Now the Labour Party’s objectives for the NHS are clearer, the real politics begins. If May’s government collapses, as looks increasingly possible, Labour will need to project its tactical policies for the NHS forcefully. The plausibility of how it plans to cope with the winter bed crisis will matter – what will the £500 million promised be spent on? How will a Labour Secretary of State for Health manage delayed transfers of care?

If May’s government survives Labour will have to live with Hunt Supremacy for a while longer, and will need some practical ideas. Two events in the last week offer some possibilities; the King’s Fund report and webinar on the development of an accountable care organisation in the Canterbury region of New Zealand, and John Appleby’s review of PFI in the NHS, published by the Nuffield Foundation.

Canterbury Tales

The Canterbury story was explained in the webinar by two leaders from the District Health Board and a large GP federation. They described the situation a decade ago in terms familiar to anyone in the NHS; clinicians trying to integrate a fragmented system but often inadvertently working against each other; hospital gridlock; and a common feeling that if only other people would sort themselves out, all would be well.

Creating an integrated local health service required investment in general practice, starting with the organisation of out of hours services, and growing collaboration around care pathway developments, not structural changes. Resources were created for GPs to support their patients in the community more easily, and hospital admissions declined. Effort went into relationship building, influencing the private provider organisations (the majority) and letting go of history in which grievances were prized possessions. Making the process of change clinician-led and management- enabled stabilised the primary care workforce, avoiding the problems we currently have. The leadership of the changes avoided consultation, with its undertones of decisions already made elsewhere, and sought dialogue. Likewise, debates about funding and contracts were postponed because early exposure to them demonstrated that nothing could change. Realistic timescales were sought – no quick fixes. The integrated system works on the basis of not wasting people’s time (patients and professionals) and stressing its operational principles of “no wait, no harm, no waste”. The cancellation of a single elective procedure because of emergency care counts as failure.

PFI Revisited

John Appleby dissects the scale, size and costs of NHS PFI schemes, which vary enormously. He concludes that it is not necessarily the case that PFI scheme were poor value for money. Early schemes were not always good deals, but as the NHS gained more experience of PFI it negotiated better terms. Tees, Esk and Wear NHS Trust, which has paid off one PFI scheme, judged that its more recent schemes were good value and has left them in place.

A Labour Government could find ways to end PFI schemes early but the question is at what cost and opportunity cost? Would such repayments be money well spent, or could they provide more benefit if spent on something else? The drive for PFI has weakened. Seventeen new PFI schemes were expected to reach final construction in the NHS between 2011 and 2018, compared with 92 in the nine years from 2002. This may change again. Trusts needing to increase their capital budgets have been encouraged to open new PFI projects rather than borrow money directly. This will create some challenges for Labour, whether in office or in Opposition.

Appleby, J (2017) “Making sense of PFI”. Nuffield Trust explainer.

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  1. simon watt says:

    Private Finance Initiatives are set up to by-pass artificial borrowing ceilings by government.

    But borrowing through government is ALWAYS much cheaper because loans are covered by sovereign guarantee. That is, no risk to the lenders.

    Do PFIs bring increased efficiency? This is the argument for them. But are we really saying that public sector managers are unable to be efficient as well as effective in providing good public services?

    Ben Griffith (1999) Competition and Containment and in Health Care and many others have set out the evidences and arguments for many decades that privatisation is set up simply as good business for the private sector.

    1. Steve Iliffe says:

      Good points, but (strangely) cost was not the issue with the main PFI expansion wave, it was speed of completion, transfer of over-run risks to the commercial sector, and keeping the building budgets off the public accounts, for political reasons. Blair bought a chain of hospitals with huge mortgages to keep the middle classes on-side with the NHS, whilst Brown murmured “no more boom or bust” in his ear. That over-simplifies the story, I know, but Appleby’s report is well worth the read because it doesn’t fall for the usual oversimplifications.

  2. rotzeichen says:

    I do wish we would all stop asking the silly question of how do we pay for the NHS.

    The obvious question is how did we set it up and pay for it in the first place? The answer of course, is that the government with the will to do it found the resources.

    The real truth is MONEY IS NOT THE PROBLEM Neo-Liberal governments are.

    We have the money all we need is a government dedicated to spend it on people. No one asks where we will find £100 billion and rising to refurbish the white elephant Trident.

    This extract from an American Journal makes the point for us as well, we have the same fiat money system:

    spending threatens our children’s promise of a better life or how
    America can “go broke.” Instead, they turn to the intellectually fraught
    “pocketbook” metaphor, proclaiming:
    Ever since the economic downturn, families across the country have
    huddled around kitchen tables, making tough choices about what
    they hold most dear and what they can learn to live without. They
    expect and deserve their leaders to do the same. The American
    people are counting on us to put politics aside, pull together not pull
    apart, and agree on a plan to live within our means and make
    America strong for the long haul.11
    The problem with this parable and related anxiety over the federal
    deficit12 is that the United States is not a family sitting around a kitchen
    table contemplating its credit card debt. Instead, as will be discussed
    more fully in Part I, the United States is a monetary sovereign with the
    Constitutional power to coin money and regulate the value thereof.13 As
    such, the Supreme Court made clear more than 125 years ago that the
    Constitution grants Congress the power to print money backed by
    nothing and force people to accept that fiat money as legal tender for the
    payment of the federal government’s (and everyone else’s) debts.
    14 If an
    entity can print money and force its creditors to accept that money in

    payment of its debts, that entity cannot really “go broke.” Popular
    discourse to the contrary notwithstanding, this is no secret. Former
    Chairman of the Federal Reserve, Alan Greenspan, for example, has
    explained: “[A] government cannot become insolvent with respect to
    obligations in its own currency. A fiat money system, like the ones we
    have today, can produce such claims [as those created against the
    government when it creates money] without limit.”15
    Of course, any mention of government money creation as a solution
    to popular anxiety over the federal deficit is usually snuffed out
    immediately with one word: inflation. Maybe, the government could
    print money to finance its expenses, the narrative goes, but such an
    approach would surely be short-lived because any government printing
    money to pay its bills would quickly destroy the value of its currency
    (and thereby lose its power to print anything of value) by triggering
    runaway-inflation. So we are told, but the analysis is not so simple.
    For one thing, inflation is not a necessary result of governments
    spending printed money. Inflation occurs only when increases in the
    money supply over a particular time period exceed increases in the real
    value of the economy over the same time period.16 Thus, if the
    government spends its printed money on projects that increase Gross
    Domestic Product (GDP), including, for example, improvements in

    The full document can be found here:

  3. Steve Iliffe says:

    Trident is as much a red herring as a white elephant, and there is the danger of lapsing into Mickey Mouse economics: the “This is a rich country and we can afford anything we want” type of argument. The Nuffield foundation’s economic analysis before the 2017 general election suggested that an incoming government – perhaps undoing years of austerity whilst the economy flat-lines after Brexit – would need to inject £5.5bn a year into the NHS (over and above growth money) to stabilise the Trust economies. This could be raised, just, by adding 2% to income tax, 2% to NI and 2% to VAT. Alternatively a bit of quantitative easing might do it. Money does matter and political will is not enough.

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