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    MAY AND HUNT announced that this winter the NHS was the best prepared ever – a claim worthy of Trump. As the New Year began, stories of horrendous delays – waits for and in ambulances, patients sitting, standing or lying on trolleys in A&E corridors, long waits for hospital beds and treatment – shocked the nation. Dozens of avoidable deaths resulted. Mental health crises have hit the news and 50,000 elective operations in January were cancelled, adding to the immeasurable misery. NHS staff have done their best – they are holding the NHS together by their exhausted commitment.

    Why is government allowing this to happen? There are two linked mainstays of their ideology: firstly, a belief that market competition and privatisation will improve NHS efficiency; secondly, the belief that funding for public services should be cut back and replaced by private finance. Austerity is the method and justification for years of deliberate neglect.

    The fallacy of this ideology is demonstrated by the collapse of Carillion: £900m in debt, a £587m hole in pension funds and 20,000 staff and projects costing £1.7bn in contracts at risk. Two new PFI hospitals, Royal Liverpool and Midlands Metropolitan, face an uncertain future. And now Capita is in serious financial trouble.

    Notwithstanding the positive investment in the NHS 1999-2009, we must not forget the PFI years of the Blair government and the privatisation it promoted. But current Labour policy has rejected those mistakes. Labour’s re-commitment to the NHS, captured in composite 8 from 2017’s Labour conference, resonates with voters. Government claims to be spending more every year are a deception. Rising health need is predictable – more people, greater complexity of need and of treatments, which society both demands and welcomes. Since 1948, on average the NHS has required 4% more funding every year on top of inflation to keep pace with expanding health needs.

    Government-imposed austerity has on average underfunded the NHS by 3% every year since 2010, reaching 30% by 2020. That is why, eight years in, there are more referrals than the NHS can manage, longer waits, more pressure on staff, more complaints, more human error. The NHS is the most cost-effective, democratic and accessible health service of a major economy worldwide.

    Government ideology is breaking it. Sustainability and Transformation Partnerships (STPs) are being used as a Trojan horse for £26bn of cuts. Visionary claims without evidence that “excellent community-based care” will “reduce the need for district general hospitals by 30%”; plans to centralise hospital services in fewer ‘specialist’ hospitals – to an unnecessary and dangerous extent which will increase health inequality by reducing access: this vision not only lacks an evidence base but is delusional when set alongside the massive cuts that undermine those very community services.

    Accountable care organisations (ACOs) are now being trialled under the radar in accountable care systems (ACS). But ACOs are undoubtedly the delivery vehicle for an NHS fragmented into 44-50 management organisations, put out to tender and ripe for further privatisation of management, financing and procurement of NHS services. Strict cost control limits will add impetus to diverting patients who can afford it into paying for treatment in the private sector. Hunt faces a judicial review on this.

    Most hospital clinical care is still in public NHS hands. But many are unaware of the inroads privatisation has made, in PFI builds, catering, cleaning, portering, pathology, radiology and significant swathes of community healthcare. Virgin Care holds £2bn worth of 400 contracts and last financial year won £1bn of new contracts. Only 34% of tendered clinical contracts last year went to the NHS. The government has given £11bn of our current annual clinical budget to private companies.

    And it has chosen where not to spend – with dramatic impact.

    Evidenced by this winter’s chaos, far too many beds, 15,000 in total, have been lost since 2010 – 8,000 in acute care, and in mental health (25% lost) and learning disability, 7,000 combined. Comparable European economies spend far more than the UK, which has fewer beds per 1,000 (2.3 in England, 4 in Scotland, 8 in Germany), fewer doctors per 1,000 than the OECD average (2.8 compared to 3.3) and fewer nurses per 1,000 (8.2 : 8.9). Germany has close to twice as many doctors. We have 40,000 nurse vacancies -100,000 across all NHS staff – which explains why £3bn is spent on agency staff and why permanent staff are exhausted.

    Some 120,000 excess deaths have occurred since austerity cut into essential health and social care services. Avon’s coroner concluded that the death of a 15-year old girl in September was the consequence of neglect due to the lack of resources of local community mental health services to support her.

    A healthy well-educated childhood population makes for a healthy country. Research shows that state investment in healthcare gives a fourfold payback to the economy. The wellbeing of our children and adults is paramount: people are dying as a result of waits for critical mental and physical healthcare, bearing in mind that three-quarters of enduring mental health problems first present before age 18.

    Keep Our NHS Public campaigns to defend our NHS, challenging government, using all means available. We reached out to other organisations and set up Health Campaigns Together (HCT) in 2015, building with the People’s Assembly for the 2017 demonstration and the NHS Roadshow during the June election. Our Emergency Day of Action on 3rd February held the government to account this winter with 60,000 marching in London and 50 events across the UK.

    Our demands are: more beds, more staff, fund our NHS; no cuts, no closures, end privatisation; health and personal social care must be free at the point of use and, as in Scotland, not means-tested.

    Campaigners have reversed plans for bed closures; hospital mergers have been slowed or prevented; STPs have been challenged; judicial reviews have forced concessions on ACO scrutiny. But Labour in local government must adopt national policy and oppose the undemocratic ACOs and cuts to health and social care, and come out fighting for our NHS before it’s too late.

    » Please consider affiliation. » Tony O’Sullivan is co-chair of Keep Our NHS Public and member of Health Campaigns Together.

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    We like to think that we own our NHS.  It’s a public service.  If we do own it, then the joke is on us.  The NHS is now an unaccountable secretive mess and our interests are not being protected.  The people tasked with looking after our interests are bullied or manipulated into amnesia.

    We are supposed to have the most open and transparent health service in the world, pause here for prolonged laughter.  What we have is a howling mess with providers behaving like autonomous private companies and claiming commercial confidentiality over everything; meeting in private to keep things secret.

    We have CCGs that commission £billions of services but have no accountability to the public they serve and who keep their business as private as they can.  They are even trying in some places, Staffordshire and Cambridge as examples, to evade all responsibility by transferring their responsibilities by contracting them out.  The next wheeze might now be Accountable Care Organisations (that could be private companies) and which have no accountability yet hold long term contracts to plan commission and deliver NHS services.  This is wrong.

    We had the whole NHS being divided into 44 planning areas with Sustainability and Transformation Plans, making a brave attempt to overcome the chaos in the NHS caused by the dreadful Lansley Health and Social Care Act.  Most of these STPs came out without any semblance of consultation with the public, patients or staff or even with the local authorities they were supposed to have included.  Hardly a day goes by without some new idea for some new body yet none of them look like something we would be able to hold to account.

    We have NHS bodies which are supposed to be public and which are paid through public funds behaving like the worst in the private sector.  There was the legendary Strategic Projects Team spending years advising on half baked schemes to privatise services, all of which failed.  The award winning SPT, set up initially to manage the Circle deal in Hinchingbrooke went from failure to failure but was never held to account.  A proper record of what they did and on what authority will never be made public, good luck with any FoI request.

    QE Facilities

    Now we have the new SPT – QE Facilities.  Again, an NHS body, again with insider status, going around the country charging Trusts for advising them about how to evade VAT by setting up a wholly owned company.  This publicly owned company has just refused an FoI request to list those Trusts it has spoken to.  This is commercially confidential – we are not allowed to know if one part of the public sector has spoken to another part.

