Many have commented that the current Health and Social Care Bill is only a framework, leaving the details for later or for development by the new bodies the Bill creates. It is claimed it is about putting patients and clinicians in charge, reducing bureaucracy and ending top down micro management.  What is actually in the Bill is a blueprint for creating a very different NHS, one which is based on competition and on a regulated market.  It follows the model for the previous privatisations of the utilities, treating health care as a commodity.  Whilst one third of the Bill is explicitly about the form and nature of the market, much of the rest only makes sense if you accept that is the purpose.  As many have pointed out, given the extensive powers currently vested in the secretary of state, and devolved to NHS bodies, the same aims could be achieved without any need for primary legislation.

NHS RIP

The Health and Social Care Bill has run into deep trouble because people have now had a chance to read it properly, and so can now understand the real intentions of this coalition government.  The Bill has little to do with patients or care, but rather is about changing our NHS from a planned and publicly accountable system into a regulated economic market – a market like that for gas, electricity, water, telecoms or trains.

We know this because we have been told that is the intention, including by the newly appointed Chair of the Regulator. He has said that NHS services will increasingly be opened up to competition, including on price, and that this transformation will be based on those that occurred in the regulated utilities.

David Bennett in interview with The Times, published 25th February 2011, stated:

‘How can you compare buying electricity with buying healthcare services?’…I would say … there are important similarities and that’s what convinces me that choice and competition will work in the NHS as it did in those other sectors.”

“We, in the UK, have done this in other sectors before. We did it in gas, we did it in power, we did it in telecoms, we’ve done it in rail, we’ve done it in water, so there’s actually 20 years of experience in taking monopolistic, monolithic markets and providers and exposing them to economic regulation”

The Health Minister told the Bill committee that competition law would play an increasing role within our NHS.

Parliamentary Question, Hansard, 7 March 2011, column 896W Tom Blenkinsop: To ask the Secretary of State for Health what recent assessment he has made of the likely effect of (a) UK and (b) EU competition rules on the operation of GP consortia. [44028] Mr Simon Burns: The Health and Social Care Bill itself does not extend the applicability of current United Kingdom or European Union competition law to the health sector of England. However, as national health service providers develop and begin to compete actively with other NHS providers and private and voluntary providers, UK and EU competition laws will increasingly become applicable.

And during the Bill Select Committee: Simon Burns, Health and Social Care Bill, Public Bill Committee, 15 March 2011, column 718“May I just explain this first? As NHS providers develop and begin to compete actively with other NHS providers and with private and voluntary providers, UK and EU competition laws will increasingly become applicable. The safeguards offered by those laws will therefore apply equally to all providers. In the health care sector, 90% of health care provision has been delivered by public providers fulfilling a largely social function. Organisations fulfilling a purely social function are not for profit and are not considered to fall within the definition of undertakings, so they are not subject to EU competition rules. Markets have been developing only in certain limited sectors over the past decade, as, for example, in elective care. However, in a future where the majority of providers are likely to be classed as undertakings for the purposes of EU competition law, that law and the protections it offers against anti-competitive behaviour will apply.”

To achieve this there have to be a number of fundamental changes and the Health and Social Care Bill makes them. Taken as a whole, they crucially change the nature of the NHS; changing not just the organisation and structure but changing the relationship of trust with patients. Healthcare is not like gas or water.

This is not something the Tories want to talk about, because they know they would not have public support. In fact, the aims that they claim for these reforms could have been better achieved through an evolutionary approach, without the need for primary legislation that is three times longer than the 1946 Act setting up the NHS in the first place.

Secretary of State (SoS) Andrew Lansley says himself he could have achieved the aims without the need for primary legislation, and claims that he has put in this legislation for the sake of parliamentary scrutiny.

As stated in statement on pause to the reforms, Hansard, Monday 4th April 2011 “As Secretary of State, I could have done most of this without the legislation: I could have just abolished most the PCTs and SHAs….but we are not doing that we are giving Parliament the opportunity to give the NHS greater autonomy”

Coalition ministers portray the reforms as modernisation or as an evolution of what was already happening.  This is of course misleading. The reasons are actually to change the fundamental system of the NHS, and to do it in a way that is irreversible. This could only  be achieved through a large amount of primary legislation.

What follows are some of the provisions in the Bill, which the coalition document don’t want to talk about but which go to the heart of making our NHS into a market.

