Don't let them kill off the NHS

“As long as you’ve got your health.” It’s a refrain I remember my mother sharing with her friends and relations as we were growing up in the 1950s, in the days when the National Health Service, established in 1948, was new.

Socialised medicine, offering universal access to tax-funded health care, free at the point of delivery was as good as a revolution for the majority in the UK. Well, almost.

The history books show that the NHS, as part of the welfare state, was conceived of partly in response to the revolutionary aspirations brewing amongst the victorious fighters returning from action in the Second World War.

Now at 65, having reached pensionable age, the NHS is itself ailing.

The A&E unit at Trafford General Hospital, from where the NHS was launched in July, 1948, is to shut. Eleven more hospital trusts have joined Mid Staffordshire in “special measures” due to concerns over unusually high death rates and poor care.

From worldwide acknowledgement as the healthcare model to be admired, providing the best care at least cost, the NHS is now falling back in terms international ratings.  

Amongst the biggest and most complex organisations in the world, employing 1.3 million people, the NHS has been through many reorganisations as it grows and changes to meet the needs of the now aging population, and to take advantage of new technologies.

But the causes of its current sickness are more external than internal.

Since its inception the NHS has been subject to exploitation by private sector for-profit suppliers of drugs, medical equipment, information systems, you name it.  The news that Big Pharma company Pfizer is party to a legal price-fixing scam exploiting loopholes in the cosy Pharmaceutical Price Regulation Scheme that has set “acceptable” profits for years, is just the latest example.  

In 1992, Conservative prime minster John Major’s introduction of the Private Finance Initiative into public sector projects was a key moment in the transition from welfare state to market state. This was taken forward after 1997 by Blair’s New Labour.

Through 30-year leasing contracts with private sector developers, the NHS and other public sector services, deliberately starved of direct funding, became saddled with monstrous debts and are now conduits for the transfer of wealth.

Taxes are collected and passed through the public sector to the private sector organisations. On its way through, the labour of those who work in the public sector become the source of the profits distributed to the shareholders in the private corporations.

New Labour’s introduction of business-type foundation trusts, which set hospital against hospital in competition for private patients, leading inevitably to financial calamity in some cases, was another moment in the transition to the market state.

It seems the previous government turned a blind eye to mounting problems. Now the ConDems are opening up whole swathes of the NHS to the private sector in a further twist of the knife.

In the 10 years leading up to the current great recession, health spending in the United Kingdom grew in real terms by 5.7% per year on average. This came to an abrupt halt in 2010 as health spending dropped by 1.9%, in real terms, with a further 0.4% fall in 2011.

Now there’s talk of an end to the ring-fence protection in England, following the example of Wales, where the health budget has already been cut by more than 20%. Hospitals are shutting, jobs being slashed, services disappearing.

Throughout its 65 years, the NHS has co-existed with capitalist social relations. As in most countries, expenditure on health care has been predominantly through the public sector. The deepening global crisis is rapidly undermining that uneasy co-existence.

Socialised healthcare is a model for a society motivated by the needs of the people. Rather than watch the wrangling over the blame for its decline, we should build new forms of democracy that can convert the rest of the economy to its principles. With goods and services like the NHS under the direct control of producers and users, we could achieve the type of society we need.

Gerry Gold

Economics editor

New Labour's devastating legacy

Take one struggling NHS Trust, add in an exorbitant build-and-maintain private contract – all this is New Labour’s handiwork – and the result is a financial disaster containing a threat to patient care.

Today’s government announcement that 22 trusts, which run 60 units, cannot afford their exorbitant “private finance initiative” (PFI) payments and have lost financial stability only confirms the worst. For some trusts, annual repayments take up more than 18% of their turnover.

PFI deals, under which the state enters into a cast-iron mortgage-leaseback deal with developers who own the assets and receive an annual fee, were favoured by New Labour for two reasons.

First, the cost of building hospitals, schools and other infrastructure did not appear on the government’s balance sheet (although it involves a state liability). Second, it fulfilled New Labour’s dream of private-public partnerships as an exemplar of 21st century capitalism.

