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A Two-Tier System Is an Existential Threat to the NHS

David Rowland

An NHS crisis caused by cuts and privatisation can't be solved by allowing yet more profiteering. The only solution is to return public healthcare to its socialist roots.

(Photo by Christopher Furlong/Getty Images)

Interview by
Ronan Burtenshaw

In 2012, as the health service was being subjected to another round of disastrous reform, a think tank was founded which aimed to push back against this effort ‘to dismantle many of the founding principles of the NHS’.

In the years since, the Centre for Health and the Public Interest (CHPI) has become one of the sharpest critics of market-led NHS reform, publishing reports that shine a spotlight on private contracts within the service as well as the growing role of private hospitals and the emerging possibility of a two-tier health system.

The CHPI’s director, David Rowland, sat down with Tribune to discuss the challenges facing the National Health Service — and whether it can weather them.


As the NHS reaches its seventy-fifth anniversary, it faces a series of crises. What, in your view, is the biggest threat to its survival?


I think it’s important when you look at the history of the NHS to acknowledge that there have always been crises. Right from the start, people [have] asked, ‘is it affordable?’ ‘Is it sustainable?’ ‘Will it meet population need?’ Much of this is because that’s how the health service as a subject is discussed by politicians and the media. They’re only talking about it in the context of crises. Health is a politically contested area and, to some degree, that means we will always talk about it in these terms; not just in Britain, either, but across the world.

However, we are almost unique in the world in terms of having a healthcare system that is predominantly supplied by state-owned, state-funded providers. The specificity of that model makes it much more subject to political involvement. If we look at the problems facing the NHS at the moment, there’s a clear political role. It has gone through a period of sustained reduction in funding after the 2008 Financial Crash and the coalition government, then again with the last Conservative government from 2015 onwards. There has been a lack of investment in the workforce and a lack of investment in facilities.

This, in turn, led to the UK going into the pandemic with far greater challenges than other healthcare systems which have not had the same contraction of resources relative to the growing population need. The pandemic, by definition, causes a massive shock to any healthcare system. It will delay the number of people who can get treated, it will mean that needs aren’t met. You have a significant additional burden on the health service at a time when the health service doesn’t have the resilience to be able to meet those challenges.

The consequences of that are twofold. First of all, the time to recover from the pandemic is going to be more substantial in the UK than in other countries because of underfunding, the shortage of staff, and the reduction in the quality and availability of facilities. Previously, when you’ve had the return of a Labour government, there has been a substantial increase in funding to the NHS. As a result, the performance in terms of meeting population [need] increases, waiting times come down, access to GPs improves, and so on. It’s going to be much more difficult to do that this time. And, on top of that, you’ve got staff which are, frankly, knackered after two or three years of extreme conditions.

The other consequence that we’re seeing is more and more people going private. They are seeking care that is either not available to them on the NHS or available in maybe eighteen months or two years. People who built up savings during the course of the lockdown because they didn’t go on holidays have been able to dip into that to pay for their care. In most cases, it’s not using insurance, it’s using their own savings. There is data out today showing that the number of people paying privately out of their own resources for healthcare is up by a third since the pandemic.

So, we’re seeing the development of a two-tier healthcare system. I would say that is probably a bigger existential threat to the NHS than full privatisation or the growth of outsourcing to private, for-profit providers. That isn’t to say that the growth of outsourcing isn’t an issue for the quality and availability of NHS care — it clearly is. However, once you start seeing middle-class ‘opt-outs’ from the system, it’s a major problem because these people provide the majority of the tax revenue for the NHS. They will be less willing to commit more in terms of tax to pay for public healthcare because they’re also paying privately. Therefore, there is a cycle where the NHS shrinks further and is unable to meet the needs of the middle classes, they are encouraged to opt out and so the service, with less resource and it becomes more and more focused on meeting the needs of the population who can’t afford to pay out of their own pockets. As anyone who has studied social policy will know, once you start getting services which are primarily for the poor, you end up getting poor services.

New Labour under John Reed and Alan Milburn were concerned about middle class opt-outs from the NHS, that’s why they argued for the introduction of the patient choice competition and making greater use of the private sector. But what you’ve got at the moment is a government which doesn’t seem to care about middle class opt out at all. Wes Streeting and Labour, on the other hand, have mentioned the two-tier system. But what you’re not hearing from them is a commitment to adequately fund the NHS to prevent that from developing. They’re seeking to do only part of what New Labour did to encourage the middle classes to stay committed to the NHS namely allowing people to self refer to consultants or to make things more digitally available. They are embracing the choice part, but not committing to the additional resources.


When Labour announced its NHS policies recently, the party committed to hiring 10,000 new nurses. But on the media rounds that weekend, when challenged on how much additional funding it would put into the service, spokespeople could only point to minor revenue-raising measures like closing non-dom tax loopholes. There was then a pivot to saying that the NHS needed to find more ‘efficiency’ in order to cover costs. What do you make of that focus on efficiency as opposed to additional funding?


I think there is perhaps too little attention given to the ways in which the administration of healthcare services can be improved. People talk about how we don’t need more managers, administrators or pen pushers. But administration is a key part of any healthcare system and it needs to be adequately staffed if it is to be effective. The NHS is actually hampered by the proliferation of thousands of different contracts and providers. The new reforms which have been introduced around integrated care services acknowledge that this competition model, whereby you had 211 commissioning bodies that were run by the GPs in a local area striking contracts with every feasible healthcare entity, was incredibly inefficient. There isn’t enough recognition by the media or the people who work in health policy that the market experiment which has been imposed on the health service has fundamentally failed.

