The NHS is 75 years old today!

I fully support the idea of a National Health Service….. here is some history of how it came to be and where we are now:

READ ON MEDIUM: HERE OR BELOW:

The Emergency Hospital Service (later Emergency Medical Service) was established at the outbreak of World War II in 1939, giving central government a right of direction over voluntary and municipal hospitals. The service was a loose alliance of separate organisations, working together to deal with a national emergency, but paved the way for separate and competing institutions to come together as part of the National Health Service.

Beveridge Report (1942) recommended a government-run benefit system to help people from the ‘cradle-to-grave’. As part of the report, Beveridge set out a plan to put an end to what he called the ‘five giants’ — Poverty, Disease, Ignorance, Squalor and Idleness(unemployment). The main scheme was universal — everyone had a right to it based on contributions. There would be universal access to education and to health services. These would be funded from taxation and would be free at the point of use. Again everyone in work would pay, but in this case, since taxation increased with increasing income, the rich would pay more. The package overall gave meaning to the proud boast that the welfare state provided care for everyone — protection ‘from cradle to grave’. For it all to happen, however, there had to be full employment.

A major issue that later split the Labour Party was whether a future NHS should be run by local authorities, or quite separately on a regional basis. During the war the Conservatives produced the first White Paper on a future service in which local authorities would lead. (1944).

But after Labour’s election victory in 1945 Bevan presented to the Cabinet a radically different plan favouring nationalisation of all hospitals, voluntary or council, and a regional framework. After much tough negotiation this plan went through, with modest concessions.

The NHS Act 1946, which came into force in 1948, was welcomed by the public who were worried about the risk of epidemics spreading from other parts of the world — Measles, a highly contagious virus, for which there was no vaccine as yet, was particularly feared because in some people it resulted in blindness and brain damage.

The National Health Service started in 1948 in a society weary but disciplined by war, and accustomed to austerity.

It is difficult for us to imagine what life was like without ‘free’ health care and the difference that the

NHS made to people’s lives.

Public Health England inform NHS choices & decisions — PHE Responsibilities:

Making the public healthier and reducing differences between the health of different groups by promoting healthier lifestyles, advising government and supporting action by local government, the NHS and the public

Protecting the nation from public health hazards

preparing for and responding to public health emergencies

Improving the health of the whole population by sharing our information and expertise, and identifying and preparing for future public health challenges

Supporting local authorities and the NHS to plan and provide health and social care services such as immunisation and screening programmes, and to develop the public health system and its specialist workforce

Researching, collecting and analysing data to improve our understanding of public health challenges, and come up with answers to public health problems

NHS Constitution: The 6C’s

The Private Finance Initiative (PFI) began life in November 1992, two years after the enforced departure of Margaret Thatcher. Chancellor Norman Lamont delivered an Autumn Statement which announced:

“…the Government have too often in the past treated proposed projects as either wholly private or wholly public. In future, the Government will actively encourage joint ventures with the private sector, where these involve a sensible transfer of risk to the private sector.”

Up to then the Tories had shown little interest in investment in public sector infrastructure, controlling “public spending in general and capital spending in particular”.

Successive Labour Chancellors had also dutifully followed the advice of the Treasury, and seen it as their role to strictly control public spending and public sector borrowing.

This resulted in mounting private sector pressure for profitable contracts to be opened up. It had also resulted in the nationalised industries being starved of funds and in-house pressure for their privatisation to escape the financial constraints.

Thatcher’s government had eagerly privatised the nationalised industries — but had prevented privatisation of the NHS, which faced an unprecedented squeeze on its budgets (since surpassed, first by the squeeze imposed from 2010).

PFI appeared to offer a way to keep public control of the services supplied in public facilities while turning to the private sector to provide funding, to take on the construction risk and to manage the facilities over the life of the asset according to a contract agreed in advance … and to generate very lucrative returns for shareholders as a result. It offered many of the benefits of privatisation to the construction and banking sector, while leaving responsibility for paying for the new buildings in the public sector, guaranteeing the flow of funds to cover the rising bills.

To embrace PFI as a policy meant breaking from rules specifically designed to guard against public sector bodies embarking upon schemes which might undermine tight controls on public spending.

