Socialist Worker

Why the market is a mortal threat to the NHS

Politicians of all parties are keen to be seen as defenders of the NHS. But, argues Yuri Prasad, they all share the neoliberal policies that are causing the crisis.

Issue No. 2066

The NHS is one of the most valued institutions in British society. But its very basis is under threat from the neoliberal policies that Gordon Brown’s New Labour government, the Tories and the Liberal Democrats, subscribe to.

These policies lead to cuts and privatisation, and the desire to put profit over need is ripping the heart out of the NHS.

The cash crisis that has gripped the service for the last 18 months has seen a number of NHS trusts forced to make drastic decisions to close wards and freeze posts.

According to the Royal College of Nursing union more than 22,000 NHS jobs have been lost in the last 18 months.

The supposed “reconfiguration” of both accident and emergency provision and maternity services has been the focus of a huge outpouring of anger that reflects wider concerns about the deterioration of health services.

Threats to local hospitals and services have provoked enormous protest movements, and can move even the most loyal New Labour MP to join demonstrations that criticise the implications of government policy.

Unsurprisingly, mainstream political parties have fallen over themselves to proclaim their loyalty to the NHS.

In the face of the job losses and plans to downgrade dozens of hospitals, even the Tories launched an “NHS yes” campaign, and the Liberal Democrats an “NHS SOS” campaign.

The government responded with its own “Your NHS, better with Labour” campaign.

Yet all the main parties share the underlying assumptions that are leading to cuts.

They believe in the need for privatisation and an internal market in the NHS, and that the system cannot afford to provide universal healthcare in an era of new treatments and an ageing population.

Therefore, for them, some form of rationing of the system is required.


Privatisation has had devastating consequences for the NHS. Every time a part of the service is subcontracted to the private sector, more of the service’s resources are diverted into shareholders’ profits.

Nevertheless the main parties remain committed to the operation of private firms in the NHS because they regard it as a means by which savings can be made.

For them, private equals efficient, and public equals inefficient.

Yet the criteria they use to measure efficiency is always that of the short term balance sheet. And they never take the experience of the patients and those who work in the service into account.

In 1991 the then Tory government introduced the internal market into the NHS as part of its drive to force competition between different hospitals.

It hoped that this would allow private firms to join in the provision of services.


Labour strongly opposed the internal market at the time but has since expanded it massively, forcing a system of payment by results on everyone who provides services.

The cost of administering this market now accounts for more than 12 percent of the entire NHS budget.

Today the number of ways in which the NHS is being privatised is so great that it is difficult to list them all.

Private firms are now providing NHS services like GP surgeries and treatment clinics, and are increasingly looking to take over the commissioning of healthcare.

Private firms want the right to take over the running of primary care trusts that buy services, like community nursing, for their patients.

That could lead to them being both the buyers and providers of services in the NHS, leaving the NHS as nothing more than a badge to put on the service.

The Private Finance Initiative (PFI) deserves a special reference because of the amount of damage that it continues to inflict on the NHS.

PFI is another Tory invention that has been greatly expanded under Tony Blair and Gordon Brown.

Under PFI, private consortiums build and run hospitals that are then leased back to the NHS under contracts that often run for decades.

PFI was supposed to harness the “efficiency” of business for the benefit of the health service, but instead it has turned into a weight around the neck of health authorities.

Professor Jean Shaoul from the Manchester Business School has analysed the cost of building new hospitals under PFI.

She found that the first 12 hospitals that were built cost the NHS an extra £60 million a year – and the contracts are set to run for the next 30 years – because the cost of borrowing for the private sector is more than for the public sector.

She says, “For the 155 schemes worth £9 billion signed so far, the additional cost of private finance is £480 million a year. That sum would build several new hospitals every year.”

Today PFI payments account for almost 12 percent of each hospital’s income, which means that a significant proportion of the government’s much vaunted increase in health spending has been pocketed by a variety of private firms.