    The saga of forming wholly owned companies to avoid VAT has been the latest stain on the NHS.  Boards have gone down this route in secret, refusing to engage with the hundreds of staff involved – who will move out of the NHS.  They make public claims about improving services which are wholly untrue – their own figures show all the savings come from tax changes and service improvement does not feature.  They refuse to provide documents, meet in secret and refuse even to consult with their alleged partners in their local STP.

    This behaviour by Foundation Trusts who do not even bother to involve their own Governors ( as they are not trusted) probably signals the end of the experiment with trying to get public bodies to behave like private companies.

    These are the same Trusts that sign up to Sustainability (all the Transformation plan money has been nicked) Plans that are not sustainable and to control totals they know they have no chance of achieving.  We live in the fantasy world where Boards are too weak to say no, they just play the game.  Since almost every other Trust is in some kind of trouble retribution is unlikely.

    Of course all this is in part a reaction to the absurdity that the legislative background is totally incoherent and is being largely ignored.  Yes, there are examples of people coming together and trying to do their best for patients by trying new ways of working.  All good.  But none of this gets us anywhere unless we make the funding available to make sustainable changes possible.  We get nowhere without decent workforce planning.  We fail if we don’t address the yawning gap in accountability.

    We will fail unless we get better Boards that tell the trust not just to power but to their own staff!

    As waiting lists grow and cancellations increase satisfaction with the NHS is beginning to fall; more people are opting to spot purchase private care, the clear signs of a system in deep trouble.

    So if we are the owners how do we get our say?

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    Dozens of hospital trusts across the country are looking at (or already have) set up private companies in which to transfer swathes of vital NHS staff and assets. The moves are supposedly to save money through a supposed VAT loophole designed to promote outsourcing, as well as on staff pay. They are also – an aspect overlooked in the coverage to date – supposed to promote a greater focus on “commercialising” hospital assets. More of that in a bit…

    “By the time people realise it’s been a catastrophe, it will be too late to undo”

    Unions and staff are up in arms about the damaging impact of these subsidiary companies in creating a two tier, demoralised workforce whose goodwill and co-operation our doctors and nurses rely on every day to keep hospitals clean, safe, and well-equipped. In Wigan, Harrogate, Bradford, and Calderdale, Unison members are already close to strike action after union ballots overwhelmingly rejected the plans. Gloucestershire – where around 700 staff are affected – is also about to run an indicative ballot, Unison announced at an NHS activists conference in the county on Saturday.

    Some hospital governors are deeply unhappy too – one in Gloucestershire told OurNHS, “by the time people realise it’s been a catastrophe, it will be too late to undo.”

    There’s been no public consultation about any of the plans to create private NHS subsidiary companies (known as SubCo’s), it seems. In Gloucestershire, Hospital Chief Executive Deborah Lee told Stroud Labour MP David Drew that “this is not a matter for public consultation as agreed with the Gloucestershire Health Care Overview & Scrutiny Committee (HCOSC)”. However Stroud Council leader Doina Cornell, who sits on the county’s Scrutiny Committee, told OurNHS, “We’ve not been consulted. There’s been a lack of input into it from any councillors.” OurNHS asked Gloucestershire Hospitals about this apparent discrepancy – and about a number of other points in this article. They have so far declined to comment.

    Cornell adds “Surely this is not the sort of thing we should be doing…. this is a high-risk project.”

    “…a gambit, a pretence, an illusion and make believe…

    Indeed it is high risk. Whilst staff understandably worry about pay, pensions and conditions cuts – and unions argue that any guarantees from employers are worth little given weak employment law and their stated intent to take on new starters on lower conditions – for the public, it gets more worrying still.

    Many experts suspect the plans could collapse altogether, with the corporates waiting in the wings of course. Respected health commentator Roy Lilley has called the SubCo plans “a gambit, a pretence, an illusion and make believe” and on the same subject comments, “an astonishing number of Trusts are heading down Carillion Street”.

    Certainly, it’s worrying that many of the SubCo plans seem to emphasise this VAT “gambit”. Gloucestershire, for example, told staff it would save £35m over 10 years (whilst the staff savings were merely “unquantifiable”) through this ruse. But the biggest similar scheme to date, UnitingCare in Cambridgeshire, collapsed spectacularly – and one of the major reasons (according to both NHS England and the National Audit Office reports) was because they signed the contract on the basis of incorrect advice about their VAT position, meaning an unexpected £5m a year was added to their costs and the arrangement collapsed.

    Selling off the hospital buildings?

    And – perhaps most worryingly of all – now OurNHS openDemocracy has uncovered considerable grounds for concern about what is happening to hospital buildings around the country as part of these plans. We’ve also uncovered a little noted aspect of the Health and Social Care Act 2012 that might partly explain the rush to these new schemes.

    In existing SubCo’s, tens of millions of pounds of assets appear to have transferred out of the NHS. In Northumberland, Tyne and Wear for example, one of the few SubCo’s where the business case is publicly available, the plan states that £33.5m of land and buildings will be transferred from the NHS to the SubCo. But in most of the plans about to be signed off in the coming weeks and months staff appear to have been given little more than hints of asset transfer (often highly self-contradictory, see for example Gloucestershire’s leaked staff Q&A, and Airedale’s (which they’ve taken down in the last few days, but you can read the cached link here).

    Neither staff or public appear to be being told anything about what hospital buildings are involved, and what this means. Whether or not asset transfers are key to the supposed VAT savings in Gloucestershire and elsewhere is one of the unanswered questions. Some of the other SubCo’s appear to anticipate noVAT savings, according to the Health Services Journal (paywall). Meanwhile, other established SubCo’s – notably Warwick and East Kent – have been set up to provide clinics and wards for private patients, OurNHS has uncovered. What is going on?

    The concerns about hospital buildings come in the light of huge pressure on Trusts to sell off or commercialise parts of their estate, under both the Carter Review and the Naylor report that Theresa May endorsed last year. Those hawking schemes to encourage sell offs are impatient with the NHS holding on to their assets “like the family silver” and preventing housing developers or rival private health companies getting their hands on these ‘strategic locations’. And all the plans – as elsewhere – are clear on one thing – that there will be “new people” with “commercial expertise” running the SubCo’s – perhaps with a different attitude to the family silver?

    Tax expert Richard Murphy echoes campaigners’ suspicions. Reviewing the Northumberland, Tyne and Wear SubCo business case, he told OurNHS “”Reading between the lines as to the true motive of this arrangement, it looks like a precursor to the sale to commercial third parties of the underlying buildings and the service contracts associated with them”. Whether this is the intention – or an unintended consequence, particularly the financial models don’t otherwise stack up – remains to be seen.

    Sneaky legal changes post-2016?

    OurNHS has also uncovered that a little spotted legal change seems to be driving the rush to the SubCo model of estates management. In an article written in May 2017 by SubCo advisors DAC Beachcroft (who are advising Gloucestershire amongst others), the solicitors firm describes how “the foundation trust sets up a wholly-owned subsidiary company. The estates workforce works for the company” but they go on to explain that “the outsourcing involves transferring the estate across into a wholly-owned subsidiary company.” And intriguingly, they add “These are only now possible because of recent changes in legislation that have enabled NHS foundation trusts to transfer their legal rights in operational property”.