Removing Secretary of State Responsibility

Clause 1 of the Bill starts the process by changing the duty of the SoS.  Since 1946 that duty has been to provide a comprehensive national service that is free at the point of use.  This duty made the NHS truly national.  The Bill removes this duty and replaces it with merely a duty to secure the provision through other bodies.  This is the first and crucial step in dismantling our NHS, even if it only involves changing a few words.

Clause 9 takes this further. This not only confirms that the SoS is not responsible directly for the provision of services, but that it is no longer the SoS that decides what the ‘reasonable requirements’ are of patients. These duties now fall to new bodies created by the Bill – the GP Commissioning Consortia and the NHS Commissioning Board (NHS CB), depending on which service area. This effectively means that it is no longer the SoS that decides what services should be part of the NHS, and therefore are provided for free as part of the NHS. The Bill does not give us a definition of a comprehensive health service; instead this decision is now given to commissioning quangos without democratic legitimacy. But then the new system is not about democracy, it is about the market. If a commissioner decides their patients should no longer be provided with a service for free, but they should rather pay for it, then this is what will happen.

Clause 22, paragraph 14 S, then gives consortia and the NHS CB powers to make additional charges for services that they decide should not be part of the NHS. And, unlike foundation trusts, these are not subject to SoS approval.

Removing responsibility from the SoS is important for the overall change to a regulated market because for a market to function properly, the SoS needs to be stopped from intervening. After all, there is no SoS for gas, telecoms or water, so there should not be a powerful one for health care.

Another clear interpretation of this market structure is that it is pointless complaining to your MP about your local NHS services as the MP will be told to take the matter to the regulators of the new market system – not the SoS.

Basing access to services on a market

It also means that in the future, the consortia which commission local services will be able to compete for patients. We turn patients into consumers; they are free to choose their GP and so to choose the GP Commissioning Consortia.  Different consortia can offer a different range of services to their customers. And because the Bill does not state that the consortia should cover set geographical areas, they can compete for customers. There is even the potential within the new structure for these services to vary depending on what extra charges/ top up fees patients are willing to pay – even if this does not happen in the next couple of years, the structures put in place allow and even encourage it. Ultimately this means that the range of services provided will be down to the market, and will lead to far greater variability in services that patients are able to access. This risks fundamentally breaking one of the founding principles of the NHS – services should not be distributed on the basis of ability to pay.

It also significantly harms public accountability. The consortia do not have any elected members on their board. In fact, they do not even need to have a board (Schedule 2, Part 1, para 3), and they do not have to make public how they have arrived at decisions. They are given great independence to decide their own formation and governance. After all, they will be accountable through a market (if patients do not like them, they can choose another consortium) rather than democratic means.  This change is wrapped up in the dishonest claim that the intention is to remove the SoS from the day to day running of the NHS and to stop top-down management – of course it does – it leaves it to the market.

The weak governance around commissioners looks dangerous. They could, at least according to what is actually in the Bill, start not only defining services as subject to charges but also finding ways to gain from being part of a provider which delivered these services!  Many GPs already have connections with provider organisations.  Both the national commissioning board and the market regulator could stop this happening, but they are not required to stop it.  The protection from conflicts of interest is weak.

The Bill takes away what we think of as the NHS and replaces it by something more flexible allowing the market to bring in new “products” but also allowing services to be edged away from being free at the point of need.  We have already seen this starting as existing commissioners limit or stop access to some services, bringing a post code lottery.

Opening up the market to new providers

Many people associate the current model of the NHS with NHS providers (e.g. local NHS hospitals), who dominate provision. However, these are to be replaced with a huge range of non-NHS providers; social enterprises, private companies and third sector.  The SoS will have no powers over these providers at all, they will simply operate within the market under the terms of licenses granted to them by the regulator (Part 3, Chapter 4).  This break up of the NHS was not exactly prominent in any manifesto or in the coalition agreement.

The powerful new economic regulator has the ability to adjust payments to providers to make a sure there is a fair playing field between providers (Clause 115, para 6), to encourage other providers to enter the market, essential to making competition healthy. This means that NHS pensions could be seen merely as a ‘market distortion’ putting pressure on providers in a ‘race to bottom’ on employee conditions.

