability overall. However the discussions with these companies resulted in big arguments between the government accountants and those of the drug industry over what research cost, what a «reasonable amount of profit» was and so on, raising as the report complains: «serious and intricate problems and which in the view of the Ministry rendered largely fruitless the cost exercise of those years.» In other words they just gave up. Following this, the Ministry resorted to negotiations according to a complex set of rules known as the Voluntary Price Regulation scheme. But what this actually amounted to was that the NHS agreed that it was reasonable to use the current export price of the drug as a yardstick for determining the maximum price level in the UK. That is, the NHS agreed to get only a very small concession from drug companies despite the fact that it was granting them a huge, sure and predictable market for their wares. In fact it agreed to provide the drug industry with a large source of profits with very few questions asked.

This attitude of subservience in the face of capital is even more outrageous, when one finds buried in the report mentioned earlier a section called «Compulsory powers for regulating prices». Here we read that in fact the government placed, in 1964, on a permanent basis certain powers it had assumed during the war. Among these was the power «to provide by order for the controlling of maximum prices to be charged for any medical supplies required for the National Health Service.» The report goes on to say that «these powers are capable of being applied to the supply of medicines to the NHS. They have never been so used.»

The reasons given for this are that firstly it would be "abnormal" to apply such powers in peacetime, that a proportion of the drugs industry is foreign-owned so this would be impossible, and thirdly that it would jeopardise their voluntary price regulation scheme in the future! The logic of all of this rather beggars belief. Especially since the report also admits that having these powers may have been a factor in the course of price negotiations, but one which is of "uncertain magnitude"! If ever there was a case of a government showing its colours when it comes to its real relationship to capital here it is.

Given the very secretive nature of the drug industry and the absence of any further comprehensive surveys on its relationship to the NHS it is difficult to make any useful analysis of the state of play in more recent years. But what is clear is that not only does this industry have a carte blanche to make profits through selling drugs to the NHS but it also is able to utilise its equipment, hospitals and qualified staff to conduct its research at no, or very little cost.

Re-organisation: another way to impose austerity

By the seventies, economic crisis had once more set in and was there to stay. Governments, both Labour and Tory, responded as usual with proposals to cut public expenditure. The 1974 oil crisis meant prices in general rose fourfold. £111m cuts were proposed in the NHS budget.

1974 is also said to have marked a watershed in the NHS as a result of the huge re-organisation which took place. Certainly it was downhill all the way from 1974 onwards, with austerity driving every new change. But it was easy for the government to justify these changes since the division of the service into three organisational units between 1948 and 1974 had obviously caused problems in co-ordination, overlap and duplication. But to present a major reorganisation like that of 1974, as an attempt to improve the service, when the patient was actually suffering from chronic funding deficiency was pure political sleight of hand.

Suddenly the government claimed to be concerned with "community health care". The fact that this happened just at the time when beds were being cut in long-stay psychiatric and geriatric wards, was not a coincidence. Wilson needed to be able to claim that it was a good thing for the discharged patients to be taken care of by "the community" - even if neither the facilities nor the staff required actually existed. Nor was it a coincidence if, precisely at this point, Wilson decided to bribe local authorities by offering them NHS funding for their healthcare activities.

At the same time, in the name of "democratising" and giving everyone a say, new levels of bureaucracy were introduced, which added even more to the paralysis and divisions of the system, and created new obstacles to the practical work of NHS workers in terms of forms to fill in, permission to obtain before any care could be agreed and so on.

This bureaucratic monster provided the Tory governments of 1979 onwards with just the excuse they needed to impose their serial cuts in the NHS. They began by abolishing a whole intermediate level of management - that of the Area Health Authorities. In 1980, they abolished the board set up to regulate the growing commercial sector and gave health authorities the right to raise money from charity (which hospitals already had). This positive encouragement to seek funds from charity became a feature of Thatcher's years. When equipment failed, charity became more and more the only available option to get it replaced, since the government refused to provide the funding for technology.

Three weeks after the Tories were re-elected to their second term in 1983, they announced a cut in the NHS budget of 1% and the sale of all surplus land and buildings. They also introduced so-called competitive tendering in order to contract out domestic, catering and laundry services. While they began to change the management structures overall, they also introduced a new responsibility for each ward and unit to manage its own budget, thereby transferring the responsibility for making "economies" onto the shoulders of senior nurses and other responsible staff.

But the more fundamental changes they introduced were to come in 1990, with the introduction of the so-called internal market, the split between purchasers of medical services (that is GPs and local authorities) and providers of them (that is hospitals). Hospitals became independent units running their own budgets and were encouraged to find ways to sell their services outside the NHS to the private sector and to compete for these contracts. GPs became independent fundholders, encouraged to build competitive practices with various financial incentives.

The prestigious teaching hospitals were the first to gain independent Trust status bringing an element of competition back to the NHS that had not existed since the time of the pre-war voluntary hospitals. Of course there was one significant difference, in that the Trust hospitals remained state-funded organisations. But in another sense the NHS had gone full circle, because it was now no longer even meant to function according to a central plan, but was meant to adapt itself spontaneously to market forces. Except that these were artificial market forces, since the competition from the commercial sector was insignificant, and anyway the NHS itself supplied most of the sophisticated diagnostic and other services required by the private sector.