The dream has, inevitably, turned into a nightmare for taxpayers and patients alike. Some hospitals were smaller than they might have been to allow for repayments, while PFI contract costs have become unmanageable. Professor John Appleby, chief economist at the King's Fund think-tank, says that there is already “a drive to keep patients out of hospital”.

The contractors are laughing all the way to the bank, however, as the state is obliged to pick up the tab if the NHS Trusts can’t. Renegotiation of the contracts is virtually impossible because lenders know the government won’t let the trusts go bankrupt.

Official figures show that yearly bills will rise by 75% in the next 18 years. By 2049, more than £70 billion will have been transferred from taxpayers to private investors.

Even taking services like maintenance into account, this sum is far above the £11.4bn value of the building projects.

According to a Commons committee, the taxpayer is paying well over £20bn in “extra” borrowing costs – the equivalent of more than 40 sizeable new hospitals – for the 700 projects that successive governments have acquired under the PFI.

Last month, the Commons public accounts committee found that tax assumptions built into the case for PFI contracts were laughable.

One of the largest PFI investment funds told the committee that 72% of the shareholders of its management company were registered offshore. HICL, a subsidiary of HSBC, which made £38m of profit from 33 PFI schemes paid just £100,000 in UK tax. Ultimate ownership of at least 90 projects has been moved offshore, potentially avoiding tax payments when they are sold on again.

The PAC report says that the “buoyant and profitable” secondary market in PFI deals. “We suspect that initial investors are able to make excessive profits from selling PFI shares, yet we lack the information to know for sure,” MPs admitted.

Figures from the National Audit Office suggest that up to £4bn has been paid in fees to financial consultants, lawyers and others to get the projects off the ground. The head of one big PFI investment fund earned £8.6m last year.

Health Secretary Andrew Lansley said: "The truth is that some hospitals have been landed with PFI deals they simply cannot afford. "Like the economy, Labour has brought some parts of the NHS to the brink of financial collapse." Yet PFI goes on and on.

Since the May 2010 election, however, the Conservative-Liberal Democrat coalition government has signed 34 contracts with a capital value of £1.8bn ($2.9bn), according to the Treasury. Hundreds more contracts are in the pipeline for schools and other projects.

The continued commercialisation of the NHS, with the direct injection of competition by the Coalition, is bound to favour healthcare corporations. Like New Labour before them, the Tories know how to favour their friends and keep capitalism happy.

Paul Feldman

Communications editor

Coalition wants 'National Wealth Service' not NHS

The story of 12-year-old Chloe McGarry in Harwich, East Anglia shows the harsh realities that many face when they seek health care.

Chloe spent five hours in agony with inflamed gums while her mother Heidi desperately searched for an NHS dentist after finding her usual clinic closed.

Heidi was told by NHS Direct to drive 32 miles to Ipswich or to be seen at another surgery in Manningtree, which is 13 miles from their home.

Such tales of woe will be shared by countless others over the coming months as the Coalition government’s health cuts begin to bite. So, as we join many others today in celebrating the 63rd anniversary of the National Health Service it’s clear that its future is at stake.

The health service unions and the Trades Union Congress are warning of “the potential dismantling of the NHS in the form of Andrew Lansley's Health and Social Care Bill”.

The TUC has uncovered well over 50,000 job cuts, the figures only prised out by using Freedom of Information laws. And, the undermining and destruction of the principle of free health care is also being exposed by the independent Bureau of Investigative Journalism. It shows that popular walk-in care centres around the country are already being closed or their hours and services being reduced

Then there is the scandal of the £2.5bn cost to the NHS over five years of the GP surgeries. An investigation has shown that the amount by which the taxpayer is subsidising some GP surgeries’ rentals has risen to £630m per year (an increase of more than 70%) since 2004.