Making NHS providers independent

In order to open up the market properly, it is vital that NHS providers are also made independent so that they do not hold a ‘special place’ within the new market system – they are just another provider. In order to do this, the Bill sets out how all current NHS providers will have to become Foundation Trusts by 2014 (Clause 176), or they can opt to become a social enterprise or even be broken up or sold off through insolvency.  The Foundation Trusts are then made autonomous through measures including:

  • Freeing them up to treat as many private patients as they choose, with no obvious defined obligation to treat NHS patients (Clause 162).  For some specialist hospitals you can already hear of plans to greatly expand their private patient base which pays 3 or 4 times the price of the NHS.
  • They are set free from employing staff based on centrally agreed terms and conditions
  • They are free to rack up as much debt from private sources as they can (Clause 160)
  • Any financial support given to them by government bodies has to be on the basis of commercial rates – there are no subsidies or support with capital costs available that will benefit patients (Clauses 160 and 135). Otherwise, they would be given an unfair advantage over other providers.
  • No approval needed for acquiring other entities, merging (Clauses 165-166), or changing their own constitutions (Clause   158).

So basically they retain the blue logo but not much else.  They will act like commercial organisations.

Ensuring NHS providers act within a market system, can fail and can shut

The Bill removes elements of public accountability of NHS hospitals to ensure their decisions about services are taken for reasons related to competition within the new market rather than because of democratic concerns. The current system gives local people opportunities to prevent changes to services and closure of facilities through public consultations and local authority scrutiny committees, which can refer proposals to the SoS.  But the market can’t work in that way; markets need providers to be able to enter and exit different services more easily. Therefore, in the new Bill, public consultation and local authority scrutiny are required only for services designated as ‘essential’ only (Legislative Framework, p109-110 and Part 3, Chapter 3).

Markets need providers to be able to fail and exit, so that they can be replaced by others. If providers start to get into problems there is no longer any sense in which the rest of the NHS steps in with support and assistance to prevent failure; that kind of supportive collaborating NHS has gone.  This is a market, so if you fail you go into insolvency (Clause 125), and any remaining assets can be sold off to the highest bidder (Clause 129). If some services are considered essential, special administration takes place with vital services maintained, but other assets are sold off and the staff redundant or transferred (creating a two-tier system of services) (Clauses 126-129). There is little consideration for what might actually be best for local patients. The creditors’ interests take priority over the local community interests.  That’s how markets work.

In the past providers which got into problems could be assisted by other parts of the NHS, even Foundation Trusts have had such help, such as loans.  A failing Foundation Trusts could have lost its status but be protected as an NHS Trust.  This kind of support and survival is portrayed as supporting failure, but it is really about protecting the services patients rely on.  Markets need failures and this kind of support would be anti competitive.

And for the market to work better, it is important that the range of ‘essential’ (designated in the terminology of the Bill) services that cannot be closed easily is as small as possible. Therefore, under this Bill, commissioners have to pay a fee for it (Clause 136), and there is an enormous bureaucratic process to get through involving applications, consultations and possible appeals before services can be designated as essential (Clauses 76-81).  It has been made clear that in most urban areas few services could be given the status of being designated as there will be alternative providers available, you just have to go a bit further like the people have to do in rural areas.

Simon Burns stated ‘A designated service will be one to ensure that across the country there are appropriate services to meet the needs of the people. There are a number of A&E services in London, so there would not be a need to designate them… If I was talking about Cornwall, A&E would be designated there.’ HSJ, 3 March 2011,

Overall it can be summed up like this: No exits, no new entrants, no market.  So the Bill takes away the ability of local people to contest closures of what they regard as their services and facilities, they are just told use the alternatives, and the Bill allows any failed hospitals to be closed down or transferred to the private sector.

Removing system planners

The Bill then abolishes PCTs and SHAs (Clauses 28-29).  This is claimed to be about reducing bureaucracy and bringing GPs centrally into the commissioning of services.  But the evidence is that market systems result in more bureaucracy and transaction costs.

Professor Ian Kirkpatrick, professor of work and employment relations at the University of Leeds, Why the NHS reforms could result in more, not less, managers/: “The White Paper talks about ‘radically simplifying the architecture of the health and care system’, but ironically the proposed changes seem to point to a far more complex system. More importantly, far from reducing the need for managers and administrators…the demand for these services will be greater than ever”

But what this Bill does is to remove bodies which are properly publicly accountable and which play a major role in managing the wider health system.  It replaces them with new quangos which have only a limited focus.  Of course in a market there is no need for planning or commissioning, the whole point is that the market sorts things out.  And there is no point at all in having a market system and then trying to put democratic control or even public accountability on top – it does not work. So any attempt at regional system strategic planning or management, present in the NHS in some form since its inception, is removed.