However while it breached these rules, PFI was clearly in keeping with the post 1980 ideological frameworks.

Lamont’s successor as Chancellor, Kenneth Clarke, was an even more enthusiastic promoter of PFI, which he famously summed up in a 1993 speech to the CBI as:

“Privatising the process of capital investment in our key public services.”

The policy was eventually branded as the Private Finance Initiative — PFI — although the acronym was soon to be parodied as “Profits For Industry”, “Profiting From Illness,” or simply “Pure Financial Idiocy”.

PFI required projects above a certain minimum scale (in the NHS this was initially above £5m) to be opened up for bids from the private sector to finance the scheme, with repayments over a prolonged period of 25–30 years or more. Rather than owning new hospital buildings, the NHS Hospital Trusts, would become lease-holders, required to make annual, index-linked payments for the use of the building and support services provided by contractors. Hospitals built on this basis would no longer be public assets, but long-term public liabilities incurring increasing payments for a generation or more ahead. These capital schemes were not investments, but new forms of public sector debt.

NHS trust management would be left to control clinical care ONLY, while other support services including maintenance of the hospital buildings was to be done by profit-seeking private companies.

The 1990 Act had also established a new system of “capital charges” under which NHS Trusts had to pay a 6% charge on their net assets each year to the NHS Executive.

In November 1994 Clarke went further, and proposed a massive £5 billion reduction in public spending, telling the CBI conference that in future the Treasury would only provide capital for projects as a last resort — “after private finance has been explored.”

Progress on PFI contracts was slow. By July 1996 angry and frustrated CBI leaders warned Clarke that PFI could fail without more decisive action. Tory ministers believed their short Bill that was passed was sufficient — but they were soon proved wrong when one of the banks involved in the Dartford Hospital project raised doubts.

So despite all the negotiations and considerable expenditure on legal and accountancy advice, no hospital PFI schemes were signed under the government which invented PFI.

Some prominent Tories even warned that PFI might in fact prove not to be such a great idea after all.

“The government itself can always borrow money more cheaply than any private sector borrower, so the efficiency test of a private finance project has to be real………. I suspect that in the long run some of these projects will go wrong and appear again on the Government’s balance sheet, adding to public spending. We shall see.” — Norman Lamont, writing in 1999

IN COMES LABOUR:

Tony Blair won the 1997 election with a massive majority, raising high popular expectations of radical change. However, to the dismay of many, Blair’s New Labour government appointed ministers even more attentive and eager than the Tories had been to satisfy the demands of the banks.

The new government’s only legislation on the NHS in 1997 was another short Bill to facilitate PFI. The National Health Service (Private Finance) Act was pushed through with just one amendment allowed, and with one aim in mind — to “remove any element of doubt” among the bankers that, despite all the tough-sounding rhetoric insisting that PFI contracts transferred risk to the private sector — there was no real risk at all, and their money was safe.

The health minister who pushed the new Bill through parliament, Alan Milburn, made clear the Bill was intended first and foremost to give the bankers just what they wanted: “It’s about removing doubt, providing certainty, and above all getting new hospitals built”.

A Labour peer, Baroness Jay revealed who was effectively dictating the legislation: “the banks concerned have seen and agreed the wording of the Bill and have made clear that it satisfies all their concerns.”

New Labour had completely changed its position on PFI, from a sceptical rejection in 1993, to embrace the policy enthusiastically and nurture it as their own in 1997. New Labour ministers now insisted that for the “overwhelming majority of new hospitals” limited availability of public capital meant it was now “PFI or bust”.

Two years earlier Margaret Beckett, as shadow health secretary, had toughened up Labour’s critical response, telling the Health Service Journal: “As far as I am concerned PFI is totally unacceptable. It is the thin end of the wedge of privatisation.”

But in the summer of 1996 Shadow Treasury minister Mike O’Brien announced a reversal of New Labour’s policy: “This idea must not be allowed to fail. Labour has a clear programme to rescue PFI”

The “rescue of PFI” was duly included in New Labour’s 1997 manifesto, sitting strangely alongside promises to scrap the NHS internal market. The pledge to scrap the market rather predictably proved to be an empty one: but the promises to implement PFI were sincere enough. By the spring of 1998, PFI was declared to be: “A key part of the [New Labour] Government’s 10 year modernisation programme for the health service.”

