Privatisation has been the economic policy of successive governments since the 1970s. All the major infrastructure, utilities and manufacturing industries which had been brought into public ownership in the immediate post-war period have been sold off, as single share offers, wholesale private transfers, or partial staged transfers. Privatisation has been developed through the remaining public services, with local authorities increasingly turning into commissioning hubs rather than direct employers, education transferring its assets and management to the private sector through the Academy programme and courts, prisons and more being owned and run by the private sector. 

That privatisation is government policy is not in question. The question is how far that has affected the NHS.  

Privatisation of the NHS began as far back as 1983 when the cleaning services started to be put out to tender. That has had fairly disastrous consequences with the spread of ‘superbugs’ being attributable to the cleaners no longer forming part of integrated core teams on wards.

Other privatisations, including IT services, facilities management, out-of-hours GP services and the 111 service, have had patchy results; some have been a waste of money, some have failed to show any benefit over public provision, some, like the cleaning services, have been cheaper but a lower standard. Interestingly these privatisations are not discussed or presented as ‘privatisation of the NHS’, or part-privatisation, although they clearly are.

The NHS is the sum of all the parts that make it function, not just its clinical services. This intellectual sleight of hand of naming private-sector takeover of asset ownership and management, ancillary and backroom services as normal business practice or ‘just outsourcing’ rather than service privatisation has allowed a significant part of the NHS to be privatised without being acknowledged as such.  

The House of Commons Library briefing on privatisation defines the need for a competition regulator as one of the essential features of the move from public to private provision. Regulators have been brought in over the last 20 years via various bodies up to the current position of the CQC and NHS Improvement, reflecting the need for market regulation. 

The Health & Social Care Act (2012)

The Health and Social Care Act (2012) continued the process of privatisation. It has become commonplace to describe the Act as a mistake. But given that privatisation is the dominant economic policy, the Act is not a mistake, it is merely a continuation of that policy.  

Privatisation is embedded in the Act in several ways. It removes the NHS in England to arm’s length from government. The relationship between the state and the service changes with the responsibility of provision lying outside the government department. The government’s remit alters significantly from being responsible for provision and planning to providing a Mandate and a funding stream to NHS England and authorising the NHS ‘kite-mark’ through NHS Identity.  

NHS Identity’s website gives advice and regulations about using the brand to the NHS family, which includes public, private and voluntary sector partners. 

The Act also created the Clinical Commissioning Groups (CCGs). Section 75 3(a) of the Act imposes requirements relating to competitive tendering for the provision of services. 

The interpretation of this provision is a source of contention with the government arguing that the clause gives CCGs choice about tendering out services and the CCGs feeling that they are open to legal challenge if they do not tender. The CCGs and Section 75 are the engine that powers the privatisation of clinical services. The constituent members of the CCGs – GPs – do not have the collective skills to carry out the complex procurement process of putting services out to tender. They use Commissioning Support Units such as Optum, the UK subsidiary of United Health of America, to perform this function. 

The CCGs are also not bound to supply the same range of services nationally. They have some core clinical responsibilities but can put restrictions on others according to their financial needs. This can lead to situations where hospitals request patients to check with their commissioner to ensure they will cover payment before they start treatment, otherwise they have self-pay and insurance options available. In all but name this makes the CCGs act as local insurance groups to their registered patients, rather than service providers with common service standards set at national level. 

Trusts and Foundation Trusts are also empowered by the Act to increase the amount of private patient income they can earn. The Act specifies that they must earn the majority of their income from NHS funding. But that is interpreted as meaning that up to 49% can be from other sources. This can include rent from retail spaces and car parks as well as private patients.  

The Five Year Forward View

Simon Stevens, CEO of NHS England, produced a Five Year Forward View (5YFV) for the NHS in England in October 2014. This is largely presented by the media, politicians of all stripes and think tanks, such as The King’s Fund, as a way of integrating services to end the fragmentation caused by the 2012 Act and to bring an end to the split between commissioners and provider organisations. In 2013, immediately after the implementation of the Act, The Better Care Fund was rolled out as a series of local programmes under different names; ‘Better Together’, ‘Fit for the Future’, etc… Its stated intention is to shift the focus from acute hospital settings into local authority based social and community care.