The widespread hostility to the privatisation of public services, particularly the NHS, has driven politicians of all stripes to attempt to camouflage their policies that encourage the market.

One such attempt is the creation of “social enterprises”, or a so-called “third sector”.

Social enterprises are profit-making bodies. They are often iniated by managers leaving the NHS or by voluntary sector bodies connected with healthcare.

Health visitors, nurses and social workers have all been encouraged by the government to set up social enterprises, and sell their services back to the NHS.

The government recently put up £73 million over four years to encourage the process. At the end of January, 26 “pathfinder projects” were announced. But these new organisations are forced to compete against private firms to offer their services in the NHS market.


Therefore, just like their competitors, they need to have low costs and overheads in order to win the bidding wars.

This drive to cut costs has led many health campaigners and union activists to believe that the social enterprises that take over services will seek to cut experienced NHS staff, because they tend to be older and therefore more expensive to employ.

In particular, staff who are transferred out of the NHS are often rightly worried about their future pension arrangements.

And while many people will regard social enterprises in a similar way to charities, there are no legal restrictions on the way social enterprises divide their profits.

These new firms can become just as much a burden on the NHS as the private firms that they are competing with.

As with other forms of NHS competition, for every patient that is taken by private or social enterprise, one is lost to an in-house provider.

This means that eventually we will be told that the in-house provider has become unviable, and should be closed altogether.

Rationing isn’t rational

The common sense of healthcare says that as more sophisticated medical technologies and medicines become available, and Britain’s population ages, the NHS’s original aim of providing free healthcare to all becomes impossible.

Many analysts point to the fact that there have been forms of health rationing in the service almost since its birth – starting with the introduction of prescriptions for medicines in 1951.

Today, health rationing takes the form of the denial of certain medicines and treatments from the list of those that can be provided by the NHS.

Alzheimer’s victims in England and Wales were dealt a blow in August when a high court judge upheld the decision by the drug rationing body, the National Institute for Health and Clinical Excellence (Nice), to stop supplying three new drugs, Aricept, Reminyl and Exelon, to certain people.

Nice ruled that only those with severe Alzheimer’s could have them. The drugs, which cost £2.50 per patient per day, can slow the disease.

NHS bosses have in many areas attempted to ration specific treatments that they believe to be non-essential, or optional.

This has included restricting access to fertility treatment.

The fact that some treatments are available on the NHS in some parts of the country, but not in others, has only served to heighten anger about the range of treatments that are being rationed.

In an effort to balance the books, many hospital trusts are setting up foundations that provide private healthcare to those who can afford it. The message being that if we have denied you NHS treatment, we can still help you… but you’ll have to pay.

The very cornerstone of the argument for rationing – that there is only so much to go round, and that needs to be fairly allocated – is false.

Britain still spends far less of its wealth on healthcare than other European countries.

In 2004 Britain spent 8.3 percent of Gross Domestic Product (GDP) on healthcare, while Germany spent 10.9 percent, and France, Belgium, Greece and Portugal all devoted 10 percent, or more.

The result is that while France, Germany and Spain all have 3.4 doctors per 1,000 of the population, Britain has just 2.3.

The number of CT scanners (imaging technology that produces a 3-D picture of your body) stood at seven per million of population in 2004, less than half the OECD block of European and North American countries’ average of 18. France, Germany, Italy and Spain all registered a higher life expectancy than Britain.

Rather than seeking to democratise rationing in the NHS, those who are committed to social justice ought to be fighting to raise the proportion of Britain’s wealth spent on health. And we should put an end to the great waste of privatisation.

Looking at the power of the trade unions, combined with the thousands who have demonstrated locally in defence of their local hospitals, provides a glimpse of the forces that could be mustered for such a battle.

National demonstration to celebrate the NHS, Saturday 3 November, central London. Called by » NHS Together

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Tue 28 Aug 2007, 18:17 BST
Issue No. 2066
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