But also, when there is already scarcity in terms of resources, with waiting lists over one million, as they still are today, how on earth can competition act as a driving force for anything? Every hospital is oversubscribed and overstretched so "choice" according to league tables of "quality" hospitals is hardly a consideration. Patients gratefully accept a test, an appointment, a treatment, or a bed anywhere they can possibly find one!

The same ridiculous screen for restricting access to treatment applies to the fundholding system for general practice that the Tories introduced under these internal market reforms. Since there was not really an excess of general practitioners, but probably rather a shortage of them, choice did not operate as far as patients were concerned but only as far as the GPs were concerned. They were able to limit access to their lists to patients, whom they felt would not cost their practices too much money.

But behind all of this serial reorganisation was another parallel agenda - that of introducing the possibility for private enterprise to enter the NHS itself in order to make profits. Of course this was not entirely new. Already the NHS provided a source of permanent profits, with a cast-iron guarantee, for numerous drug companies and suppliers of medical equipment, office equipment beds and so on. On the back of the NHS, capital had always had a field day. The Tories merely opened up new avenues for this including ones which had previously been taboo, by bringing private patients back into NHS beds and operating theatres in a positive orgy of queue jumping.

A report published in January 1998 showed the gap between the time people wait for an operation on the NHS and the time they wait if they "go private" to have been widening between 1994-5. NHS patients were waiting ten times as long as private patients for cataract surgery and six times as long for a heart bypass. But what this report showed was that this gap was being widened by the NHS Trust hospitals themselves, by expanding their own pay-bed facilities for private patients, at the expense of NHS patients! The Royal Brompton Hospital was shown to rely on private income for as much as 23.5% of its total core income. Of course budgetary autonomy, which was imposed in the first place to pressurise hospitals into economising, has caused many Trusts to run out of money on a regular basis. So the incentive to switch towards paying patients in order to help balance the books is obvious.

It is at this point that Labour, under Tony Blair and Health Minister Frank Dobson, has entered the scenario. And as the December 1997 white paper clearly sets out, they intend to continue along the same road that the Tories delineated, though like all new owners, they have re-named the house that they have taken over. So the internal market is now called a partnership, contracts are called agreements, and group fundholding is replaced by larger groups of GPs in "Primary Care Groups" who will be able to apply to become Trusts in the future all the better to ration healthcare for the poor. But this was exactly the logic of the changes the Tories introduced and the path they intended to take themselves. The fact that they no longer had the credit among the electorate to carry on has meant that Labour has had to take over. Only in the context of today's squeeze on public spending, it is likely that much more overt cuts are going to be on Blair's agenda.

Defending the NHS?

There has always been a world of difference between the traditional demand of the working class movement for social welfare and the provisions which were actually implemented. Back in the last decades of the 19th century, the European socialist movement argued that it was up to the capitalist class to make up for the fundamental deficiencies and crisis-ridden operation of their economic system. Therefore social provisions against unemployment, poverty, sickness, disability, old age, etc.. should be funded by the profits of capital and controlled directly by the working class and its organisations.

But the bourgeoisies never gave in to this fundamental demand. Instead, welfare measures were introduced from above by the bourgeois states, providing only the barest minimum required to defuse the risk of social explosions, under the tight control of unaccountable functionaries and secretive bodies. And to add insult to injury, they were funded mostly out of the workers' own wages.

Time and again in the past, when welfare provisions came under attack, the working class was put on the defensive and cornered into a dead end by leaders who claimed that the vital issue was to defend existing welfare institutions. When, on the contrary, the class interests of the proletariat, including its short-term material interests, would have required that it went on the offensive and showed its ability to threaten capitalist profit - the only way to change the social balance of forces, short of a social revolution.

Today, in Britain and, indeed across the industrialised world, the working class is once again faced with such a situation. Of course, any attacks by the bourgeoisie and its Labour party trustees on existing welfare provisions should be opposed and vigorously resisted. But this cannot be done effectively by clinging to the defence of an illusion - that of a worker-friendly "provident" state which never existed outside the propaganda of the Labour party.

What would be the interest of the working class in defending today a bureaucratic monster like the NHS which has always been the milch-cow of a whole range of profiteers? To protect its so-called "universal" nature? But the NHS has always been more "universal" for some than for others - particularly for the wealthy who contribute so little to public funds compared to working people, or for the caste of well-paid parasitic bureaucrats who can't tell a forceps from a scalpel, but think they make a great contribution to the cause of health by sitting around in ceremonious meetings and bickering over meaningless statistics!

In fact, it is not the institution of the NHS which is at risk. No, too many privileged make a comfortable living on its back. It is the health of the working class which is at risk. And this makes the whole issue a lot more down to earth than Labour and union leaders would have us believe. Blair talks about combatting inefficiency and waste? Fine, workers' control over the NHS could achieve just this, but much more effectively than any bureaucratic system of accounting, performance tables and cost pricing. Public funding is scarce? Maybe, although one would have to look into the way in which public funds are used to line the pockets of private businesses. But in any case, profits are definitely not scarce. The stock market alone earned shareholders paper profits worth over £300bn last year. Let the big shareholders fund the NHS cash shortfall!

