arket Prescriptions is the opening chapter
of NHS-PLC. It carefully chronicles the numerous private
companies that now have their fingers in the NHS pork barrel.
From pharmaceutical to construction companies like Balfour-Beatty,
Tarmac, Jarvis and Siemans reaping rewards from the Private
Finance Initiative (PFI) to the transnational health care
corporations such as BUPA, PPP, United HealthCare, Kaiser
Permanente, Westminster Health Care and Capio, who are all
seeking new market opportunities through joint ventures with
In her new book, Allyson Pollock recounts how she questioned
Gordon Brown on the rationale behind PFI, given that private
borrowing is more expensive, and that the risks were not
in practice transferred to the private sector. His response
was to repeat the mantra that the public sector was bad at
management and the private sector is more efficient.
In what way has Blair’s NHS shifted from Bevan’s
egalitarian vision of a service ‘free at the point
of delivery for all who need it’?
“The story begins long before Blair. Since 1979 we’ve
seen a creeping process of privatisation which was quite
covert to begin with, but is now overt. All Blair has done
in many ways is to implement the policies of privatisation
begun by Thatcher and take them to their logical conclusion
with the break up of the NHS. With the removal of direct
parliamentary accountability and its replacement by a regulator
we see the model of a privatised welfare state.”
So what are the main features of NHS PLC? Once again, an
historical view is necessary she argues. “It is a process
that could not be achieved overnight. The NHS began as a
nationalised hospital and community services infrastructure,
with staff, especially clinicians, nurses and doctors, on
national terms and conditions and also national ownership,
control and accountability. The book sets out in some detail
how privatisation has been achieved. Complex mechanisms have
been used through the PFI and direct contracting out of services
to the private sector.
Moving from an internal market, the Tories set up system
of buyers and sellers and shadow pricing systems in 1991.
This took more than ten years to bed down. The Government
under Labour is moving to a full market introducing ‘for
profit’ private providers. Now the NHS is the sole
funder with a plurality of providers.”
So how would she counter the view of Brown and Blair that
PFI and PPP is not privatisation just allowing some small
measure of marketisation and competition to make services
more efficient and effective?
“The argument can’t be answered by crisp soundbites.
There is no simple rebuttal. The book details the complex
processes that have been at work. In asking do markets make
services more efficient you have to ask do they actually
meet the basic goals and principles of the NHS which is universal
care, services free at the point of delivery, provision on
the basis of need and access for all. We know that markets
operate by segmenting the risk pool. We now have the introduction
of winners and losers. In terms of services we know this
means the ability to pay or the ability to access the services.
The problem is in the way the government is establishing
the new NHS, which is very provider dominated. Increasingly
the provider’s eye will be turned to the balance sheet,
the need to make profits from investment. So the problem
is that it incentivises hospitals and hospital providers
to behave in certain ways. If they have always got their
eye on the balance sheet they have to select the most profitable
patients to balance the books. Or they have to get into income
generating activities which is not the core function of the
We see these scenarios being played out in the new Foundation
Hospital Trusts, which will no longer be bailed out by the
government when they get into financial difficulties, although
inevitably they will.
The real strength of the NHS for its first 50 years was
its geographic tiers, geographic planning structures, plans
for vulnerable groups, be they the mentally ill or the chronically
sick, on the basis of need and putting in services to meet
these needs. The new providers and Foundation Trusts will
be planning services on the basis of their balance sheets.
The element of competition is that providers will be competing
among themselves to provide the most profitable services
and treatments. Inevitably some treatments and services will
be left off the list. This will include accident and emergency,
mental illness, long term care, acute geriatric care and
control of chronic diseases. Evidence of this is clear if
we look at the US, the model NHS PLC is based on. The US
has a health maintenance organisation (HMO) which is provider
dominated. Providers are driven by the same sort of financial
structures as the new NHS. Indeed the new pricing structures
are a direct import from the US. So what see in the US is
that the unprofitable treatments, patients and conditions
are simply left off the list. This is not the same tradition
of providing care for chronic illness, or people with learning
difficulties or disabilities, irrespective of ability to
But what did she think about the argument that public services
did need reforming. That they were bureaucratic, top down
structures, often remote from the people, the users and the
providers. Could Blair have taken another route to modernisation?