Outlawing collaboration and co-operation (aka anti-competitive behaviour)

For a market to work, you need competition to be at the heart of the system. It is unacceptable for commissioners to work with one particular provider (presumably an NHS provider) to improve services within an area, as this would mean the provider is treated unfairly in comparison to competitors. It is also unacceptable for commissioners to work with providers to decide between them how services are best provided for the local population, or for providers to work together to agree on how services are set up, because this should be decided by the market not by planning.

This Bill makes sure of this by enforcing commercial competition law (both domestic and European) across the NHS (Clauses 64-65). Before this Bill, rules covering competition were tailored to the NHS, included a proper place for co-operation, and were enforced by a body that only had powers to advise other NHS bodies. The new Bill applies full blown commercial competition law to the NHS, and makes sure that is enforced by a powerful new body. This new body, the economic regulator, has the power to direct, instruct and fine providers (Clauses 94-100), and direct and instruct commissioners (Clause 68) to make sure that the market rules over all other considerations. Collaboration and co-operation take a back seat, while market ideology rules.

Forcing the market on commissioners

There is another obstacle that needs to be overcome for the market to properly develop. Many commissioners do not believe that a full blown market is the right solution for the NHS. They are likely to choose promoting collaboration with local providers rather than allow the market to reign supreme. Therefore, there needs to be a way to force the market on commissioners.

This is provided not only by competition law, but also by the ability of the SoS to force commissioners to competitively tender the range of services that he chooses (Clause 67). Local expert commissioners at a local level are not allowed to decide how best to buy services, but rather the preferences of the SoS take precedent. These regulations are then enforced by the economic regulator that has the ability to nullify contracts and instruct commissioners if need be (Clause 68).

There also needs to be a presumption for services in favour of a market. This is provided by the assumption that ‘any willing provider’ will be used for services, as stated in the White Paper and already enshrined in procurement rules set by the coalition last year (White Paper, p17). This means any provider who can meet the standard for quality (set as a minimum standard by the quality regulator the Care Quality Commission) can deliver the service at the NHS price – patients can pick from any willing provider. It does not matter what impact this will have on fragmentation of services, on the ability of clinicians to collaborate, on the quality or access to services in the region as a whole, because it is the market that has to respected.

Forcing the market on providers

Because the current NHS providers, like the large hospital trusts, have a natural monopoly over some local services the Bill brings in methods to deal with this distortion to competition.  It sets out how the regulator can require a provider to open up its facilities and services for use by competitors (Clause 101, para 3).  Our NHS assets built up with public money over generations will be effectively held privately and leased back to willing providers – which is pretty much what happens with rail and electricity supply. Along with bringing in the private sector to manage failing hospitals, selling off the assets to the private sector, and the economic regulator correcting prices for market ‘distortions’, that should be enough to get the market going.

Long term objectives

Over time as the market develops and there is far more choice of provider for most services, and patients begin to get personal budgets, or direct payments to pay for their care – then you have a proper market with the patient choosing the provider and paying them – and the commissioners are no longer necessary.

Of course, the market will not simply dominate in every area from the very moment the Bill is passed. But if this Bill becomes law then the structure of the NHS has been changed permanently so that it continually promotes more and more of the market driven by the powerful competition regulator, and less and less of the core values we currently hold for the NHS – equal access, collaboration and public accountability.

The LibDems claim not to support any of this – but they signed the Bill and voted for it on second reading.  The Tories simply refuse to talk about this. They talk about how the NHS is failing (using dodgy statistics) and therefore needs to be changed, but are not honest about the fundamental changes they are making. Yet, to make matters worse, the changes are irreversible. Once commercial competition law is applied to the NHS, it cannot be unapplied because the European courts will sit in judgement. Once public assets have been sold off to private providers, they will only be able to be bought back at a very high cost.

However much the coalition tries to deny it that is the reason we have the Bill with its 281 clauses and 22 schedules.  We get a regulated market, whether we want one or not.

The coalition claims this is fantasy and will not happen and that there are also restrictions in the Bill.  The facts are in the Bill, coloured by statements by ministers and the chair of the economic regulator.  All that has been described above, and more, is in the Bill and it could be used in the way described, if not now, then in future should we have an even more market obsessed government.

Irwin Brown

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