    What “recent changes in legislation” is this? OurNHS has spoken to top NHS campaigning solicitors who are unsure but have suggested it may be a change that follows on from the controversial Health and Social Care Act 2012. One little noted aspect of the Act made it easier for the NHS Foundation Trusts to sell off assets, even where those were previously protected because they were used to provide essential healthcare services (known as “Commissioner Requested Services”). There were some transitional arrangements to protect these services and the buildings used to provide them, following the 2012 Act –but these arrangements ran out in April 2016.

    And certainly, the government’s attitude to these SubCo wheezes seems a little slippery. On the one hand, the government’s “NHS Providers Finance Director” Chris Young wrote an apparently strongly worded letter to Trusts last September (and seen by OurNHS), which stated that “HMRC are actively investigating the health sector in relation to tax avoidance schemes” – though perhaps with a chink of a get out clause about such schemes being “acceptable” if there are also “genuine commercial reasons”. Meanwhile numerous parliamentary questions about the SubCo’s have been met with bland indifference from ministers. Whilst some – like Labour’s health spokesman in the Lords, Phil Hunt – have suggested ministers’ relaxed demeanour means any tax savings are likely to be clawed back from the overall NHS budget, NHS insiders have also told OurNHS that their strong impression is the main NHS regulator (NHS Improvement) is quietly promoting these schemes.

    So what can campaigners do?

    In Gloucestershire, experienced NHS campaigners – who 6 years ago took NHS Gloucestershire to Judicial Review and reversed the planned transfer of nine local hospitals and 4000 staff to a so-called “social enterprise” company – have written today (letter here) to the local Hospital Board of Directors, who are due to agree the project on Wednesday (28 February), raising detailed questions regarding all the above issues. The campaigners warn the directors that the Trust risks being negligent with public money and assets if they rubber stamp the plan before they have clear answers to all these questions – which, campaigners point out, should be shared with the public.

    So what can Trusts do?

    It’s not good enough for Trusts to rely on unpublished advice from the likes of DAC Beachcroft and KPMG. Gloucestershire for example has set aside £200,000 for this advice, OurNHS has learned. And let’s not forget KPMG’s role in Carillion – a role which prompted Peter Kyle MP to tell them last week in a parliamentary Carillion investigation, “I wouldn’t trust you to do an audit of the contents of my fridge”.

    Nor does it seem wise for other the twenty or so Trusts who are relying on advice from QE Facilities Ltd, a SubCo created by Queen Elizabeth Gateshead NHS Foundation Trust. As Unison’s Michael Sweetman drily told OurNHS, “they are selling this deal on the basis that they’ve found it very lucrative – for them – but it’s lucrative for them partly because they’re going around selling their consultancy on how to do it, back to other parts of the NHS.” (Did anyone say “pyramid scheme”?).

    Of course Trusts are in impossible financial positions, with soaring waiting lists and problems compounded by heavy fines levied if they miss targets, and – as exposed by last week’s File on Four – an absurd government fixation on capital controls as hospitals crumbleGloucestershire is in the same financial black hole as most Trusts – and also in special measures following a recent huge accounting cock-up.

    Trust Chief Executives have even taken to Twitter to defend their adoption of SubCo’s models, for example Sarah Jane Marsh, CEO of the Birmingham Women and Children’s Hospital Foundation Trust who also have a SubCo due to go live next month, commented earlier this month “It’s a real head/heart issue – but the reality is if we don’t, we will have to reduce further posts as our CIP [Cost Improvement Plan] for 18/19 is £17 million.”

    But it’s not good enough for Trusts developing these plans to attempt highly risky ways to wriggle out of these constraints, remaining tight-lipped about what they could really mean. It’s not good enough for Trusts to hope that no-one’s going to weep for the procurement teams, estates managers, cleaners, safety staff and the other workers who keep the NHS show on the road – and ignore vital questions about the hospital buildings and financial models, the quality of the advice they’re getting, and the loss of accountability and control these plans entail. Given the secrecy around these models, it’s particularly unhelpful when Trust Chief Executives then blame “irresponsible” unions for causing staff anxiety with “political” opposition, as Gloucestershire’s Chief Executive Deborah Lee was spotted on camera doing last week.

    Instead, all Trust CEOs should be being as outspoken about the government’s failure to fund the NHS as a few brave ones have been – and as honest about the obscure tricks the government is using to push ever more outsourcing, even as the failures of Carillion, Grenfell and PFI come home to roost.

    OurNHS openDemocracy will keep investigating. Whatever the intent of Trust directors, the reality is they tend to move on to pastures new within a few years – only one of Gloucestershire’s current directors has been there for any length of time, for example.

    Meanwhile local people, currently frozen out of decision making, may be left in a few years wondering how our precious hospitals were sold from out under our feet.

    First published on the Our NHS website

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    The outsourcing of public services to private companies is a model in disarray. The impetus for challenge has been the collapse of the outsourcing giant Carillion but concerns have also been raised across a number of other public services including probation, the prison service, forensic science service, and the NHS. Much less interest has been paid to the longer-standing privatisation of adult social care, where the debate tends to be focused on levels of funding and the respective obligations of the state and citizen to contribute to individual care costs. This relative absence of policy interest in examining the ownership structure of adult social care may be due to three related factors – market penetration, market fragmentation and market fragility.

    Market Penetration: The longer the period over which outsourcing has taken place and the greater the penetration of the market, the more difficult it is likely to be to reverse the situation. This is the situation with adult social care, where the process has been in train for over 30 years and the current structure is deeply embedded. In 1979, 64% of residential and nursing home beds were still provided by local authorities or the NHS; by 2012 it was 6%. In the case of domiciliary care, 95% was directly provided by local authorities as late as 1993; by 2012 it was just 11%.

    Market Fragmentation: There is no compact adult social care service that can be easily repatriated into public sector ownership. Rather the sector is characterised by a multiplicity of fragmented, competing providers. The care home sector supports around 410,000 residents across 11,300 homes from 5500 different providers. The situation in home care is even more diverse with almost 900,000 people receiving help from over 10,000 regulated providers. Nor is it any longer the case that the state is even the dominant commissioner of these services – the privatisation of care alongside tighter access to local-authority-funded care has resulted in a large growth of self-funding ‘customers’.

    Market Fragility: The third complicating feature of the adult social care market is its fragility and the politically toxic consequences of market failure. The first major casualty was Southern Cross in 2011 – a large national care home provider which had 9% of the market nationally but a much greater share in certain regional areas. Much of the Southern Cross provision was eventually taken over by another major provider, Four Seasons, which is itself now at high risk of going under. Either through financial collapse or strategic withdrawal the market model is at tipping point.

    There is a growing view that the problems associated with the outsourcing of adult social care need to be addressed, but if no ‘big bang’ change is feasible, what are the alternative options? Better and fairer funding is a prerequisite but the local state (as the biggest commissioner of services) and national government (as policy-maker) can also act in other ways that could create better care quality and reshape the provider mix. Four dimensions can be identified: commission local and small; commission holistically; commission individually; and commission ethically.

    Commission Local and Small

    The trend, especially in the residential sector, is for small operators to be replaced by large provider chains with more than fifty care homes which in turn house up to a hundred residents each. A focus on smaller and more local commissioning is needed to counteract this trend. Small organisations hold vast expertise about the issues affecting people locally and can serve very specific communities of interest. Moreover, much of what they do focuses on bringing people together which ties in closely with the policy focus on loneliness, ideas around Asset-Based Community Development, and on supporting communities to rebuild their own social infrastructure by harnessing community businesses.

