Socialist Worker

Cuts are symptom of an NHS in crisis

by Joseph Choonara
Issue No. 1994

Recent announcements of sweeping job losses have exposed a crisis at the heart of the NHS. They are a direct result of the free market policies being pushed by New Labour.

Some 480 jobs will be cut at London’s Royal Free Hospital. At University College North Staffordshire 1,000 jobs – one in seven posts – will go.

County Durham and Darlington Acute Hospitals, which serves Tony Blair’s own Sedgefield constituency, will slash 700 jobs.

Health secretary Patricia Hewitt claims that these cuts will not affect patient care. But NHS staff tell a different story.

No consultation

One Unison member at the Royal Free Hospital told Socialist Worker, “It’s difficult to see how unnecessary deaths can be avoided. The job losses came with no consultation. It’s staff and patients who will bear the brunt of these attacks.”

The hospital will lose a further 100 beds on top of 100 lost last September. “We had to clear 250 beds to accommodate the injured during the 7 July bomb attacks on London,” the hospital worker added.

“We spent two weeks dealing with the effects of the bombs. Now staff are wondering if they will face a working day like that every day.”

The thousands of job losses and bed cuts of the past fortnight are just the start. NHS trusts across the country face a combined deficit estimated at £750 million.

Sir Nigel Crisp, the man charged with dealing with these deficits, was pressured out of his post as NHS chief executive in early March. This was widely seen as a warning to health service managers – cut spending, fast, or lose your job.

How can the crisis faced by trusts be squared with chancellor Gordon Brown’s claims that extra money has flooded into the NHS?

Former health secretary, Frank Dobson MP, addressed a 600-strong conference last Saturday, hosted by the NHS Support Federation and Keep Our NHS Public.

He told the audience that under New Labour’s market reforms “every patient and treatment” had to be costed up.

“This paper chase is now swallowing up 15-16 percent of NHS spending on administration and paperwork, compared to the 4 percent under the old, non-market system,” he said.

“That means spending of upwards of £12 billion is going on paperwork. I can’t believe anyone thinks that’s good value for money. And this is not just a one off – it will happen every year.”

This market system is set to become even more deeply embedded on Saturday of this week as the new “payments by results” system begins. This will see 80 percent of hospital activities paid for through a complex system of tariffs.

As well as spiralling “transaction costs”, money is passing out of the NHS into the hands of private companies running “independent treatment centres”.

Hewitt wants all patients who need an operation to have a choice between four different hospitals, including at least one private centre.

Nine for ten

The private sector is a particularly inefficient way of providing healthcare. “The private sector gets 11.2 percent more per operation than an NHS hospital gets,” said Dobson. “The taxpayer is getting nine operations for the price of ten.”

For some of the independent treatment centres the price of an operation is seven times that of an NHS hospital.

Keep Our NHS Public reports that 60 cataract operations performed by the Mercury Healthcare treatment centre in Portsmouth cost £335,412. The same operations would have cost just £50,820 at an NHS hospital.

The NHS is quite literally paying the price for New Labour’s commitment to the free market.

Another way in which public money leaks out into the private sector is through the Private Finance Initiative (PFI). These schemes give the private sector a role building new hospitals and providing non-clinical services.

NHS trusts then lease back buildings and pay for services contracted out to private providers. PFI is a more costly way of funding new NHS building work than direct government funding.

However, the government plans a £26 billion expansion in PFI contracts over the next five years. And it also plans to extend the Local Improvement Financial Trust (Lift) scheme.

This is an attempt to push PFI-type deals beyond hospitals and into primary care – using private finance to fund basic, frontline services such as GP surgeries.

Rachel Aldred, a researcher from Goldsmiths College, told last Saturday’s conference, “Lift already covers half of the primary care trusts in Britain and is likely to be expanded. The government believes that PFI failed because it didn’t go far enough. Lift will give the private sector even more control.”

Broad campaigns such as Keep Our NHS Public are crucial to fighting back. Last Saturday’s conference voted unanimously for a national demonstration. When workers in the audience called for union leaders to organise industrial action against job and service cuts, they won wide applause.

But it is also necessary to challenge the ideology of Blairism. Building forces such as Respect can challenge the free market consensus of the mainstream parties.

Planned fragmentation

The overall affect of Labour’s NHS “reforms” has been the fragmentation and destabilisation of the NHS.

The government believes that this sort of destabilisation can improve efficiency by forcing trusts to compete against each other, and against the private sector.

Gordon Brown’s budget speech last week did not mention the NHS. Having put money into the service, and watched it drain out just as fast, Brown now wants to rein in spending. This would leave the NHS to the tender mercies of the market.

According to last Friday’s Financial Times, “The Labour government started in 1997 with a fierce squeeze on public spending, followed by a few years of rapid growth.

“Its projections show a sharp slowdown this year and a further slowdown to below 2 percent a year after 2008 [the year the NHS reforms ‘bed in’].”

The role of government will be to enforce financial discipline, if necessary by sending in hit squads of management consultants, to hold down pay rates and to drive through more private sector involvement.

For more on the threats to the NHS go to

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Sat 1 Apr 2006, 00:00 BST
Issue No. 1994
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