NHS in crisis; Private profits cutting  public services to the bone

Jim Jepps

Crisis can be an over used word, but in the case of the NHS its difficult to get across the scale of the problem without using it. Three quarters of the NHS trusts in the UK are reporting that financial deficits are forcing them to make some form of cut backs this financial year. But, hold on, the government says its putting more money into the NHS than ever before.

For once the government is telling the truth - they are spending far more on the NHS than ever, but the cuts are still taking place... how on earth can they both be true? The answer is simple, it's not a question of how much money, but where it goes, and not only are we spending more money than ever as a nation on the National Health Service, private companies have become more deeply entrenched into the health service than ever before, on a level that would have been unimaginable even just fifteen years ago under the Tories.

NHS in crisis Channel Four News, STOP THE MASSIVE HOSPITAL RIP-OFFS The Mirror, Staff work unpaid overtime to help NHS BBC, Tough Choices Lie Ahead Warn NHS Bosses, UK Medical News UK


NHS in crisisThe NHS broken into pieces

The NHS has undergone two decades of ruthless fragmentation, splitting the service into pieces.

When the Tories began this process the idea was simple. If they were to sell off the NHS it was not possible to sell it in one piece, because there was no single company able to take on one of the largest employers in the world. Just like with the railways, by slicing the service into bite sized chunks they hoped to encourage potential buyers and encourage competition between previous allies.

So by carving the NHS into piecemeal fiefdoms (or Trusts) they were laying the groundwork for something far more fundamental. But even the initial stages did not stop there, a process of outsourcing work began.

This meant that work that may have previously been done by NHS employees, but was not directly health care related, like cleaning or catering, was often farmed out into the private sector, at greater cost, poorer service and far worsened working conditions. Out sourcing has now become the norm rather than the exception from maintenance to payroll to accountancy (Big Four step in to turn around NHS finances, Accountancy age, NHS outsourcing plan exposed, Indymedia) and each and every instance of this is an instance of financial mismanagement.

Private companies also began supplying health workers to the NHS via agencies, first undermining and then superseding the NHS 'bank' workers. These agency workers would often have a higher hourly rate than the NHS employees, but were working on zero hour contracts with no guarantees of work from one week to the next - more importantly the private agency would be taking a cut for every hour the agency worker worked, often without having to supply or do anything. That is public money going into the pockets of private companies for supplying staff that were previously organised by the NHS on more secure contracts.

Also services like old people's homes and care in the community services were carved into newly launched charities (that often went bust). These charities, even when they act in professional and competent manner, which is rare, cannot rely on any of the advantages of economy of scale - for training, staffing, payroll, etc.

New Labour did not simply leave this fragmentation untouched, they pursued a policy of deepening and widening that fragmentation and partial privatisation with a renewed vigour. Foundation hospitals and trusts, the brain child of the Blair government were completely opposed by the medical profession and unions. For example the BMA statement on foundation trusts read "Reforms of this type have an internal logic in which the financial strength of the individual organisation is pursued at the expense of other concerns and of competitors within the sector, and which is inevitably in tension with public sector values and concerns."

And public sector union UNISON said that "Foundation Trusts will undermine the provision of an integrated and planned health service and will reinforce inequalities in access to health care. They will have an extremely negative impact on the NHS and staff as there is an emphasis on meeting financial needs rather than health needs."

Currently 25 NHS Trusts have foundation status, and their record is hardly inspiring (BBC NEWS Foundation trust records deficit) but it is not unsurprising that Trusts are running up record deficits when there are so many people taking their cut. For example, the cost of operations has increased by 9% purely on the basis that private companies have a greater involvement in their delivery.

One area of increasing costs has been drugs which accounts for more than 12% of the NHS budget, all of which goes into the coffers of the drugs companies, despite the fact that we could take a lead from the Brazilian or South African governments and begin producing the same drugs at a far reduced cost by removing the profit motive from the supply of drugs.

The belligerent orthodoxy of the market, the idea of introduction of free competition and private finance has been revealed to be operating on an uneven playing field. As Martin Wicks stated (Keep our NHS public) "In fact there is no competition. NHS organisations are being instructed to hand over work to the private sector. In Yorkshire for instance, the Department of Health has instructed the Trusts in that area to increase the value of work given to the private sector from 3.2 million to 18 million. Brighton hospital has learned that 85% of its orthopaedic work will be simply handed over to a private hospital down the road. Oxford's Nuffield hospital is faced with closing up to half of its beds because it is losing work to a private hospital which has just been opened up nearby. There are many other examples. Between 10-15% of elective work will initially be given over to private companies, not as a result of competition but by instruction of the Department of Health."

Even the Tory shadow health spokesman Andrew Lansley has said  "I know that we needed to build hospitals and it is right to do so, but to do it, as the Government did, in a way that transferred little risk but large amounts of profit through PFI, is not necessarily the right way." (Hansard) Which, to honest is a bit hard to get your head around. But then thankfully he started blaming health workers wages for the health crisis which sets the world back the way you might expect it.




