A death foretold

The difference between David Cameron and Tony Blair is that Blair was better at disguising his intentions. He would never have announced, for example, the sale of public forests. Instead he might have promised “a world-class forest estate” in which “walker-led beacon foundation woodlands” would be managed through “partnerships with a plurality of recreational providers”. Ten years later we would discover that our forests had mysteriously fallen into the hands of timber companies and were being felled in the name of customer choice.

Nor would he have done anything as stupid as this government’s attempt to transform the NHS in one bill. Cameron sought to dig himself out of his hole yesterday, but too late. His claim that “there will be no privatisation … no cherry-picking from private providers”(1) reminds us that privatisation and cherry-picking are the likely outcomes of his bill. Blair would have allowed private interests to keep spreading through the health service as slowly and quietly as dry rot. In their book The Plot Against the NHS, Colin Leys and Stewart Player show that Cameron’s health and social care bill consolidates a plan that has been fermenting for many years(2).

You could date the programme to John Major’s creation of an internal market in the 1990s. But Leys and Player reckon the crucial moment was July 2000. It was then that the Independent Healthcare Association, negotiating a concordat with Blair’s government, spelt out what it wanted. “The NHS would simply be a kitemark attached to the institutions and activities of a system of purely private providers.”(3) The government, they show, set out to make this happen. Its reforms crept in: buried in the NHS Plan in 2000, in the concordat in the same year, in the NHS Improvement Plan of 2004. Here is how New Labour began the process of turning the NHS into little more than a logo.

In 2002 the health secretary, Alan Milburn, announced the creation of NHS foundation trusts. They would be supervised by a new body, Monitor, which now plays a crucial role in Cameron’s bill. They could borrow on the money markets, start joint ventures with private companies and, most importantly, go bust. This meant that they had to put financial viability first, the needs of patients second: they behave like private companies or they sink(4). Though there was no competition on price, the foundation trusts are the fissures into which Cameron now inserts his crowbar.

In 2003, Milburn’s successor, John Reid, launched his independent sector treatment centres. These would be run by private companies but would use the NHS kitemark. They would perform routine operations: cataract surgery, hip and knee replacements. Doctors told Reid what would happen: the private companies would cherry-pick the easy cases, leaving the difficult, expensive ones with the NHS, which would also have to pick up the pieces if they botched an operation(5). This would drain crucial resources from hospitals, threatening some of them with bankruptcy. Reid forced it through, and the centres did just as the doctors had warned. Over 5 years, £5.6bn was transferred from the NHS to private companies(6). Yet the crucial data on their costs and performance remain hidden.

In 2004, the government launched a new kind of contract for general practitioners, Alternative Provider Medical Services. This allowed primary care trusts to commission services from private companies: the wrecking ball that Cameron now swings.

Julian Le Grand, Blair’s former health adviser, maintains that the coalition’s plans are “a logical, sensible extension of those put in place by Tony Blair.”(7) Yesterday Cameron used almost the same words. “Our changes are a logical extension of tried-and-tested policies initiated by governments of all parties in recent years.”(8) What he is seeking to do, he says, is to make their piecemeal reforms “effective across our NHS.” As Leys and Player point out, the difference is “mainly that what had so far been more or less successfully concealed now came into the open.”(9)

This is not to suggest that the Conservatives are being candid: Cameron’s speech yesterday was stuffed with elisions and deceptions. He falsely claimed that he is protecting the NHS budget from cuts and increasing NHS funding in real terms. In a marvellously devious formulation, he asserted that “it’s time we had the confidence to say we should have some of the best health outcomes in Europe”. We can say it with confidence because we already do.

Worse still, most of the ills he listed – hospitals failing to balance their books, overlapping layers of waste and bureaucracy, irrational decisions about who gets treated where – arise from reforms of the kind he wants to extend. Leys and Player show that the administrative costs of the NHS climbed from 5% to 14% in the three decades to 2003, partly as a result of the costs of implementing John Major’s internal market. In the US, administration swallows one third of health spending(10).

This programme seeks to model one of the most efficient and cost-effective health services in the world – the NHS – on one of the least: the US system. The OECD’s figures show that healthcare in the US costs $7,500 per person per year. The OECD average is $4,500. In the UK it costs $3,500(11). Yet while the US system is plagued with fraud and lawyers, while it overtreats the rich and dumps the poor in the street, the NHS came out top of the countries surveyed in the journal Health Affairs on most measures of public confidence and public access. The US came bottom(12). As Major did with the railways, Cameron wants to take a functioning system and smash it into chaotic fragments.

Why have successive governments insisted on policies that are likely to raise costs and reduce standards? In February, Will Hutton wrote an interesting column in the Observer, in which he argued that the postwar economic boom was propelled by the inventions of the first half of the 20th Century(13). Over the past 20 years, however, productivity growth has been driven less by innovation than by laying people off, outsourcing, reducing terms and conditions, paying less tax. A parasitic corporate sector has been developing, sucking wealth from the common treasury.

There was one element he left out. The richest opportunities for capital exist within that part of the economy controlled by the state. Here, because the government cannot allow services to fail, the risks are low and the gains, for early movers, can be astronomical. An army of lobbyists, assisted by the corporate media, has been demanding ever greater access. Blair discovered that as long as you conceal your plans, you can give the CBI, Rupert Murdoch and Lord Rothermere what they want and get away with it. If you show your hand, as Cameron has done, you blow it.