At present doctors are paid rent by the NHS for a surgery, but also keep the profits from any sale of the surgery. At least half of the board members of some GP consortia who commission health care have links with the private company Assura Medical, which is part of Richard Branson’s Virgin Group. (At present Primary Care Trusts spend around 80% of NHS funds, but in future the GP consortia will be responsible for 40%.)

The essence of the Coalition’s changes to the health service are described by the TUC as leading to an “unaccountable super-quango at the heart of NHS reforms”.

Writer Richard Blogger says: “The free market model that [Secretary of State for Health] Lansley had planned could more accurately be described as the government liberated from the NHS rather than the NHS liberated from the government. Lansley did not want (and still does not want) to run the NHS – he is the first Secretary of State for Health whose primary objective is to legislate away his job … The Secretary of State has been liberated from his duties.”

The proposed National Commissioning Board has aptly been renamed “National Wealth Service”. The GP consortia who will run it could benefit personally from the private companies working in the NHS.

Blogger notes, the thrust of the Coalition strategy for the NHS, in line with years of New Labour rule, “is stripping a huge amount of power from Parliament and handing it to an unaccountable quango . . .The Bill will specifically make it illegal for the Secretary of State – representing the elected government – from changing NHS policy.”

The NHS will truly lose any democratic scrutiny or control as a result of these changes. The TUC’s milk and water call for people to write to and lobby the House of Lords “to stop or alter” the Health and Social Care Bill disguises the real issues about the NHS and other services under attack. Democracy is being wound down and the global crisis of capitalism is driving massive cuts and changes disguised as “reforms”.

Corinna Lotz

A World to Win secretary

How cost cutting costs lives

New Labour health secretary Alan Johnson’s claim that the unnecessary deaths and abysmal standards of care at Mid-Staffordshire NHS Foundation Trust are not being repeated at other hospitals is based on wishful thinking rather than facts because the same target-driven, cost-cutting approach exposed in an official report is at work throughout the health service.

In one of the most critical reports of NHS treatment ever, the Health Commission found that up to 1,200 people could have died at the hospital as a result of what it described as “appalling standards of care”. The Commission denounced the trust’s disastrous failure to look after patients entrusted to its care.

Reducing waiting times took priority over the need to look after seriously ill while cost cutting, management targets, gaining foundation trust status and public relations marketing way came ahead of patient care. The Commission concluded that staff believed care of patients had become secondary to government-imposed targets and there was a “reluctance to acknowledge or even consider that the care of patients was poor”.

A survey found that two thirds of doctors would not be happy to have a family member treated at the hospital. Patients described conditions in one ward as a “war zone”. People in A&E were left covered in blood and without pain relief, food or water, even those with serious injuries.

But no need to worry too much. Mid-Stafford is simply one bad apple in the barrel, according to Johnson. “I can give a reassurance that what happened in Stafford is an aberration, it is not indicative of what is happening in other hospitals,” the health secretary said.

But how does this explain that Johnson’s own office ignored repeated warnings by bereaved patients’ relatives? Julie Bailey, daughter of a patient who died at the hospital as long ago as December 2007 wrote to Johnson about patient concerns on January 5, 2008. Bailey, who founded a group to campaign about deaths and poor care at the hospital, simply received a reply from the health minister’s office referring her back to the hospital.

Worse still, Johnson’s office was not the only official body to ignore warnings about the failings at the trust. The Healthcare Commission itself rated the trust’s quality of care as “fair” between 2005 and 2007, before it applied for foundation status which was granted in February 2008. In other words, it was granted “flagship status” exactly at a time when patients were suffering and dying needlessly because financial and marketing priorities were put ahead of patient care.

Those who failed to spot (or ignored) the debacle in Staffordshire are still in charge of leading NHS bodies. The manager in charge of the West Midlands Strategic Health Authority from 2006, Cynthia Bower, is about to head the health super-regulator, the Care Quality Commission. Her predecessor at the authority’s forerunner is now chief executive of the NHS. The same Trust is said to have “fobbed off” NHS investigators who reported high mortality rates in 2007, saying they were statistical errors. This delayed further investigation.