    Complementary to this is the concept of Local Wealth Building, a growing movement in Europe and the USA based on the principle that ‘places’ hold significant financial, physical, and social assets of local institutions and people. The key here is local ‘anchor’ institutions (public, social, academic, commercial) and their procurement role in supporting the local supply chain. This will include opening markets to local small and medium enterprises rather than looking to national and international chains. Central government also has a role to play here, for example by minimising corporation tax rates for small local businesses.

    Commission Holistically

    It no longer makes sense to think of social care commissioning in isolation. Rather the focus is upon ‘holistic’ or ‘place-based’ commissioning. Most social care is commissioned separately from other place-based interventions. However, market-shaping is a much broader strategic task spanning several council departments and other partners – social care, transport, housing, economic development, health, community safety, training providers and more. Coordination on this scale would require significant investment in capacity, skills, and structures – in effect, the reinvention of robust local governance.

    Commission Individually

    Policies on access to social care support have created two groups of ‘individual commissioners’: those who fund their own care and those whose care is funded via an individual budget. Both are in need of greater support. A market requires ‘customers’ who seek and digest information to inform their choice of product. From this perspective the care home market in particular has some characteristics of an inefficient market – entry is often unplanned, made in response to a personal crisis and with very low rates of switching to a different provider in the event of dissatisfaction. The Competition and Markets Authority  raises the prospect of enforcing consumer law, but others will take the view that it is simply not possible to replicate a market with informed ‘consumers’ in the social care sector. However one option that can work for some people is that of personal budgets and more recently personal health budgets, though here too there are issues to be resolved around matters like making choices and decisions; receiving information and advice; budget management, monitoring and review; and risk management and contingency planning.

    Commission ethically

    Ethical commissioning could include the following dimensions.

    Commission from ethical employers: Commissioners need to be able to distinguish between the workforce practices of different providers and prioritise those acting as ‘good employers’. This might have several components such as prioritising providers that comply with minimum standards around workforce terms and conditions, have effective training, staff development and supervision, and encourage staff to participate in collective bargaining.

    Commission from transparent providers: A ‘transparency test’ could stipulate that, where a public body has a legal contract with a private provider, that contract must ensure full openness and transparency with no ‘commercial confidentiality’ outside of the procurement process. All providers of public services should – at a minimum – publish details of the funding they receive, performance against contractual obligations, the suppliers to whom they subcontract services, the value of these contracts and their performance, and user satisfaction levels.

    Commission from tax compliant providers: The ownership of all companies providing public services under contract to the public sector, including those with offshore or trust ownership, should be available on the public record. At the same time, a taxation test could require private companies in receipt of public services contracts to demonstrate that they are domiciled in the UK and subject to UK taxation law.

    Commission from not-for-profit providers: A fresh approach to adult social care offers the opportunity to rethink the role of other sectors. Whilst wholesale renationalisation seems unlikely there is every reason to encourage local authorities to begin to build up their own in-house provision and to support all organisations with a social purpose, whether in the public, private or voluntary sector. This could include encouragement for user-led organisations, social enterprises, mutuals and others to recruit and train service users in innovative ways.

    The privatisation of adult social care in the UK has an unusual policy trajectory compared with other sectors. Devoid of any real debate or stated purpose, a 30-year process of outsourcing has grown unabated and unchecked. The scale of penetration and the dismantling of alternative providers have resulted in a situation that fails to meet ordinary market standards around choice and control. And now, as a result of austerity politics, there is every chance that the private sector will lose interest and leave the market with serious consequences for those in need of services and support. Whilst it is not feasible to simply eliminate a model that has become so deeply embedded, a combination of better funding and smarter commissioning can, over time, reshape ownership structures, increase provider stability, focus on ethics rather than cost, and enhance the quality of care.

    First published on the British Politics and Policy blog

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    Following the collapse of Carillion comes an authoritative judgement by the National Audit Office that – it uses accountancy speak but the message is clear – the Private Finance Initiative has been a gigantic rip off. The nostrums of New Public Management stand exposed. The mantra “private good, public bad” sounds like it always was a pro-market ideology that has dominated British public life for over three decades.

    Public services in England (and to varying extents in other parts of the UK) have been stigmatised and eviscerated not just by austerity but by the enforcement of market-inflected doctrine, especially New Public Management. More a body of precepts and reflexes than an elaborated theory, New Public Management is a derivative of the global project (“neoliberalism”) to expand markets and crimp, cull, and confine the social state. In the UK, Thatcher was the doctrine’s high priest, but the gospel was actively propagated by Tony Blair and Gordon Brown and set out canonically in David Cameron and George Osborne’s 2011 ‘open public services’ white paper.

    A central precept of New Public Management was “steering not rowing”. Public bodies should step back from providing services and outsource to private, often global, companies. Outsourcing, along with the expansion of opportunities for financial intermediation in private finance initiative, simultaneously secures a route to corporate profit and diminishes the state.

    Contracting is not new and there is an untidy continuum in the state’s relationship with private markets, as suppliers of goods, finance, and services. But most people see a difference between a council buying disposal gloves from a firm, and contracting for HIV support services. The differences are principled but also practical: the former can be fairly straightforwardly specified and delivered, the latter is necessarily much subtler and much less susceptible to corporate finance accounting.

    None the less, outsourcing has been driven into the further reaches of human services. Under perennial financial pressure – now acute – councillors and NHS trust boards reach for the seductively cheaper options offered by companies based, usually, on worse conditions for their staff. Outsourcing has been a perfect match for British administrative empiricism and short termism; it has been both cause and consequence of the dismembered condition of the British social state.

    The model has now come unstuck. Grenfell Tower exemplifies the opaque accountability of ‘arm’s length’ management (the Royal Borough of Kensington & Chelsea seemingly neither steering nor rowing). That disaster follows a series of high profile failures, starting with the inability of G4S to meet the terms of its contract to police the 2012 Olympics, followed by large gaps in performance on benefits assessment, refugee housing, offender supervision and so on. The collapse of Carillion is the latest, but not the last.

    As for PFI, it was a mixture of pandering to financial institutions that saw state projects as a means of making money and (unevidenced) assertion that private management secured lower cost infrastructure; the first and second generation of PFIs bolted on outsourcing arrangements for facilities management, adding to the profitability of deals. Now the NAO – not for the first time – has redone the sums and found PFI has delivered the profit, but added no discernible public value.

    Failure hasn’t tempered dogmatism; alienation of service delivery remains the default option across central, local, and devolved government and, enforced by Cameron-era legislation, the NHS. Cameron pressed ahead with outsourcing probation services. For example, despite immense practical difficulties and, as it turned out, scant opportunity to make the kinds of profit companies had expected; Tory ministers adjusted the contracts to accommodate them.

    But the sheen has undoubtedly come off the outsourcing project. In austerity, companies can’t make enough – the problem in social care. Companies that have turned themselves into outsourcers – the construction company Carillion, for example – have fallen apart, discovering that schools and prisons are really quite different places. Investors are realising that there are limits to how far public services can be commodified. Labour has declared it would enter into no new PFI deals. But PFI was so evidently a bad deal for the state that in austerity, the number of new deals has wound down to single figures. Labour’s bigger issue is outsourcing and the reconstruction of the state that would be implied if, once again, the default were public provision of public services.

