According to the Royal College of Physicians, acute hospitals are on the point of collapse. Emergency admissions have increased 37% in the last decade, but hospitals have a third fewer beds than 25 years ago.
For a while the decrease in beds was matched by a shortening of patients’ stays in hospital, but that trend is now in reverse. Older patients are coming into hospital with more complex conditions and are staying longer.
Meanwhile the Tories plan £20 billion cuts by 2014-5, and £50 billion by 2019-20.
The Tories’ Health and Social Care Act, passed despite wide protest in March, will make things worse. When the NHS was run as an integrated public service, adminstration costs were just 6% of total health spending, and costs and risks were shared throughout the system.
When rational planning was replaced by the internal market in 1990-2010, administration costs rocketed to around 15%. Health economists expect that further marketisation and privatisation under the Health and Social Care Act will increase bureaucratic overheads by a further 30% or 50%.
And worse. Dr Mark Porter, the new chair of the British Medical Association’s council, has told the Guardian that current policy is “morally wrong” and will threaten people’s health or lives because they will no longer be able to get treatment.
“Bits of the NHS are being parcelled off and taken out of the NHS offer year by year... there’s lots of areas where bits of the NHS have been taken out of the offer... It’s no longer a comprehensive service. We can see the effect of people to whom we have to say: I’m sorry, this treatment is no longer available.”
NHS hospitals, as Porter has previously pointed out, will be reduced to an “increasingly tattered safety-net” for patients with difficult, long-term, but common illnesses like diabetes and heart problems.
At the other end of the market, the Government’s plans will encourage the rise of luxury provision for rich people who’ll pay extra. There will be “Fortnum and Mason” health care for some and “Lidl” health care for others.
In September 2012, a survey commissioned by private firm BFI Healthcare reported that 70% of GPs questioned have denied at least one patient elective surgery in the last month. This treatment rationing is driving a private sector boom as patients opt to pay rather wait in pain and discomfort. BUPA have announced there is now “huge demand for operations like cataract, hernias and hip and knee replacements”.
The new Health Secretary, Jeremy Hunt, is on record as saying: “the NHS would be better off broken up into an insurance based system... The poor and unemployed should have their contributions supplemented or paid for by the state”.
Shadow health minister Jamie Reed has rightly criticised Jeremy Hunt for seeking to hire Christine Lineen, former head of communications at Circle Healthcare, as his special advisor. Circle paid Andrew Lansley £21,000 to fund his private office when in opposition, and has since become the first private company to take over an NHS hospital, at Hinchingbrooke.
Reed said “The whole country should be worried by the cosy relationship between the Tories and private healthcare — there is clearly a revolving door between them and it leads right to the heart of government.”
The National Policy Forum report presented to Labour Party conference 2012, starting in Manchester on 30 September, rightly pledges that a Labour government will repeal the Health and Social Care Act.
But that pledge is not enough. Andy Burnham has qualified Labour’s commitment on the Health and Social Care Act (HSCA) by saying that he wants to avoid any “top-down reorganisation”, i.e. by suggesting that the Tories’ reorganisation will be left to stand under a new “HSCA-lite” regime. Labour must restore the NHS as a public service.
Ed Miliband has said that he is in favour of GP-led commissioning, the cornerstone of the HSCA.
Labour must also pledge to reverse the cuts, which even aside from the HSCA are worse than anything Margaret Thatcher did to the NHS. A lot of the money could be found by bringing all outsourced NHS staff back in house and abolishing the internal market and replacing it with a system of block grants and rational planning.
The rest? Tax the rich! In this crisis, the wealthy are becoming even wealthier. Luxury houses are currently under construction in London, at an average tag of £2.5 million each, to a total value of £38 billion. Tax those billions!
The NHS was founded in a time of even greater economic stress than now. Labour can restore it now — if the movement summons up the political will.
According to the Financial Times (25 September), in late October the coalition government will announce a “remodelled version” of the Blair government’s Private Finance Initiative (PFI), “with only minor changes”.
PFI meant that private companies put up the cash to build new hospitals and schools in return for a lavish payback over the years to cover the initial outlay, a return on capital, and maintenance costs, which the private companies can inflate more or less at will.
The total of pledged paybacks now reaches £122 billion, and PFI commitments are crippling a number of hospitals.
