Serious concerns are developing within the Labour movement about the growth and dependency of the NHS on private finance. The private finance initiative (PFI) and public private partnerships (PPP) in the NHS and in other public services pose a serious risk of developing into full scale privatisation.

When significant amounts of state capital are available to the Treasury, it should not continue to starve the NHS of capital and insist that NHS managers market test every capital building project for PFI before consideration is given to state funding. Government capital attracts much lower interest rates than private capital, and without the need to undergo the PFI process, there is a much shorter lead in time for schemes. The trend over the last 25 years has been to reduce the availability of state funding and encourage private investment, a truly Thatcherite policy that the Labour government should surely have abandoned by now.

It is not simply concerns about delays, profiteering, poor value for money and mortgaging the future that characterise PFI and PPP schemes, but the combination of privatising the ownership of both NHS stock and its workforce that alarms the SHA. Many PFI schemes include the transfer of key NHS staff, which will erode the essential nature of the NHS: an NHS hospital, owned by the NHS and staffed by NHS workers.

There has already been competitive tendering, where poorly paid ancillary staff were further exploited, often by seriously incompetent private contractors. Modern health care is a multi-disciplinary endeavour, where porters and ancillary staff are also key members of the team. The resilience of the NHS, with its public sector values, during the Thatcher years owed much to this feeling of participation and ownership.

The SHA, with its 70 years of support for socialised health care, is opposed to dependency on PFI and PPP as a means of funding NHS modernisation. Some people say it doesn’t matter who owns the building and who employs the staff. However, the Duke of Westminster was not willing to give up the ownership of his estate in response to the suggestion that ownership didn’t matter! Buildings should be owned, and health service staff should be employed, by the NHS.

The SHA acknowledges that the NHS needs reform, and that it can be inflexible. The SHA endorses many of the Government’s health policy initiatives and aspirations, including reducing health inequality, and the modernisation programme. The SHA is not opposed to change. The SHA approves of adopting solutions that work.

The SHA welcomes the framework of national priorities and a system of accountability, inspection, and intervention to maintain basic standards across the country. The SHA wishes the government to devolve power to front line professionals and set them free to innovate and develop much needed services. Most will only require sufficient resources to do just that. And the SHA welcomes front line staff having proper recognition for the work they do, real incentives for better performance, higher morale and greater fulfilment.

However, the SHA does not understand why the government continues to believe that introducing the profit motive will work in health and social care. The SHA does not object to more use of not-for-profit organisations as stakeholders, but not as shareholders!

Both as the recipients and as providers of health care, people have learned to ask for evidence that a new procedure is safe and effective before it is used. As citizens, they would similarly like to see some evidence before experiments are tried on the NHS, especially experiments that will alienate most of the workforce and mortgage the future. The initiatives that have already been introduced, and the extra funding that accompanies them, need to be given time to work.

The SHA does not object to the use of spare capacity in private sector hospitals to perform operations on NHS patients where it makes sense to do so. Acceptable examples might be to keep elective care going during a time when emergency admissions are causing cancellations. But this must be regarded as a temporary expedient, to be utilised only until NHS capacity is increased.

The reduction in acute hospital beds has gone far enough. Standards of safety in private hospitals are not always as high as in the NHS, and it is not sensible to encourage NHS staff to moonlight, nor to pay private employers to entice NHS staff, trained at public expense for the NHS, away from the NHS to profit from their work.

The SHA does not understand why private sector managers are considered to be more effective, nor why proposals have been made to employ them to run some of the new stand-alone surgery centres. As these centres have never been run inside the NHS, how can the government conclude that the private sector will run them better? And why does the government wish to develop stand alone surgery centres?