    In our new report, Out of contract: time to move on from the love in’ with outsourcing and PFI, we argue for the primacy of information and analysis. We simply don’t know how far private interests have inter-penetrated and eroded the public space. In a market society, public bodies buy in markets: there’s a continuum in the relationship of the state to external suppliers. This relationship runs from the purchase of goods that public agencies would never make themselves to the transfer of entire service sectors to profit-seeking companies.

    We know that in some instances contractors have become the public sector. However, this is merely an accountants’ illusion. The state is the last resort; it can mitigate but not eliminate risk; as for the banks, outsourcing carries an implicit and uncosted guarantee of bail out. It has become big business. The UK state spends £200bn a year on goods and services from third parties. About half of this – up to £100bn – is paid in service contracts. But some of those contracts go to charities and some for specialist services that were never regularly part of the public services offer. Private sector involvement is heaviest in IT, construction, waste management, building maintenance, social care and defence but also includes prison, probation, ambulances, diabetes care, blood testing, trimming shrubs in Royal Parks and applications for UK visas.

    We ask for a Domesday Book spanning central government, the devolved administrations, the NHS and local government. We simply don’t know – now – which companies work where, let alone how they book costs and profits; their performance is only recorded at points of crisis and failure. Academic studies have largely failed to elucidate a phenomenon that involves organisations, structures of power, markets and (administrative) cultures. Polemic and anecdote abound, but do not substitute for a dispassionate explanatory description of public bodies’ relationship with third-party suppliers. Even taxonomy is lacking, without which it’s hard to understand make or buy decisions and the commodification of public bodies’ functions.

    In our report we start with an immediate pause on any further outsourcing while existing contracts are reviewed, renegotiated or terminated. A central registry should list details on all significant public sector contracts. That sounds like the Cabinet Office, but historically it has been blind to local government and the NHS and it’s critical that outsourcing be view panoptically, drawing in evidence and comparison from all sectors.

    Public bodies will make supply decisions that involve companies – but the legal framework must allow them to impose public interest conditions. Among relevant factors are a company’s market share, previous performance, company ownership, tax practice and avoidance, directors’ remuneration as well as staff employment and conditions and union recognition. These criteria should inform contracts, which should be as open as possible and no longer be concealed behind “commercial confidentiality”, with the Freedom of Information Act extended to provider and public sector clients.

    Such information is not readily available. Acquiring and deploying it imply public service commissioners get a lot smarter than they have been. An overhaul of contracting doesn’t absolve councillors or ministers from the Sisyphean task of ensuring public services serve the public with maximum efficiency, effectiveness and – a clincher if Labour is to secure approval for tax increases – economy.

    By John Tizard and David Walker.  First published on the British Politics and Policy blog

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    This illustrated video lecture – 60 minutes plus 30 minutes Question and Answer – gives a comprehensive overview of the background to the continuing dismantling and privatisation of England’s NHS.


    Jeremy Warner, an editor at the Telegraph, once said there are either ‘big state’ people or ‘small state’ people. I felt the same way following the reaction to the collapse of Carillion: there are either ‘private good, public bad’ people or ‘public good, private bad’ people. Of course, reality is somewhere in between.

    Carillion went bust because of cost overruns or delays in three large construction projects. The nature of such projects involve that kind of risk, but clearly the company – despite its size – was not resilient enough to withstand those failures. It did not go bust because of privatisation of public services, unless you think the government should build its own hospitals or roads. If anything, it shows that those contracting out public contracts were getting a good deal.

    There will always be public projects contracted out to the private sector. Much of the increase in public investment planned by Labour if it wins the next election will be undertaken by private firms. Getting the contracting relationship right is difficult and fraught with dangers.

    The government clearly has questions to answer about why it continued to award contracts after the profit warning, and we need some informed analysis to determine whether the government, as they claim, had fully protected all but one (!) of these projects and will not lose any money as a result of the collapse. As David Allen Green suggests, this smacks of ministerial failure. (The link also shows public procurement can have its funny side.)

    Also, why was the position of the ‘crown representative’ (who was meant to be overseeing scrutiny of, among others, Carillion) left vacant? The government should also ask whether companies should be allowed to pay large dividends when their own pension fund is underfunded. And why Carillion’s auditors, KPMG, gave it a clean bill of health when its balance sheet was already showing signs of stress.

    To see what lessons the collapse of Carillion does have for the debate over whether the public sector should privatise certain of its activities or do them in house, we need to go through some of the pros and cons.

    There is one main benefit of contracting out public services, which is that it can save money. To mention ‘the market’ here is not very helpful, because with one buyer and only a few sellers for something (the contract) agreed once every few years, this is hardly a normal market. It is instead about the incentives faced by managers and workers, both in achieving efficiency and fostering innovation. Managers have a clearer incentive system in a private sector firm to maximise profits, and that incentive is provided by the need to bid low to win the contract and nevertheless make a profit. As Carillion shows, margins on most public sector outsourcing are not large. In that sense, Carillion confirms that part of this mechanism is working. A single public sector entity cannot replicate this advantage, unless it too is in competition with private sector firms. In short, competition improves incentives.

    One important qualification to this argument involves information. The temptation of a bidding system based on the lowest price is to cut quality. So the public sector has to have a clear means of not just specifying quality in the contract, but of ensuring the contract is being fulfilled once it is awarded. Sometimes politics can get in the way of that happening. For activities where quality is difficult to observe, contracting out is not a good idea.

    Another qualification involves the attitude of public sector workers before privatisation. If they, for whatever reason, internalise the need for efficiency and innovation, because for example they can see how both improve the outcome for customers, then contracting out to the private sector will achieve little. The NHS could be a case in point.

    A further problem with privatisation is finance. When people argue that public money should not be wasted paying the shareholders or creditors of private firms, they are both right and wrong. They are wrong in the sense that without contracting out the same amount of money has to be raised by the public sector, and so it “wastes” money by having to pay interest on government debt. But they are right in that the rate of interest on government debt is much less than the rate of interest a private firm has to pay on any debt, or in the form of dividends to shareholders. The reason for this is that investors do not like risk: people who lend to the UK government know they will always get their money back, while as the shareholders and creditors to Carillion have just found this is not true for private sector firms.

    This is why Private Finance Initiative (PFI) projects undertaken just so that the borrowing is done by the private rather than the public sector are costly from an economic point of view. It is why it makes sense to exclude public investment from any fiscal rule: fiscal rules that restrict public investment are an open invitation to politicians to undertake PFI type financing. In my view, the best constraint on public investment is the expected social return, assessed with the help of an independent body. It is often said that PFI type projects ‘avoids risk to the taxpayer’. Again this is the wrong way round. It is far easier and cheaper for the public sector to take risks than the private sector, so PFI projects are paying far too high a price to avoid risk to the public sector.

    Another problem related to risk is the interrelationship between what the private company contracts to do and what actually happens when government forecasts go wrong, as they always will. This may have happened with the East Coast line “bailout” (but if it was, we should be told), and it did happen with privatising the probation service. Public sector contracting out forces each side to commit to guesses about the future, whereas if everything remains in-house there can be much more flexibility. There is also the cost of having to train more civil servants in the art of writing good contracts.