The only way that Labour's present attacks can be opposed successfully is by taking on capitalist profit itself, in the name of the class interests of the proletariat.

Annex (1) - The case of psychiatric services: from bad to worse

Mental asylums remained almost unchanged from the prewar years right up until the late sixties. Banstead in Surrey which was typical, had 1,500 female patients housed in seven wards, that is over 200 per ward, all of them locked.

Yet in 1953, a Paris drug house had announced the discovery of a drug, chlorpromazine, which suppressed symptoms of mental illness and made out-patient treatment possible. While it led to the liberalising of the mental health act in 1959, making provision for voluntary admission and management of patients outside, very little was to improve for the patients concerned, who as it were have gone from the frying pan into the fire.

The prospect of cutting costs and getting rid of the old Victorian institutions should, by rights, have motivated a rapid change in policy in this field. But even in the early sixties, when Enoch Powell announced the storming of the defences of the «asylums which our forefathers built with such immense solidity» this unprestigious corner of the NHS continued to be ignored and neglected. Already less was being spent on the mentally ill in 1959 per head than in 1951. Though fewer patients now became long-stay inmates, new patients were more likely to be short-stay and then managed in the community afterwards. But for a whole period, in fact right up to the end of the seventies, a further series of horrific scandals of ill-treatment was uncovered in numerous institutions up and down the country - the most prominent of these being the Ely Hospital in Cardiff.

In the end the long stay beds closed but the hospitals did not. Fewer residents were treated at a higher cost per head as a result. Given the way the NHS budget works - one area can only expand if another contracts - only when the hospitals closed completely could their sites be sold off to make sums of money available to provide psychiatric care in the community.

It was the Thatcher government, as late as 1981 that finally set this process in motion. A consultative document called "care in the community" in 1981 envisaged that buildings and land freed up by transferring patients to the community would provide the funds for their support away from hospitals and institutions. So 27,000 psychiatric long stay beds were actually cut between 1980 and 1990, while only 5,840 new community places were created to replace them.

Consequently, many psychiatrically ill, as is now well publicised, ended up joining the homeless on the streets of Britain's large cities, or actually committing suicide because they were unable to cope in the community and the support services were inadequate or non-existent.

Annex (2) - How the hospitals emerged

Hospitals, that is "hospitable" resting places for sick pilgrims, first emerged during the Middle Ages. St Bartholomew's, considered to be London's oldest hospital, was founded in 1123 by a rich patron for this purpose. Throughout the Middle Ages, such hospitals, provided by rich individuals or religious orders, were the only organised form of social welfare. Exhausted pilgrims, homeless vagrants, the sick and the aged, were given the same treatment - a roof, a frugal meal and a prayer.

Leprosy, which was an unmistakable disease endemic until the end of the 15th century, was one of the only diseases recognised as contagious. Lepers, therefore were excluded from hospitals and shunned, or worse, locked up in special infirmaries. But leprosy remained an exception: plague was allowed to spread through the population - starting with the primitive hospitals where it wiped out almost everyone.

By the end of the 14th century, the huge flow of rural poor shoved off the land crowded into hospitals, which, as a result, came to be seen as a threat by the wealthy. To deal with this, the poor were divided into the "deserving poor" on the one hand - for whom hospital gates remained open - and the "unsick stubborn knaves", who were chased from London's precincts from 1359 onwards because, said a municipal ordinance, they «do waste divers alms, which would otherwise be given to many poor folks». Proof that Labour did not invent anything new when they blamed the size of the social security bill on claimants who allegedly "abuse the system" by being "unwilling to work".

Specialisation did develop however. Religious orders opened profitable pilgrim's inns for the better-off. Some trade guilds and municipalities set up special institutions for their aged. And the first maternity hospitals were opened, providing future mothers with a guarantee that their children would be looked after should they die in labour.

The Reformation destroyed all this. In the battle for power and assets between the Church and the Crown, hospitals were ransacked, their land confiscated and most were closed down. Besides, rebellion against enclosures was simmering in the countryside, leading to a full-scale uprising in 1549. In that context, the hospitals had to be closed anyway, to deprive the rebellious poor of a natural meeting place. Welfare for the poor was replaced with warfare against them. To be poor, or rather unemployed, became a punishable offence. In 1536, "sturdy vagabonds" over fourteen years of age were ordered to have their ears cut off and death became the penalty after a third offence.

When eventually Edward VI "generously" allowed three hospitals to be re-opened in London, it was only because the Corporation of London had offered to take on all the costs. But the pattern of the new "Royal Foundation" thus set up in 1553 was already entirely different, shaped by the semi-open civil war which was taking place in the country. St Thomas', was allocated for the sick and the aged, another, Christ's was devoted to orphans and the third, Bridewell, was designed as a punitive centre for the "lusty rogues". This division of labour among welfare institutions presaged the terrible decades to come for the poor.