It is not only individual NHS executives who are responsible for what is going on in Britain’s hospitals. It is the entire ethos fostered for years by New Labour whose priority has been to introduce capitalist market techniques into healthcare. In the end, the trust was run like any other corporation, driving down costs while maximising output.

A different approach in which the needs of the patients come first is desperately needed. That means reshaping the NHS so that it is managed by doctors, nurses and other staff working in it, alongside patients and community groups. The pharmaceutical corporations, equipment suppliers, cleaning, catering, maintenance and construction companies must all be owned and run in a similar way.

Corinna Lotz
A World to Win secretary

Milking the NHS

So even the chair of the government’s own drugs watchdog has had to acknowledge what everyone else working in health has always known – the pharmaceutical corporations milk the NHS for all its worth and patients in need are the biggest losers (along with taxpayers).

Professor Sir Michael Rawlins launched his tirade against drugs companies after the National Institute for Health and Clinical Excellence (Nice) was accused of “barbarism” for refusing to approve new kidney drugs for NHS use because of their cost. Rawlins said it was common knowledge that some companies charged what they thought they could get away with. “We are told we are being mean all the time, but what nobody mentions is why the drugs are so expensive,” he said. Kidney cancer drugs could be produced for about a tenth of their current cost, Rawlins claimed.

Rawlins cited three key factors in the cost of drugs. One was the fact that many older drugs were soon losing patent protection, allowing rivals to produce cheaper versions. Secondly, the price of shares was paramount. Rawlins insisted. “Pharmaceutical companies have enjoyed double-digit growth year on year and they are out to sustain that, not least because their senior management's earnings are related to the share price. It's not in their interests to take less profit, personally as well as from the point of view of the business. All these perverse incentives drive the price up.” The third factor was the cost of marketing.

This is not a new story. In 2005, the Commons health committee reported that the pharmaceutical industry “has been left to its own devices for too long” and added: “The Department of Health has for too long optimistically assumed that the interests of health and of the industry are as one. This may reflect the fact that the Department sponsors the industry as well as looking after health.”

The committee heard allegations that clinical trials could be designed to show the new drug in the best light – and sometimes failed to indicate the true effects of a medicine on health outcomes relevant to the patient. They were informed of several high-profile cases of suppression of negative clinical trial results and of selective publication strategies and ghost-writing. The committee lambasted the intensive promotion of medicines to prescribers, especially GPs. Promotion of medicines to patients and links between drug companies and patient organisations may add to this problem, said the report, which added:

“The most immediately worrying consequence of the problems described above is the unsafe use of drugs. Over-prescription of the COX-2 inhibitors, Vioxx and Celebrex, has been linked to thousands of deaths and many more cases of heart failure. These cases illustrate a series of failures. Manufacturers are known to have suppressed certain trials for these drugs in the US and may have done the same in the UK. In addition, there were inadequacies in the licensing and post-marketing surveillance procedures and excessive promotion of the drugs to doctors.”

The NHS drugs bill has doubled under New Labour to over £11 billion a year, 80% of which goes on prescribed medicines. The real question is, if 1.3 million people can work in the not-for-profit NHS, with the majority of basic research done in publicly-funded universities, why can’t drugs be produced in the same way? The answer is that the market state acts as a guarantor for the drugs companies instead of the needs of the sick and is a barrier to the comprehensive socialisation of health care.