    One further problem that Carillion reminds us of is that privatisation runs the risk of a degree of interruption if the company goes bankrupt. Disruption is nothing new. If privatisation is to have any benefits, the contract from the public sector has to come up for renewal every few years, and if the private sector provider is changed that will involve some dislocation of service.

    One final point, which is contingent on what I hope will be a temporary state of affairs. Nowadays, the management overheads for private sector firms are likely to be far higher than in the public sector, for reasons that have little to do with management quality. Ben Chu sets out how much management was being paid at Carillion compared to equivalent public sector managers. And what on earth were shareholders doing allowing the directors to relax clawback conditions on management’s pay if things went wrong, which even the Institute of Directors described as “highly inappropriate” and “lacking effective governance”. In truth the public sector is much better at stopping managers using their monopoly power to be paid over the odds than the private sector appears to be.

    So the economist’s answer on public sector outsourcing is, it depends: on all the factors outlined above and probably more I have momentarily forgotten. (Like economies of scale and expertise: no one would ever suggest the public sector makes its own paperclips.) Where the balance will be is bound to be case dependent. But it would be incredibly surprising if at least some of the outsourcing undertaken by this government was not ideological rather than evidence based. This suggests that Labour, if it wins the next election, should undertake a thorough independent review when it has all the facts at its disposal. That at least might ease fears that we will lurch from one ideological position to its opposite.

    This first appeared on the British Politics and Policy blog

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    Good integrated healthcare or neoliberal con?

    La Ribera Hospital

    The Alzira Model is named after the town in Spain where the La Ribera hospital, the first hospital using this model, is located

    Map of Spain

    The Alzira Model:

    • Goes beyond the PFI model of the building being privately operated to also include clinical services
    • Paid for by a capitation fee
    • The first contract covered only the La Ribera hospital and was signed in 1997, the hospital opened in 1999 and the contract was terminated in 2003 due to losses.
    • Replaced by second contract, which widened the remit to also manage the primary healthcare of the surrounding health area.

    The Spanish National Health System

    Spanish health system

    There are operational differences to UK NHS

    • Responsibility for healthcare has been devolved to the regions
    • Specialist care  (e.g. Children’s hospital) is covered at Health Area level
    • A health zone contains a hospital plus primary health centres. Residents are allocated to primary health centres. (No choice of GP, as in UK) Residents are referred to hospital by a GP at their primary health centre.

    The model was hailed as a tremendous success story by neoliberal groups around the world with the following claims:

    • Cheaper to deliver than traditional public sector healthcare – savings of around 25% being achieved
    • Good for patients and staff
    • Affordable for the taxpayer

    The Reality

    (a) The Spanish context

    • Labour costs in Spain: Clinical staff in public hospitals are part of the Spanish Civil Service, which has very generous pay, above OECD average, whilst working hours are less than average – if we compare to the UK NHS savings of around 20-30% can typically be made.
    • Financing by regional savings banks Prior to financial crisis their governing bodies were dominated by regional politicians – so no risk transfer. Low rates of interest charged on loans

    (b) No financial success story

    • The integrated contract was only viable because of:
    • Generous Increases in capitation fee in early 2000s
    • Low interest rates
    • Low labour costs
    • Cherrypicking and freeriding

    All of this was hidden due to poor governance systems and lack of accountability

    Further flaws

    • Very optimistic capitation fees at start
    • 1st contract failed – political coverup on re-letting
    • Wage protests
    • High staff/patient ratios
    • Additional costs of monitoring ignored
    • Many items omitted from contract
    • Recommended structures for managing PFI-style policy all missing in Spain (Specific Public/Private Partnership unit, model standardised contracts, public sector comparator, any method of project evaluation)

    Proliferation of the Alzira Model

    • Used for other integrated healthcare (i.e. hospitals and primary care) in Valencia region with similar findings
    • When used elsewhere (both in Spain/elsewhere in world), it has tended to be for hospitals only


    Given that it’s NOT a good cost effective way of delivering healthcare, what does the usage of the Alzira Model mean?

    • A way of keeping artificially keeping debt off the public sector balance sheet?
    • A way to impose an ideological right wing view of creating a market for healthcare?

    Performative Frame

    • Superiority of private sector style techniques in delivering a better quality service
    • Linked with political will to create a market for Public/Private Partnership healthcare over the long term – shift from infrastructure (just 5% of global healthcare spend) to clinical services (lucrative and stable long term returns)
    • Increasing involvement of healthcare companies


    Breakdown of Alzira model in Valencia

    Regional government changes from right wing Partido Popular to left wing coalition who scrap the policy amid corruption scandal of director of the healthcare group

    The rhetoric of success from global consultants needs to be challenged

    This was presented at our conference on Accountable Care Systems

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    Some of us that have worked in and around the NHS for years are getting very worried. Not just about the mismatch between aspirations and funding but because of a malaise deep within the NHS itself – the culture might be one word for it.

    Particular concerns come from those of us who examined the STPs and are now looking at plans for ACS/ACOs; and separately but connected – the sudden outburst of plans to outsource NHS services to wholly owned companies.

    Parking for now the wisdom of these moves what raises concern is the appalling way the NHS is going about trying to force changes through.  The lack of any robust governance, refusing to consult, badly written documents and obviously implausible plans just being voted through by apparently sensible people.  We even have the Chief Executive of one of the major NHS quangos admitting on his exit that they were managing plans they knew were bonkers.  The NHS leadership and the Ministers can’t even agree on basic issues such as the extent of “additional” funding.  Those same leaders also admit that the system is unable to deliver what it is “Mandated” to do.  Full speed into the iceberg.

    Why are people signing up to things they know won’t work?

    What on earth is going on?

    A select band had the misfortune to look in detail at the STPs.  We have also recently had the task of evaluating plans from multiple Trusts to set up wholly owned companies.  Our immediate reaction is exasperation at just how poorly prepared these plans are (with a few notable exceptions).  The NHS appears to have lost the skills required to write Business Cases and to be able to subject these to proper evaluation and change control.  Many Trusts turn to “consultants” who give them cut and stuck reports of poor quality and limited value which they slavishly follow – what happened to due diligence?  The shelves full of guidance and the endless reports on lessons learned and common causes of failure are simply gathering metaphorical dust.

    And let us not forget the infamous Strategic Projects Team that for many were the consultancy of choice; ironically they were not procured through any competitive tendering despite their enthusiasm for markets and competition.  They advised Trusts on magic plans and it took years for them to go from winning awards to being forcibly wound up.  The NHS does not learn

    With the wholly owned approach the driving force is now wrapped in the age-old NHS saga – we are being put under pressure, something must be being done, this is something, we are doing it.

    When we had at least some form of strategic oversight (through Strategic Health Authorities) there were some with the skills and the clout to push back on the more daft plans that came to their attention.  No more.

    Developing the STPs was a master class in how not to develop plans for a whole system change programme.  Keeping things secret, anonymous leadership, refusing to consult organisations that were claimed to be partners, wasting millions on private sector advice to do the obvious was bad enough.  What was worse was that when what were claimed to be plans finally emerged they were pants.  The level of quality varied from poor to awful (OK with 2 or maybe 3 exceptions).  Already analysis by various reputable groups has shown how totally inadequate these plans are.  So they lost the word plan from the title!

    Now, yet again plans that have serious financial risks and which require thousands of staff being moved out of the NHS are being pushed through without a Business Case, without having conducted any Options Appraisal, with a refusal to publish the documents and with decisions about spending our money being taken in private  and with a refusal to consult with staff representatives.  Why is that even allowed – what oversight is applied to these Trusts who say they have been given the go-ahead by the Regulator!