The point of a hospital is to concentrate medical resources in one place in order to deploy them to best advantage. If patients develop complications in a stand alone centre they will have to be transferred to an acute hospital. Would it not therefore be more sensible to build these centres on existing hospital sites? The SHA does not object to new ways of working so long as they are appropriate to the service and acceptable to staff, and not just a crude attempt to save money or give the appearance of “modernisation”. New grades of intermediate professionals can and should be introduced. Hospitals can and should work into the evening and over weekends more than they do.

Private sector managers have an easy target. They are required to make profits and can choose whom to serve without the need to provide the universal cover that is expected of the NHS. The more profit the better.

Public sector managers have a harder task. They have many targets to meet that are not compatible with each other, and they are required to provide a comprehensive service to the population. So why would private sector managers be more effective?

It is proposed to extend PFI beyond the hospital sector into primary care, social services and the provision of equipment, and to employ private sector management expertise to run NHS buildings and IT systems. The SHA’s objection to these developments is profound.

What motivates the private sector is profit. It is not established for the public good. The private sector has commercial obligations to shareholders. In the planning process, the interests of the shareholders are put on the same level – or higher – than the needs of the patients. Government contracts are an easy touch, where there is no need to compete for customers.

The government should approach the extension of private involvement with capital projects with great caution until those projects already undertaken have been fully evaluated. There have been some spectacular failures in this area, the computerisation of the Passport Office and the outsourcing of Housing Benefit being just two of the best known. PFI hospitals may equally turn out to be expensive long term disasters.

The SHA recognises that the private sector supplies much of the goods for the NHS, such as food and medical supplies. Medical instruments, pharmaceuticals and modern technology are researched and developed and then sold to the NHS by the private sector. But this international market is quite different from the ownership of NHS buildings and the employment of core staff. And government policy and bulk purchasing by NHS Supplies can mediate the relationship between private sector suppliers and the NHS.

NHS managers are given little option about PFI funding of major capital schemes. The SHA would like the government to publish the criteria governing PFI schemes, making it clear to the public, the staff and the management what the advantages of this option are. These should be based around the following questions, which should be answered satisfactorily before more PFI schemes are agreed:

  • What time frames are built into the planning and tendering phase of PFI schemes?
  • Do PFI hospitals come in more on time and closer to budget than those conventionally financed?
  • Over the length of the contract, are they cheaper to run and do they provide better value for money?
  • Do they provide greater or lesser flexibility in service provision?
  • In what circumstances do they improve the quality of care?
  • Can they demonstrate accountability to the local population?

People do not want anyone to make a profit out of their illnesses. No one should have an incentive of any kind to prolong anyone’s stay in hospital, nor to subject them to treatment that they do not need.

So where is the sense in employing private contractors to do for the NHS what could be done better by in-house NHS staff? Competitive tendering led to the ‘hiving off’ of cleaning, catering, laundry and other support services and thence to dirty hospitals, poor quality food, more hospital acquired infections, and a breakdown in the ability to control essential services.

Contractors make profits by attacking the terms and conditions of the lowest paid staff, many of whom are black or female, and their health suffers as a result. If the government is introducing contractors because NHS terms and conditions of employment are not flexible enough, then it is the terms and conditions that should be changed.

Some of the firms involved are unprincipled and unscrupulous. Involving them in the running of the NHS could invite catastrophic failure on the scale of Railtrack into the NHS. PFI contracts are not a good deal for the NHS, because they end up with more profit than is justified by the risk they carry. So the SHA opposes Government policies and proposals that support the expansion of private sector management.

The SHA also opposes the extension of user charges into NHS clinical services that allows NHS bodies to charge for non-nursing elements of care. This could put at risk the fundamental principles of the NHS that everyone has fought so hard to retain. There should be a very extensive and public debate about what should and should not be provided free as part of the NHS, and what should be available for an additional charge.

The SHA wants to see real and lasting improvements to the nation’s public services. The SHA does not want to see speculators making money out of them. That would not be an improvement.

The popular perception that the Labour Government is moving in this direction can only help to undermine belief and confidence in the NHS amongst both the public and NHS staff.

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