The 5YFV started with a series of Vanguard testbeds and will end with Integrated Care Systems and possibly Accountable (or Integrated) Care Organisations.  The stated intention of the 5YFV is to shift the focus from acute hospital settings into local authority based social and community care. In other words, even though they have different names, the two programmes have exactly the same aim.

This illustrates that the HSCA 2012 was not a mistake but is in fact a continuation of policy. That is why the findings of Michael Mansfield’s 2015 independent inquiry into Shaping a Healthier Future in NW London is still relevant. It highlights how this programme is moving services away from those areas most in need of them towards high-density, more profitable areas.

The reality of the 5YFV is that it is a re-shaping of the NHS to fit with a predicted permanent reduction in funding levels. It is based on a reduction of the total number of fully functioning blue-light A&Es from the 144 A&Es in England in 2013 reduced to somewhere between 40-70. These will be large major trauma centres. There will be no more than two for each of the 44 Sustainability and Transformation areas (STPs) which were announced in December 2015 as part of the implementation of the 5YFV. Some STPs will only have one. This is the case in Northumberland, an early adopter of the system. 

Other hospitals are having their A&Es downgraded and services transferred to the trauma centres along with their income. When campaigners are fighting across the country to save their local A&Es they are really fighting against the 5YFV. Acute and emergency care is being separated from elective (planned) care. Planned care is more attractive to the private sector as it is low risk and high income. It is one of the areas of clinical care included in the ‘7.9%’ of privatisation quoted in the Health and Social Care Select Committee’s oral evidence session. 

The 5YFV also envisages using the sale of property as a form of pump-priming of the changes. The Naylor Review (part of the 5YFV process) goes further in working on the transfer of services out of owned properties into rented accommodation, built and managed by the private sector. 

The 2012 Act also created NHS Property Services Ltd, the ‘PropCo’, which took ownership of all the properties previously in the stewardship of the Strategic Health Authorities and Primary Care Trusts. The PropCo is a private company, currently wholly owned by the Department of Health & Social Care. It also charges commercial rents. 

The 5YFV encourages the separation of midwives from the hospitals to form their own companies to provide midwifery in the community. It contains plans for the widespread use of vouchers for maternity and personal health budgets for the disabled and those with other long-term health needs. These vouchers and budgets can be spent in the private or public sector. 

Privatisation: an economic policy

Analysing the overall effect of privatisation in the NHS will take time. Whilst there is little evidence of an increase in health insurance schemes, there is evidence that more people are turning to self-pay options to avoid waiting times. For a cultural change to happen people have to accept the principle that there will be things outside the ‘NHS menu’ that they will have to pay for – that cultural change hasn’t happened yet.

Descriptions of how little impact the private sector has currently had on the NHS avoids the issue of how little unmet need is being created by the reconfigurations. It is in the unmet need that the principles of universal and comprehensive care are being lost.

The report from the Health and Social Care Select Committee on Integrated Care is absolutely explicit about the need to retain ‘choice’ of providers and to avoid the ‘danger of creating airless rooms in which you simply have one provider who is there for a huge amount of time’.

This is the economics of privatisation and it needs to be addressed at parliamentary and legislative level. The Health and Social Care Committee recommends new legislation. On the current trajectory that will mean the introduction of ACOs.

The battle to promote the principles of public service as public good still has to be fought and won if the privatisation agenda within the NHS is to be brought to a halt.

The NHS [Reinstatement] Bill will be presented under the 10 Minute Rule by Eleanor Smith MP on 11 July 2018.

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2 Comments

  1. Martin Rathfelder says:

    Perhaps the earliest privatisation was the closure of geriatric wards and moving that sort of work into private nursing homes

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