    So how is this possible?  Where are the system leaders challenging autonomous dysfunction?  Where are the Non Executive Directors who ask tough questions?  Where are the Trust governors who refuse to sit back and allow stuff to get forced through?  Where is the oversight of commissioners?  And even – what happened to common sense?

    Maybe we know the answer.  It is back to that word culture.  In the NHS the toxic culture of bullying with all that implies is rife.  Successful NHS leaders do what they are told, even when they know it won’t succeed.  In fact for many, their tenure is so short they will have moved before failure occurs.

    So what of the latest wheeze, to let the NHS lead on setting up Accountable Care Organisations responsible for the planning and delivery of the care needs of large populations?

    Well, based on the above no STP/ACS/ACO should be permitted if it has leadership drawn from the NHS.  It is time we found proper leaders, willing to engage and consult, able to speak their own minds and there to genuinely represent the best interests of the patients and public.


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    The disgraceful failure by the private sector to provide vulnerable addicts with the safest and best quality treatment available was exposed at the end of last month in a damning report issued by the Care Quality Commission (CQC).

    72% of private providers of residential-based detoxification were found to have been failing in at least one of the fundamental standards of care that everyone has a right to receive. Shamefully, providing ‘safe care and treatment’ was where the CQC found the most breaches: 63% of providers failed to meet this standard at the time of their first inspection.

    Detoxification under clinical supervision is often the first stage of a person’s addiction treatment. Often difficult and unpleasant, it is vital that they receive the best possible treatment to support their onward rehabilitation and recovery.

    And yet systemic faults were found in the way these services are provided by the private sector. Many were basic and entirely avoidable errors.

    No alcohol for me

    For example, some staff were caught giving paracetamol to people within their care more frequently than every four hours, despite the heightened risk of liver damage among heavy alcohol users. In other cases, staff failed to plan how they would manage fits during withdrawal, despite knowing that the people in their care were at risk of having seizures.

    Training in basic life support, consent, mental capacity and safeguarding were all found to be severely lacking. At times staff were found to be administering medication, including controlled drugs like methadone, without the appropriate training or being assessed as competent to do so.

    This is extremely serious. People undergoing residential-based medical detoxification from alcohol or drugs often have complex physical and mental health problems alongside their addictions. According to the Royal College of Psychiatrists, the potential dangers of erroneous detoxification include fits and hallucinations, suicide risk and risk of prescription opiate drug overdose.

    That’s why it is essential staff looking after these vulnerable patients are properly trained, follow national clinical guidelines and have appropriate 24-hour medical cover.

    So what explains this appalling failure?

    My own research in September revealed that the Tories have cut vital alcohol and drug treatment programmes by £43 million this year, forcing many people to turn to the independent sector for help. These cuts are part of wider damaging public health cuts, to the tune of £800 million by 2021.

    Specifically, 106 local authorities are reducing their drug treatment and prevention budgets this year, with a combined cut across England of £28.4 million. Similarly, 95 local authorities are reducing their alcohol treatment and prevention budgets this year by a total of £6.5 million. Equally concerning, services for children needing help with drink and drugs will be slashed by £8.3m across 70 town halls.

    Last month the Children’s Society revealed that parent’s alcohol abuse is damaging the lives of 700,000 teenagers across the UK. Frustratingly, at a time when demand for councils’ children’s services is rising, severe funding cuts from central Government are leaving more and more families to deal with these huge problems alone.

    Yet without support at an early stage as problems emerge, families can quickly reach crisis point and the risks for the children involved grow.

    The children of addicts must not be forgotten and supporting them is a personal priority of mine. Having grown up with an alcoholic father, I’m acutely aware that as a society we simply aren’t doing enough to deal with the effects of addiction.

    We know that children growing up with an alcoholic parent can often themselves go on to develop problems with alcohol or drugs or suffer mental health problems.

    That’s why during our party conference I reiterated my pledge to implement the first ever national strategy to support children of alcoholics and drug users.

    We also mustn’t ignore other forms of serious addiction. My colleague Tom Watson, Labour’s Deputy Leader, has powerfully exposed the Government’s abject failure to treat problem gamblers.

    According to the Gambling Commission the number of people with a serious habit has risen to 430,000, with a further 1.6 million at risk of developing a problem.

    And yet, shockingly, the government has no idea how many problems gamblers are being treated by the NHS or how much their addiction is costing. Like alcohol and drug addiction, we must start viewing gambling addiction as a mental health problem and not a moral failing.

    Theresa May’s mishandling of Brexit and her narrow majority in the Commons has left her with little ability or inclination to tackle these ‘burning injustices’ across society. Addiction treatment services have unquestionably suffered as a result.

    Forcing people to turn to inadequate private sector treatment is entirely unacceptable. That’s why Labour will continue the fight to ensure our health and care system, including addiction services, remains public, free at the point of use and there for all who need it.

    First published by Our NHS

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    While the snow delights children and Instagram users, it is confirmation for our NHS staff that winter is most definitely here. Already hospitals have had to divert patients away because of over-capacity and 20,000 patients were stuck in the back of an ambulance for over 30 minutes in a period of just two weeks.

    The state of the NHS under the Tories gets worse each day with ever-lengthening queues of the sick as waiting lists climb beyond four million. Last year 2.5 million people waited more than four hours in A&E, while over 560,000 people were designated as “trolley waits” because of acute bed shortages.

    Austerity for the NHS has meant the biggest financial squeeze in its history, public health budgets cut and social care slashed severely by billions.

    Some 14,000 beds have disappeared from the NHS and hospitals are now often occupied at unsafe levels. Over 400,000 elderly and vulnerable people are without the social care support they otherwise would have received. Community walk-in-centres have closed and local pharmacies seen their budgets cut all putting more pressure on A&E departments.

    There are vacancies for more than 35,000 nurses, despite promises to recruit more GPs, we have 1,000 less than a year ago and we have seen district nurses and health visitors lost from the front line. The abandonment of the 18 week target for “non urgent” operations will mean more and more of our constituents waiting longer in treatment in pain and distress.

    The news earlier this year that increasing numbers are now paying for operations such as hip replacements or knee replacements, because of escalating waiting times, should send alarm bells ringing for campaigners who share my belief that we must restore a fully-funded, comprehensive, universal, publicly-provided and owned national health service.

    Meanwhile, advertisements have emerged across the London Underground for private healthcare – “topdoctors” – telling London commuters that when you need a doctor you need the “best one” implying the best aren’t in our NHS. I’m not sure they could be more offensive and crass if they tried.

    This are all the very real implications of Tory underfunding and we’ll make no apology for continuing to highlight the impact on patients. Indeed we’ll redouble our campaigning efforts to demand our health service is given the investment it needs as we head into the 70th anniversary of the NHS.

    And as we celebrate 70th years of the NHS we’ll continue to campaign to end the toxic privatisation agenda that destroys the very soul of the NHS too.

    In our recent manifesto we pledged to repeal the health and social care act, and to reinstate the powers of the secretary of state for health to have overall responsibility for the NHS. We are determined to reverse the Tory privatisation of our NHS.

    That’s why earlier this year I raised warnings about a possible fire sale of NHS assets after my research showed that ministers had doubled the amount of land  – now up to 1,332 hectares including many used for medical purposes – they’re looking to sell off.