Paul Feldman
Communications editor

Profit and loss in the NHS

The Healthcare Commission, the government's health watchdog is launching a safety drive. Officials are concerned about the "alarming" figures on the harm patients suffer in hospital and elsewhere. Various studies estimate that there is a one in 300 chance of a hospital patient dying as a result of medical error. One in 10 is estimated to suffer harm, of whom a third suffer serious harm, and an estimated 600 errors are made a day in primary care with more than one in 10 prescriptions containing errors. Anna Walker, chief executive of the Commission, says "it is time we had a really sustained drive, through the regulators, on safety issues." It would also be putting pressure on the boards of health organisations to ensure that they "monitor, analyse, and learn lessons from safety episodes" in their hospitals, and then act on them. These are admirable sentiments but there is little hope of seeing any improvement in the near future. After decades of market-oriented initiatives to undermine the not-for-profit, tax-funded, socialised medicine provided by the NHS, the service is in disarray. Up to 20,000 staff have lost their jobs in the last year and most trusts are in deficit. But there is worse to come. At the same time as hospitals are being asked to improve safety, they are also being told to identify the services and treatments on which they could turn a profit. In the last resort, that could lead to some ceasing to provide services that do not make money. The move marks a further injection of market disciplines into the National Health Service and is being promoted by Monitor, which was set up by New Labour in 2004 to regulate foundation trust hospitals. By the end of next year it will expect all NHS hospitals applying for foundation trust status to scrutinise their balance sheets in this way. William Moyes, Monitor's chairman, said the aim was to "understand profitability, efficiency and quality - and to strike the right balance between the three", he said, with hospitals merely "behaving like any other business" and understanding their profit and loss centres. Moyes is well-placed to drive the profitability agenda in the NHS. He was Director-General of the British Retail Consortium from 2000 to 2003; a member of the economic secretariat in Margaret Thatcher’s Cabinet Office in the early 1980s; joined the British Linen Bank (a wholly-owned subsidiary of the Bank of Scotland) in 1994 and established their Private Finance Initiative advisory and equity investment team, which focussed on large deals mainly in health. With Blair’s bankers in control the health of the NHS is under attack like never before.

Gerry Gold, economics editor

Health needs conflict with drug profits

So the Office of Fair Trading has revealed what everyone in the health service has known for 50 years: successive governments have sustained the compromise which trades the needs of the NHS and its patients against the profits of the pharmaceutical companies. The OFT's study, carried out since 2005, identified several drugs where it said prices were "significantly out of line with patient benefits". Treatments for blood pressure and cholesterol were among those identified. Some treatments which are prescribed in large volumes are up to 10 times more costly than other drugs offering similar benefits. The news broke on the day that it was revealed that 132 NHS trusts are heading to overspend by £1,318m, and are being forced to cut services and reduce staff. At the moment, the PPRS (pharmaceutical price regulation scheme) agreed every five years between the Department of Health and the drug companies effectively "caps" the amount of profit any one company can make. But within that company's profit margin - calculated according to their investment in the UK as well as the range of drugs they make - new drug prices can be set as high as the company wishes. This has led to prices as high as £30,000 or £40,000 a year per patient for a the latest drugs, sending the total NHS drugs bill soaring to £11 billion a year – twice the level of five years ago.

This conflict between health need and profit is being played out throughout the world. Thailand's minister for health Dr Mongkol na Songkhla, says price talks with major drug firms had become "easier" since Bangkok issued compulsory licences allowing generic drug production on two HIV/AIDS drugs and a medicine for heart disease. The licences allow Thailand's government to make or buy copycat versions of medicines needed for public health measures. Drug makers have reacted angrily. A lobby group for the industry representing 38 foreign drug makers in Thailand has said the action is completely unprecedented and it believes another 11 drugs would soon be targeted. Mongkol too has suggested other "essential medicines" to fight cancer, heart disease and other leading causes of death in Thailand were being examined. As he says, the majority of the population in Thailand cannot afford patented drugs. Mongkol has rejected industry arguments that high prices are necessary because drug companies need to invest heavily in research and develop new medicines. The corporations, he says, could compensate by cutting inflated marketing costs. The OFT report will not change the basic arrangements in Britain, whereby a handful of transnational corporations actually restrict the development and sale of drugs in order to ratchet up profit margins. The real question is, if 1.3 million people can work in the not-for-profit £96 billion budget NHS, with the majority of basic research done in publicly-funded universities, why can’t drugs be produced in the same way? We need Big Pharma like we need a hole in the head.

Gerry Gold, economics editor