NHS in crisisThe implications for the resistance

The implications for those who wish to resist further attacks has been that organising campaigns, and trade unions has become that much harder.

Take a hospital that may have once had at most two employers, now there could five or six each with different service conditions, each in different sectors. Bringing all these workers into one union branch is an obstacle that is often (but not always) insurmountable.

There are some notable exceptions, like Colchester General where midwives, cleaners, catering staff and other health workers are all in one branch of unison and all have well trained stewards integrated into a single UNISON branch. But even in this case of good practice recruitment of agency workers and casual admin staff can seem impossible.

Coupled with constant reorganisations in the NHS - that not only demoralise staff but cost money and undermine the effectiveness of services - it leaves union members often disorientated and branches merge, split or simply wither on the vine.

Steve Webb, Lib Dem shadow health spokesman argued that the "constant revolution in the NHS is creating serious financial instability for Trusts. Ministers are making it impossible for Trusts to plan ahead because of their endless reforms. The Government is trying to sort out long term financial imbalances at breakneck speed, with devastating consequences for local services. " Unfortunately the Lib Dems simply want to see a more stable partly privatised NHS rather than one brought back into public hands and democratic accountability.

And when talking about any latest round of cuts often it will be services that are easy to cut that go first - mental health and learning disabilities, youth services, day services, the very services that have the most dispersed workforces which are therefore often the hardest to organise.


How much are we talking about?

The Royal College of Nursing (RCN) recently commissioned a report  that stated that "70 per cent of nurses say their trust is struggling to make ends meet. Nearly 40 per cent of nurses say wards have been closed at their hospitals in order to save money. And more than a quarter, 27 per cent, say they know of operations that have been delayed for financial, rather than medical reasons. "

The official government figures say that the total deficit in the UK for NHS Trusts is 1.6 billion between 167 Trusts (Hansard) and this does not include the official "efficiency saving" (sometimes called cuts by unreasonable people) of 769 million made this year.

It's hard to see what this might mean at the ground level, so if we look at the figures produced by Eastern Region UNISON of the deficits in the six counties that make up the region.

Norfolk 32.95 million

Suffolk 52.85 million

Cambridgeshire 32.2 million

Bedfordshire 13.96 million

Hertfordshire 46.14 million

Essex 28.15 million

So if we take Cambridgeshire (where I live) they are going to have to find 32.2 million pounds of savings, even though the government "hit squad" admitted that there was nowhere that cuts could be made. Nevertheless the mental health services are now having to cut around 3 million form day services, Addenbrookes hospital has had to close at least one ward and the small Newmarket hospital has cut 16 inpatient beds and the Young People's Service is facing a terrifying level of cut backs.

But whilst this helps illustrate what the cuts mean it also produces a strong element of nimby-ism in those who correctly oppose the slashing of services. David Hewitt, Lib Dem Cambridgeshire MP has argued against the cuts on the basis that the government is biased against Cambridge, Peterborough campaigners have called for the cuts to be shifted to elsewhere in the region and some Hertfordshire groups have argued on the basis of Hertfordshire exceptionalism.

These campaigners are not only on a hiding to nothing trying to shift the pain from one trust to another but also they are refusing to face up to the facts that the local health crisis that they oppose is utterly dependent upon the national government policy of private finance and fragmentation.

The only way that these local cuts can be fought is by forcing a national policy shift, and this has been why UNISON in particular has had difficulty getting fully behind a campaign to shift the New Labour ministers, because the leadership has been engaged in a battle within its own ranks to doggedly hold on to its relationship to the very government that has deepened the crisis .

So UNISON has been very good at combating Council Housing sell offs, because it does not require a direct confrontation with national government (and often on a local level they may be opposing Lib Dem or Tory councils) but pulled out of a lobby of Parliament on the NHS crisis earlier this year. This has got to change, Amicus and Unison are the key players if a real combative campaign is to successfully defend the NHS.

If these local campaigns, despite some of the problems in their rhetoric, can fuse with trade union activists to fight on both a local and national level we can create the seeds of a far more wide ranging and national campaign that might actually win the idea that the profit motive and the NHS simply do not mix.





Related links


Work stress finding in NHS survey BBC

NHS death bed tragedy The Sun

NHS overspending increases waiting times for patients Financial Times

Katie Grant- No news is bad news for our stressed NHS Sunday Times

NHS Trusts- who is to blame? Accountancy age

IMF warns Britain of 50bn hole in future NHS bill Telegraph

Post code lottery; in Norfolk NHS- no cash to pay for ops Eastern Daily Press on the same day in neighbouring Suffolk NHS praised for op after just 11 days Bury Free Press

Alzheimer's drug 'too expensive' for NHS Daily Mail

NHS Trusts slash staff to juggle debts Daily Mail

Biopirates- Bayer earns $379m from diabetes drug Indymedia




March 2006

> > home page > >