Socialist Worker

Jobs axed as trusts flounder in NHS market

The announcement of 1,000 redundancies at the University Hospital of North Staffordshire is the first volley in a new barrage of NHS cuts, writes John Lister

Issue No. 1993

The announcement of 1,000 redundancies – 15 percent of the workforce, including 370 nurses and midwives – at the crisis-hit University Hospital of North Staffordshire (UHNS) is the first volley in a new barrage of NHS cuts that will run into the new financial year.

The trust is the first to announce cuts which truly reflect the scale of the financial problems they face as a result of government policies.

But similar announcements are likely to follow as a new financial year brings a new system of “payment by results” that is designed to pump money out of the NHS and into private treatment centres.

With a minimum of £800 million in deficits being carried forward across the NHS in England, even bigger problems will confront trusts as they battle to clear the backlog of debts and rein in spending.

Beds, wards and departments will close. Whole hospitals are also likely to face renewed closure threats.

Already the chief executive of Queen Mary’s Hospital in Sidcup, south east London, has warned that its £15 million deficit could worsen and force the whole hospital to close. Health chiefs in Surrey and Sussex, facing deficits of over £100 million, have repeatedly argued that they need to close at least one hospital. There are rumours that Guildford’s Royal Surrey hospital could lose its accident and emergency unit.

Even New Labour’s flagship foundation hospital, University College Hospital (UCH) in London has descended into crisis, weighed down by the inflated costs of its new £420 million building. The build was financed through the private finance initiative (PFI) and has left the trust facing debts of up to £40 million.


PFI-funded hospitals face an additional difficulty. All their non-clinical services have been privatised and incorporated into the “unitary charge” that is paid out each month as a fixed, index linked fee to a private consortium.

So trusts faced with financial pressure have to cut back on clinical care – closing beds, or sacking doctors or nursing staff.

UCH has also lost out because of the government’s mania for diverting NHS patients into private sector treatment centres. A purpose-built NHS treatment centre in UCH has been closed, and a big lump of the trust’s budget for elective (waiting list) operations will be handed to the private sector.

This is the biggest round of spending cuts in almost 60 years of the NHS. Health secretary Patricia Hewitt’s insistence that patient care will not suffer is just a symptom of the way in which ministers and senior NHS managers have been living in denial for the last 12 months.

After several years of rapid growth and rising spending, New Labour’s policies are now throwing the NHS into reverse. Primary care trusts, which provide basic services in the community, are being told to prioritise just six key policy objectives, none of which includes care of older people or mental health.

There are dozens of trusts like UHNS in Staffordshire that have been forced into crisis by a combination of government policies and the imposition of performance targets which cost more than the increase in funds since 2000.

UHNS had clawed its way up from a middle size district general hospital to a teaching hospital, and managed to stay solvent for almost six years through a combination of one-off measures and financial juggling.

But in the run-up to last year’s general election, NHS chiefs across the country were clearly warned off making any cuts in services and many were led to believe that they could carry over deficits.

Finance chiefs at the trust also wanted the accounts to look good when they approached private sector finance and business chiefs to back a £350 million PFI hospital project. This would involve index linked payments of £53 million a year for 35 years – 16 percent of the trust’s annual turnover.


But no sooner had they got the formal go-ahead for the PFI scheme than the wheels came off the flimsy juggernaut.

Finance chiefs revealed an ever widening deficit, which peaked at £18 million, and began seeking cuts in jobs and delaying treatment to patients in an effort to bring spending under control.

The PFI scheme was brought to a grinding halt, but the initial cuts only delivered £1 million in savings over three months. The trust had by this time lost two finance directors, two chief executives, its chair and non?executive directors, and had been subjected to a visit from one of Hewitt’s department of health “hit squads”.

The question we face is not so much whether more cuts are coming, but whether health unions and local campaigners will be ready and able to fight back and defend the NHS against the double whammy of cuts and privatisation.


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Sat 25 Mar 2006, 00:00 GMT
Issue No. 1993
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