How Managerialism Took Over the NHS

Saving the NHS is not just a question of public over private – it also involves taking power from the growing class of cash-driven bureaucrats and putting it back in the hands of doctors and nurses.

The NHS is set for another overhaul. This time, the Conservative government claims to hope to reverse the privatisation policies imposed by David Cameron’s government in 2012; under the leaked plans, the health service would no longer be required to put contracts out to tender, making competition a choice for NHS managers rather than a compulsion.

In the same week the NHS reforms were made public, Keir Starmer’s Labour vowed to launch a ‘radical programme of insourcing’ and return to the public sector many of the functions recently farmed out to global corporations like Serco and G4S.

On the face of it, this cross-party push against privatisation, outsourcing, and competition looks like a fundamental break from the governing sensibilities of the last few decades. The Economist, for one, complained how the NHS changes would mean ‘competition’ was no longer the guiding principle of the service and marked the end of the ‘internal market’ in the NHS first established by Thatcher. Others, meanwhile, cautiously welcomed the proposals as a belated redress from the excesses of market rule that characterised the 2012 changes.

Yet, whether to laud or lambast, it’s a mistake to treat ‘markets’ and ‘competition’ as the political faultline of public sector reform. While competition, choice, and market efficiency have been consistently talked up in the rhetoric of neoliberal era, the actual practices that were implemented across the public sector were quite different. Rather than marketise the public sector, reforms over the last four decades aimed to empower central managers and ministers. Nowhere was this clearer than in the NHS.

Driving the repeated reforms since the 1980s was the political conflict between the autonomy of frontline public-sector professionals and the control of the ministers and managers who governed them. In this conflict, neoliberal reformers wanted a stronger hand than market forces would allow. As Thatcher herself later put it when reflecting on the NHS: ‘If more money had to be provided, I was determined that there must at least be strings attached.’

These strings were introduced in her government’s 1989 Working for Patients White Paper, which established the internal market. It involved imposing a split between ‘providers’ of healthcare services and professional ‘purchasers’. This model was then extended through New Labour’s development of Primary Care Trusts and Foundation Trust Hospitals, and again in the 2012 compulsion for competitive tendering. Though each reform promised to reverse the mistakes and changes of the last, the agenda was always the same: empower ‘purchaser managers’ to govern healthcare.

This centring of purchaser managers was built on a practice of ‘budgetary planning’, first experimented with at the heights of post-war state planning in the 1960s. The idea was to use budgeting not just to administer resources or control expenditure, but to attempt to rationally plan how financial resources could be marshalled towards some a quantitively-defined policy objective. The performance of public services in reaching targets would then be scrutinised through constant audit and league tables.

Budgetary planning required vast amounts of data to feed a managerial machine of objective setting and continual audit. While it promised accountability, it was a strange inversion of it. Rather than democratic accountability that scrutinised power, it was a managerial accountability that disciplined subordinates. The effect was to thrust managerial actors to the centre of public service delivery. Economics increasingly became a dominant force within the Civil Service, while management consultants vultured around government reform programmes offering the latest fad in change management.

It was a strange twist that the neoliberal government of Thatcher first opened the door to the managerial revolution within the public sector, empowering the very bureaucrats she had built her entire politics around criticising. Thatcherism was highly effective at shifting the discursive terms of public welfare from a drive for equality and state-led progress to one that rationalised gross inequalities as a justified outcome of the market. But, in the end, the Thatcher government turned against the market as an actual organising device, dismissing it as too unwieldy to drive change in a direction that could be centrally determined. It is this bankruptcy of ‘competition’ as an actual programme of government that then explains the ease with which New Labour picked it up, with their misguided faith that the ends justified the means when it came to delivering public welfare.

As management and economics took greater sway in the public sector, the NHS was a major target. Rather than clinical expertise, managerial knowledge came to hold ever greater sway in how the NHS was run.  Between December 2013 and December 2017, management positions increased in the NHS by 16 percent, compared to 8 percent and 2 percent for doctors and nurses respectively.

The design of home social care, for example, gradually shifted from being run by social workers, patients, and clinicians focused on compassion and care, to a matter for a cadre of management specialists: accountants, consultants, auditors and the legal advisors who design ‘provider’ contracts or organise ‘purchaser’ strategies.

It is this infrastructure of managerial planning in the design, delivery, and evaluation of public services that has defined the political economy of privatisation. It has constructed an entire business model from which a revolving door of managers inside global corporations and NHS bodies gain. Those with managerial expertise—both from public organisations and sitting in corporate boardrooms—shape how contracts are assigned, how targets are set, and what opportunities these provide for external providers to extract profit. It is why NHS England spent an estimated 26 percent of its total expenditure on the private sector in 2018/19 and why the same agencies involved in those contracts helped develop the PFI programme that meant an £80 billion price tag for building £13 billion of assets.

For the Left, calls for a radical insourcing of public services and ending competition is an important step, but must be situated within the managerial empowerment privatisation has brought. Decades of austerity has corroded the capacity of public sector professionals to run services themselves, while giving the coercive forces of public and private sector managers significant power to set the terms by which they run services and enrich themselves. The blatant cronyism of the government’s heavy reliance on private firms to organise the healthcare response to Covid-19 reveals the depth the public sector has come to depend on outsourcing and panicked procurement to deliver public services.

The challenge will be to embark on an insourcing project that navigates a balance between dismantling the coercive managerial architecture of public sector ‘competition’ while preventing both a crisis of planning expertise and the vast costs incurred from terminating lengthy contracts with private providers.

About the Author

Sahil Dutta convenes the MA Global Political Economy programme at Goldsmiths.

Ian Lovering is a Teaching Fellow in European Studies and Public Policy at Warwick.

Samuel Knafo is a reader in International Relations at Sussex.