Margaret Hodge, former Labour minister and now chair of the parliamentary public accounts committee, complained that “all the problems with the old PFI such as the lack of real risk transfer, large private profits, and a lack of transparency” would remain.
It is a pity that she and other New Labour ministers did not recognise those problems when they used PFI. Unions and local Labour Parties should fight to commit Labour to cancel PFI schemes and end their drain on public services.
Break from the New Labour record
When public services are privatised it is often presented as the inevitable march of history. However, there was nothing inevitable about NHS privatisation. It was pushed through deliberately — and in large part by New Labour.
The 1997-2010 Labour administration increased NHS funding at a faster rate than any previous government. When Labour came to power in 1997, total NHS spending accounted for 5.3% of GDP, or £44 billion a year. By 2010, total NHS spending was 8% of GDP, or £117 billion.
But under the shine of the new hospitals, the canker of privatisation was being spread.
Under New Labour, individuals like Mark Britnell (KPMG), Paul Jones (Atos) and Penny Dash (Boston Consulting/PwC) occupied strategic positions in the Department of Health. Both Patricia Hewitt and Alan Milburn were rewarded by jobs with private health firms after their time in office.
New Labour pushed again and again to find openings for the relatively inefficient private sector. Those attempts were to some extent masked from public scrutiny by substantial increases to NHS funding.
The Thatcher government had already outsourced non-clinical work, and multi-national corporations were able to cream off profits for portering, cleaning, catering and maintenance. Alan Milburn first introduced the private sector into core clinical work. In November 2000 Milburn signed a concordat with the private sector agreeing that NHS patients could be treated in private hospitals.
Having lobbied hard for that concordat, private firms soon found they were unable to perform treatments at NHS prices. The privatisers then hit on the idea of hiving off a section of planned, low risk, routine operations at favourable rates.
In 2008 Independent Sector Treatment Centres (ISTCs) were performing just 2% of the 8.6 million elective operations carried out every year in the NHS; they were paid not for operations performed but for those contracted for.
A King's Fund report from 2008 said that ISTCs were performing just 85% of treatments and 25% of diagnostics that they were paid for. Over a period of five years that initiative cost £5.6 billion.
New Labour also pushed the Private Finance Initiative (PFI). PFI was originally proposed by the Major government in the early 1990s. The idea was that consortia of banks, private equity capitalists, and construction and maintenance companies, would put up cash to build public service premises, like hospitals, then own and maintain them and lease them back to the public sector. The contracts would work like massive hire-purchase schemes spanning 30 years or more.
PFI is an expensive accounting trick. A national government can borrow money at much lower rates than the private sector, and direct state investment avoids the need to pay legal fees and administrative costs. In exchange for allowing government to hide the size of the national debt, the taxpayer paid way over the odds for the buildings.
During Labour’s time in office £11.4 billion of PFI money was spent on building new hospitals. Recent projections are that the bill will total £70 billion and not be paid off until 2049.
New Labour health minister Alan Milburn once boasted that PFI allowed Labour to lead “the biggest hospital building programme the NHS has ever seen”. Now PFI may well become a major factor in the biggest hospital closure programme the NHS has ever seen.
South London Healthcare Trust is the first NHS hospital trust to be placed under the control of a special administrator as it struggles to pay the bill to its PFI masters. South London Healthcare Trust has some of the best mortality rates in the country and recently made it to the finals of the Health Service Journal’s Efficiency Awards. But the government has stepped in to ensure the needs of private investors are prioritised over the needs of patients.
The Department of Health expects another 20-30 hospital trusts to follow a similar path due to extortionate PFI repayments.
Circle Holdings = Tory millionaires
Four of the key people behind Circle Holdings, the private company running Hinchingbrooke Hospital, have between them donated £1,410,928 to the Conservative Party.
This scandal has been uncovered by Dr Eoin Clarke in his “The Green Benches” blog. The money came from Lansdowne Partners CEO Paul Ruddock (£630,000), Odey Asset Management CEO Crispin Odey (£242,000), Invesco Perpetual former director Martyn Arbib (£413,000), and Bluecrest founder Michael Platt (£125,000).
The four companies concerned own 81% of the shares in Circle Holdings, which is based in an offshore tax haven.