While Kenneth Clarke had openly boasted that PFI would generate new profits for the private sector, New Labour, insisted using private investment to modernise public services was a “partnership,” an example of the ‘Third Way’ , finding common ground between neoliberalism and social democracy. Despite its popularity with New Labour ministers (most notably with the Treasury team) PFI soon began to incur the increasingly vociferous opposition of the BMA, the Royal College of Nursing, UNISON and almost all trade unions, local campaigners in affected towns and cities, and a growing body of academics.

PFI came to be associated with funnelling profits to the private sector and contracting out/privatisation of support services. Nevertheless as soon as the 1997 Act went through Parliament the go-ahead was suddenly given to 15 hospital projects in 1997, prior to devolution, so the first list of schemes agreed included one in Wales and three in Scotland.

17 of the first 22 PFI hospitals were costed at below £100m. Even including the more expensive schemes the first wave schemes averaged less than £100m each. However most first wave PFI hospitals — which in most cases brought sharp reductions (ranging from 20%-40%) in bed numbers — struggled both financially and clinically as a result of flawed schemes. Several of these same schemes are still in severe difficulties now, 23 years after the first of the PFI hospitals opened.

The bed reductions came from a combination of efforts to hold down costs by restricting the scale of the new buildings on the one hand, and on the other hand the involvement of management consultants committed to the introduction of “innovative methods,” who made hugely over-optimistic assumptions on the increase in throughput of patients per bed that could be achieved through the move to a new building — and sharp reduction of average length of stay.

In Worcestershire, for example, the PFI scheme, shaped by management consultants SECTA and the propositions put forward by the King’s Fund, sought to reduce bed numbers by 35%, and cut beds per 1,000 patients by 40%. This meant hoping for a truly massive increase in throughput per bed by reducing average length of stay — without any actual evidence that this could be achieved.

“While Kidderminster faces the loss of 100% of its acute in-patient beds, the whole of Worcestershire also faces a massive, possibly unprecedented cutback in acute beds under the WHA plan. Figures in the supporting documents show that the combination of the Kidderminster rationalisation, the Worcester PFI scheme and the WHA “efficiency” measures would close up to 35% of the county’s front-line acute beds in just four years. There are no grounds to assume that hospital services would be able to cope with such a massive and rapid cutback.” John Lister of London Health Emergency

To make matters worse it was difficult to get any detailed or serious public discussion or political critique of specific issues and schemes: the media remained largely oblivious to the whole question of PFI, and MPs and pro-PFI enthusiasts were keen to brush aside and ridicule any critics of the scheme, dismissing them as negative opponents of building a new hospital.

In one South East London trust, Queen Elizabeth Hospital, Woolwich, which opened in 2002, the scale of the financial problem reached the level of ‘technical bankruptcy’ just 3 years later, with the trust paying out 14.5% of its income on the “unitary charge” for use of the building and support services, according to a 2005 Audit Commission report. John Lister for UNISON

PFI also failed to deliver on another measure of value for money: many staff working in the new hospitals, especially the first wave PFI hospitals, were profoundly unimpressed by the quality and design of the buildings, criticising predictable practical problems, compounded by the limited or non-existent prior engagement with staff in drawing up the plans, and the failure to learn lessons from the first hospitals before completing plans for others with similar problems.

ALL of the first-wave PFI hospitals are desperately short of beds, with an immediate consequence for nursing staff who are under pressure to discharge patients more quickly. Several of these hospitals — all opened since 2000 — are already looking to build new extensions, or are resorting to the use of Portakabins, old buildings that should have been demolished, or local private sector beds to bridge the gap in capacity that has opened up.

So in my Happy Birthday wishes to the NHS, I also hope for someone — anyone in power to roll back the harmful Labour PFI initiatives, and every other harmful piece of Labour, Lib Dem and Tory legislation and Policy since — that further sinks the NHS into the abyss of debt to private organisations!

FURTHER READING: