A decade ago, when the Coalition government began its austerity cuts, spending on the NHS was supposed to be ‘protected’ from the cuts inflicted on other public services. It is true that average real spending on health and social care increased by 1.4% a year. But this compared with average increases of 3.7% a year from 1948 down to 2010.
In other words, government policies implied a halt to any hope of normal improvement and modernisation. On top of this the need for healthcare rose significantly throughout the decade. First, because the proportion of people aged over 75 rose by 12%, to 5.4 million in 2019, and the cost of providing them with care is from three to four times higher than for people under 50. And second, because austerity impoverished millions of families and simultaneously eviscerated the social security safety net.
By 2019 14 million people, a fifth of the population, were living in poverty, with consequently deteriorating health. The combination of stagnant funding and rising need led to a decline in access to care, and in its quality. Between 2008-’09 and 2018-’19 the number of people admitted to hospital every year rose by 20%, while the number of people waiting for treatment almost doubled, from 2.2 m to 4.3 m.
The NHS coped initially by keeping staff salaries below inflation – i.e. cutting them – and employing as few as possible. For comparison, by 2018 France was spending 22% more per head on health than the UK, and employing 17% more doctors and 38% more nurses per 1000 people. Germany was spending 47% more per head, and had 48% more doctors and 65% more nurses per 1000.
In order to force hospitals to make annual ‘productivity savings’, as businesses are supposed to have to do in order to stay competitive, the ‘tariff’ of payments that hospitals received per completed treatment was cut by 4% a year. But they were not given the funds to make the investments needed to achieve increased productivity, and so had to squeeze ever harder to find savings out of existing resources. And rather than investing, they had to postpone even routine maintenance: today there is a backlog of £6 billion simply for repairs.
Even so, many were forced to overspend, as their income fell short of covering costs, for a total deficit by 2015-16 of £4.3 billion. When this happened the Treasury provided loans to cover the deficits which carried interest and had to be repaid, increasing the pressure to make still further spending cuts. On top of this, many hospitals had the financial burden of paying for privately financed hospital building schemes, which account for most of the £83 billion a year being paid for PFI schemes by the health and social care sectors. By 2019 many hospitals were unable to meet the true needs of patients. The overall result was an erosion of morale and quality, and growing staff shortages.
By the end of the austerity decade primary care was also in serious trouble. GPs felt increasingly stressed. Few newly-trained GPs were willing to take on the responsibility of running practices and more and more opted for part-time work, while large numbers of older GPs were due to retire and others planned to retire early.
This was not unconnected with austerity-driven cuts in the number of district nurses and other community-level health services (health visitors, school nurses), driving people to seek more help from GPs. The resulting difficulty in many areas of getting a GP appointment led people to present themselves at hospital A&E departments instead, which meant they were often crowded with people who really needed non-hospital treatment but didn’t think they could get it.
This game of pass-the-parcel reflected the fact that the NHS had been simultaneously subjected not just to austerity, but also to a series of steps towards converting it from a unified national service to a set of businesses competing in a healthcare market. This culminated in Andrew Lansley’s 2012 Health and Social Security Act, which cost an estimated £3 billion in reorganisation and added substantially to the NHS’s ongoing administrative costs.
While the Act actually reduced the NHS’s capacity to ensure that its budget was being well spent, it reinforced the subjection of the NHS to a management regime in which meeting financial targets displaced improving health outcomes, or even patient safety, as the overriding priority. Also abandoned in the drive for marketisation was any serious commitment to public health, as documented by David Rowland in Tribune.
The Covid-19 pandemic thus caught the UK without its former structures of protection against an infectious epidemic and with a hospital system so depleted that it could only meet the needs of Covid-19 patients by abandoning almost all other kinds of care.
The outcome that Lansley and his predecessors had expected – a healthcare market in which private health companies would compete with NHS trusts and drive down costs – did not materialise. One reason is that providing good healthcare to everyone in the population is arguably never likely to be profitable.
In the absence of public subsidies, the way profits are made from healthcare is typically by cherry-picking profitable patients (the healthiest or wealthiest), or by fraud. But austerity also forced a recognition that a healthcare market would undoubtedly be more costly than an integrated national service. This truth was vividly revealed when Circle Health tried to make a profit out of running an NHS hospital in Hinchingbrooke in Cambridgeshire, at the level of funding of the rest of the hospital sector, and failed comprehensively.
Since then the watchword of government policy has been ‘integration’, but cherry-picking and subsidies have continued to offer some opportunities for profit-making from the NHS. The most obvious has been the way private hospital companies got the chance to provide hundreds of thousands of routine treatments a year – chiefly routine surgery, and especially hip and knee replacements and cataract removals – to NHS patients.
NHS hospitals had growing waiting lists for elective surgery but no spare operating theatres or surgical beds; yet they faced government-imposed financial penalties if they kept patients waiting more than 18 weeks for treatment. So they took to referring more and more patients to nearby private hospitals, where they were operated on by – none other than their own NHS consultants, who also practised privately at those hospitals.
In effect, NHS hospitals were simply renting theatres and beds from private hospitals. By 2018 the share of NHS patients receiving hip and knee replacements in private hospitals had risen to 29% and 19% respectively, to the point where NHS patients accounted for some 50% of all private hospital beds and a third of their income – much of which, of course, also represented a loss of income for the NHS trusts concerned.
The private hospital companies were happy, because the rapid growth in the supply of NHS-funded patients, combined with NHS patients choosing to receive treatment at a private hospital under the government’s ‘patient choice’ agenda, allowed them to weather the drop in private patient demand that resulted from the 2007-08 crash.
Of course, there is a limit to this development, since all the surgery is being done in their non-NHS hours by NHS consultants, of whom there is a fixed supply – and the UK private hospitals’ business model depends on not having to pay anything towards either their salaries or their pensions (the work they do at private hospitals is paid for by the private patients, or by the NHS for NHS patients, on top of their NHS salaries).
But this intimate involvement of for-profit companies in NHS provision puts them in a new position to influence NHS policy, in a way that a new ‘deal’ currently being negotiated behind the scenes for the years following the pandemic seems liable to consolidate.
In-between the hospital sector and primary care lies a fertile area for potential further private sector inroads. Hospital costs having been pared to the bone, the only remaining way to save money was believed to be to ‘unbundle’ as many services as possible from hospitals and relocate them, more cheaply, in ‘the community’.
To achieve this, NHS England’s Chief Executive, Simon Stevens, divided the country into 44 organisational areas, called ‘footprints’, to serve as the bases for planning a shift of specialist services out of hospitals and integrating them with community-based services. The power to spend the NHS budget for local populations remains legally vested in Clinical Commissioning Groups (CCGs) led by GPs; but 44 informal bodies, one for each footprint, called ‘Sustainability and Transformation Partnerships’, or ‘Integrated Care Systems’, and led by people hand-picked by NHS England, now decide how the money is to be spent.
This move represents a decisive rejection of the competition model embodied in Lansley’s 2012 Act, and a return to population-based planning and management. But these unelected bodies, with no basis in law and hence no democratic accountability, are now deciding what services will be available to us, how they will be provided, by whom, and at what cost.
It is also envisaged that in future commissioners may ‘award a long-term contract to provide a range of health and care services to a defined population following a competitive procurement. This organisation may subcontract with other providers to deliver the contract… The contract could also involve a bigger role for private companies if they decide to enter the market.’
Implied here is the ‘prime contractor’ model of outsourcing, in which a company like Serco wins the contract and then parcels out the work. While no proposal to do this has so far materialised, the government’s default preference for private companies suggests that this could change.
How far the pandemic has changed the prospects for the NHS remains to be seen. It would be naïve to think that the government’s dependence on the NHS in face of Covid-19 has converted the Conservative Party to the original ideals of the NHS, let alone the welfare state of which it was a key component.
As semi-normal life resumes we will have to fight hard to undo the far-reaching damage of the austerity years. The NHS needs an increase in its budget on a scale far beyond anything the government is currently envisaging – note Johnson’s latest proposal to give NHS hospitals £1.5 billion for ‘hospital maintenance, eradicating mental health dormitories, enabling hospital building and improving A&E capacity’, when the outstanding backlog of repairs alone will cost £6 billion.
To raise the NHS’s staffing and facilities to the level of comparable countries, unify it with social care, and make it democratically accountable, is a project that the left needs to build broad support for, and soon.