    And at our party conference John McDonnell confirmed his intention to deal with the PFI deals that see taxpayers’ money drain out to private companies.

    But perhaps the urgency of our commitment to end privatisation was laid bare last week with the shocking revelation that Virgin Care had successfully sued our NHS, some say for possibly up to £2m, after losing out on an £82m contract to provide children’s health services across Surrey.

    This action has drawn widespread condemnation with thousands signing a petition demanding Virgin “give the money back”. A tweet from Richard Branson asking whether it’s possible to fall in love with a brand seems particularly ill judged in this context.

    Meanwhile Babylon have been given a contract for an online GP service effectively cherry picking the patients easiest to treat.

    Under the Tories more of the NHS budget has gone to private health firms, many of whom have become increasingly aggressive in pursuit of contracts. Department of Health figures show that the percentage of its funding allocated to the private sector is about 7.6 per cent, the equivalent of £8.7bn of the total NHS budget.

    In fact the real figure is most likely far higher: much private work is masked from official records by complex operating arrangements with large private-sector health corporations whose sole concern is creaming off profits from public money.

    NHS staff will be the first to tell you just how harmful this needless privatisation has been. A survey earlier this year of BMA doctors found that more than two thirds were fairly or very uncomfortable with independent sector provision of NHS services. Many were rightly concerned that the primary motivation for many independent sector providers is profit, rather than providing the highest possible standard of care for patients.

    The source for this privatisation agenda is the Tory health and social care act. Despite vociferous opposition from Labour, patients and the public, Part 3 of the 2012 Act extended market-based approaches to health care, resulting in far greater private sector involvement as competition became the preferred means of improving health care.

    Prior to the act, hospitals were only allowed to make 2 per cent of their income from private sources, but with the legislation’s passing the cap was egregiously lifted to 49 per cent.

    Unsurprisingly, the Tories’ expansion of the internal market has led to one third of contracts being awarded to private providers since the act came into force in April 2013.

    Some of these private contracts are vast and their failures have wasted millions of pounds worth of public money. A contract in Staffordshire to deliver end-of-life and cancer care worth £1.2bn was dropped in April- the procurement for the cancer element alone cost the four Staffordshire CCGs more than £840,000.

    UnitingCare Partnership in Cambridgeshire and Peterborough is another controversial example of a procurement collapsing. Over £1m of public sector cash was wasted after an £800m, five-year contract to provide older peoples care collapsed just eight months after going live.

    Similarly, in January 2015 the private sector operator, Circle, pulled out of a 10 year contract to run Hinchingbrooke Health Care Trust, a privately managed NHS district general hospital. This left the NHS with the subsequent operational risk when the franchise failed: Circle were only liable to cover financial deficits of up to £7m over the ten years, which was far below the total deficit incurred during the three years the private firm were in charge.

    Private meddling is equally damaging on the commissioning side. Just a few months ago Burton Hospitals Foundation Trust was forced to pay £300,000 in VAT charges due to a controversial “prime provider” contract involving Virgin Care. These charges would not have been incurred had services been commissioned directly by the CCG rather than Virgin Care, which is outside the group of NHS organisations that can recover VAT costs.

    In many instances, because of underfunding local health bosses feel compelled to turn to the private sector. The resultant lack of capacity means mental health and community services in particular have often had to rely on the private sector for short-term fixes.

    Similarly, in the acute sector, drastic bed shortages have forced NHS hospitals to turn to the private sector to carry out non-emergency services. NHS Improvement reports that expenditure on outsourcing elective treatments to the private sector rose significantly from £241m in 2015/16 to £381m in 2016/17. For example, earlier this year we learnt that more than one-third of hip and knee operations are being carried out by companies such as Spire Healthcare, BMI and Nuffield.

    Desperate NHS Trusts have also been forced to increase their expenditure on private ambulances by a fifth in just two years, despite serious patient safety ramifications. Indeed, the Care Quality Commission has highlighted that some private firms use less qualified staff who are forced to work in poorly equipped ambulances, with insufficient infection prevention and inadequate clinical governance.

    For example, one patient transport contract was handed to a private company who sub-contracted to 20 other companies. When some of these companies ceased trading they couldn’t pay their ambulance drivers for eight weeks. Patients were routinely left stranded for hours often missing important appointments. Eventually this shambolic privatisation was ended and brought back in house.

    The unprecedented financial squeeze on the NHS, coupled with the private sectors’ ability to undercut NHS providers, means CCGs will increasingly be under pressure to outsource more contracts, despite concerns about the quality of service that may ensue. This is another reason why campaigners must join us in demanding the underfunding of the NHS comes to an end.

    Moreover, there have been shocking increases in hospital car parking charges, much of which has been contracted out to the private sector. Whilst thousands of disabled drivers and low-paid staff lost their free hospital parking last year, one of Britain’s biggest parking firms celebrated a 38 per cent jump in profits. It’s why Jeremy Corbyn committed Labour to abolishing car parking charges across the NHS.

    The sad truth is that privatisation schemes like these are increasingly, and disproportionately, affecting the most vulnerable people using our health service.

    But we can fight back.

    Just a few months ago my shadow ministerial colleague Justin Madders secured a major victory by forcing the government to back down on their outrageous plan to privatise NHS Professionals. This effective and successful public body saves the taxpayer around £70m a year, by ensuring hospitals don’t have to rely on expensive private staffing agencies.

    New privatisation fronts could well emerge too. There are fears that not only will Accountable Care Organisations (ACO) be a means to control local health spending through greater rationing and service cuts but that also they will be used as backdoor to private sector involvement in commissioning and providing local services too.

    It’s why last week I tabled EDM 660 demanding a Commons vote and full parliamentary scrutiny on Tory plans to push through the creation of these Accountable Care Organisations.

    And as the government attempts to negotiate new international trade deals we will be watching carefully, ready to call out any attempt to include the NHS in free trade agreements.

    Next year is the 70th anniversary of the national health service, our party’s greatest achievement built by Nye Bevan and opposed tooth and nail by Tory parliamentarians who voted against its creation over 20 times.

    Our commitment 70 years later is a fully funded NHS, reinstated and reintegrated NHS. An NHS restored as a public service, publicly provided with its democratic accountability strengthened.

    I’m calling on Labour members, trade unions, NHS campaigners, and patients to join me as we campaign for the future of our NHS. Just as Labour created the NHS and rebuilt it in government, we will again fight to save our NHS today keeping it universal in scope and there for everyone when you need it.

    First published by LabourList


    “One more term of Tory government after this should be enough to see off the NHS.  It will not collapse overnight and Ministers will not announce is abolition.  Rather, it will go the way of dental services, where more and more practioners went private until, in some areas, it has become almost impossible to find an NHS dentist.

    In a few days, a doctor’s conference will debate a motion calling on the British Medical Association to consider how GPs “can  be supported……………within a private, alternative model”. Nothing may come of this motion. and doctors  won’t walk out en masse.  But some time over the next few years, without anybody really noticing, significant numbers of GPs will start to charge for at least some services.  The numbers will grow, as will the charges.   The NHS will not die with a bang but fade away with a whimper.”

    Peter Wilby – New Statesman 3-9 November 2017

    This warning must act as a challenge to ensure our precious NHS receives adequate support and funding