“The book tries to look at the causes behind the symptoms.
Everybody knows a bad doctor is one who will just look at
the symptoms and not try to understand the causes of the
problem. Whether talking about education, transport, or health
it is all too easy to talk about bureaucracy, lack of responsiveness,
these are simply symptoms. We need to ask why.
On bureaucracy we know that all large complex organisations
have to have one to make them work. The problem is if you
look at market-based systems, bureaucracy is not actually
geared to meet the needs of patients but those of the bottom
line. A huge share of income actually goes on marketing,
transaction costs, billing, administration and invoices.
So in the US bureaucracy, even in the not-for-profit sector,
can account for 25% to 30% of the operational budget. Whereas
in the UK it was always around 6%, this has doubled to about
12% as a result of the internal market. So we need to ask
how this money is being used. The second issue is about user
involvement and public accountability”.
These are not the same thing, she hastens to add. “We
know that the NHS at its outset was less than satisfactory,
as many public services are, but that does not mean we shouldn’t
be always aiming to reform and improve. We forget at out
peril this historical legacy where people were fighting from
within and without to improve the NHS. This did not mean
moving to a market-based system. It is wrong to conflate
the two arguments.
If you look at the new systems of public accountability
they are individualistic, they are consumer based and not
geared to meeting population needs and have absolutely no
element of democratic accountability. Indeed, even the weak
systems we had in place, like Community Health Councils (CHCs),
have been diluted and replaced. CHCs had an important statutory
role and right of appeal to the Secretary of State for Health.
CHCs were never entirely satisfactory nor particularly robust.
In some areas they functioned better than others.
But CHCs up and down the country have been opposing closures
of services resulting from PFI. One of reasons why the government
was so keen to extinguish them was because in some areas
they were doing their statutory job of challenging decisions
on behalf of the local population. They could undertake complaints
at individual level, they kept an eye on services like chiropody
and mental health and challenged reorganisations where they
were not in the public interest. The Government didn’t
like this. If you look at the extraordinary success of CHC
campaigns in Birmingham, Kidderminster and Hertfordshire,
where they became very good public watchdogs, they caused
the government great embarrassment.
Local Authorities should be watching this carefully because
increasingly that whole strength and vision of population
planning, the hallmark of LA services and the NHS, is being
lost. The market provider-oriented focus does not take into
account local needs. This is as true of education or transport
as it is of health. If you give the providers all the control,
their mission has to be to exclude, to cherry pick, to cream
skim the more profitable services and individuals.
The other big principle argument of the government is that
it doesn’t matter who delivers care as long as it is
provided. This is a travesty because the great strength of
national, population based systems is that you have the element
of risk pooling where groups are sharing the risk. In the
case of health it’s the poor and the rich, the sick
and the healthy.
The risk pool is a basic principle. The postal services
operation is the best example where the people of Shetland
and Orkney or in rural areas are not penalised. They will
pay the same price as those living in London. The Government
is now dissolving the risk pool. It’s using an insurance
approach, fragmenting, decentralising budgets and devolving
the risks. The costs of care and the burdens are falling
to much smaller communities and much smaller risk pools.
This is exactly what happens when you privatise. You break
up the risk pool. Then people say that health or education
is failing, so why not privatise more.”
Pollock reserved her real bile for new Labour and its think
tanks like the Fabian Society. “They appear to have
forgotten more than 150 years of carefully documented, detailed
analysis by Florence Nightingale, the Webbs and many others
who were arguing for public health and education. They understood
only too well the issue of the risk pool and public service
delivery. It is a great indictment of the left that they
haven’t actually bothered to acquaint themselves with
the meticulous arguments, evidence based analysis and science
of the early Fabians.
Instead they’ve been caught up in the mantra of ‘it
doesn’t matter who delivers care’. It wasn’t
a right or left argument, it’s about what was a sensible
way to provide public services and what kind of society we
wanted to live in. This is about the basic principles of
Unlike the early Fabians today’s young males in think
tanks have never actually worked in these areas. The ethos
of public service has completely deserted the think tanks.”
* NHS PLC-The Privatisation of Our Health Care, Allyson
M Pollock, Verso £15.99