Simon Stevens, when he was in charge of NHS England, partially dismantled the market reforms he inherited from the 2012 Health and Social Care Act because he knew that there was no way the NHS could survive austerity if it was wasting money on a highly con- voluted bureaucratic market and the Conservatives actually acknowledged this in their 2017 manifesto. He attempted to put together a much more collaborative approach between providers, commissioners, local authorities and public health. But that’s laid on top of another huge market in social care. So now the problems start with people getting discharged from hospitals. The district nurse, the ambulance, the domiciliary care have been contracted out or the care home doesn’t have enough nurses to provide care.

So I think once you start talking about efficiency within the health service, you are not going to address the problems by introducing gimmicky measures such as introducing the right for patients to by-pass a GP and go direct to a consultant. What you need to focus on are those frictions within the administration that are a result of this failed market experiment. This idea that different providers competing with each other to access the pot of money would drive up quality and mean there’s greater choice for patients has been proven definitively wrong. It runs through the Lansley reforms but builds on everything that has been going on since the Community Care Act back in the 1990s. Since that model was fully unleashed onto the NHS, everybody started to realise ‘this is crazy.’ This is going to take up so much time having to tender for everything, to manage contracts with all these different providers, to go through contract monitoring, which was almost impossible because you had so few staff who were doing it and so many providers.

Labour still thinks that giving consumers more choice will improve healthcare. If cosumers have more choice, what Wes Streeting called ‘the producer interest’ will have to respond. But we’ve tried that. We’ve had a comprehensive experiment in it, introduced by Andrew Lansley, and it was shown to be inefficient. If you want to tackle inefficiency, what you actually need to do is root out the market logic in other areas, such as social care. Take London, for example; in one London borough, there are 800 care businesses. How is a local authority meant to keep track of them all? How is a patient who needs that service meant to do quality control or exercise meaningful choice when arranging a care package during a highly distressing time for them ? None of this is efficient.


What do you make of the argument that, as the welfare state declines in almost every area in Britain, a public, universal health system which is free at the point of access just isn’t ‘affordable’ anymore?


It’s frightening, really. When people talk about the NHS being ‘unaffordable’ what that actually means is that people will have to suffer because they won’t get the care they need. They should be made to spell that out. The wealthy will be able to take care of themselves, but large and growing portions of the population will simply not have access to the healthcare that is necessary.

The NHS is framed sometimes as a luxury that we’ve got to move on from because we don’t have the economy to support it. But the corollary is never explained. People will suffer and be in misery if the funding doesn’t emerge to pay for healthcare. Some will say, ‘Well, it’ll just be covered out of pocket.’ But there are huge consequences to shifting the responsibility for investing in healthcare from general taxation back to the individual. One of these, quite simply, is that far fewer people get care.

It’s even possible, under a two-tier system, that a greater portion of the national wealth goes towards healthcare. But it will mostly go towards care for a minority who can afford it, and healthcare, in general, will cease to be something we manage in common. What will this mean in an era when healthcare costs are going to rise dramatically? What will happen to the additional costs that are going to come with a growing population, an ageing population, and an increasingly unhealthy population?

We need some honesty among politicians about how much that’s going to cost because if the additional resources don’t go into healthcare, access to care is going to diminish for the majority of people. So will their quality of life. There are very few politicians who are prepared to even acknowledge that.


One of the challenges of contemporary healthcare systems is that even though they keep people alive longer, they often have more serious illnesses in those later years. How should the NHS tackle the realities of a population that is growing both older and sicker?


We’ve been aware of that trend for decades. There are going to be significantly more older people who are going to require support towards the end of their life. But there has been a lack of focus on transforming society accordingly. Unless we do something about that, it will fall to families, and particularly women, to care for older people. We also won’t have enough workers to meet demand because there has to be a huge expansion in the workforce and that can’t happen when people are on zero-hour contracts or not earning enough to live. We need to be advocating for young people to go into these jobs, highlighting to them that this is a growing part of society and the economy, but that won’t work when wages and conditions are as low and as poor as they are.

But the population getting more unhealthy isn’t just to do with old age. Across the NHS, an estimated one in five hospital beds is occupied by someone with diabetes. The majority of care that is provided by primary care practitioners, GPs, is not actually for people who’ve got sore throats or need a referral for a lump. It’s for people with chronic conditions which require maintenance and which can’t be solved by issuing a prescription. The burden of that ill health on society is impacting not only those people themselves and their families, but healthcare staff — actually to the point where people are being prevented from doing the productive work we need them to do.

There are those people who, I would say, don’t want to tackle the root causes of that ill health. They tend to focus on digital solutions, robotics, or artificial intelligence as a solution. There’s a growing divergence between camps. Should we invest in preventing people from becoming unhealthy to start with, or should we seek technological solutions? I mean, who knows what that technology is going to be able to do in the future. But I think we’re missing a trick in asking where all these illnesses are coming from, their social roots, and what can be done about it.


You mentioned primary care there. That has always, to some extent, been an outlier in the NHS, as a service that is run by private contractors. Is that a contradiction? And, as the sector faces a deep crisis, what should be done about it?


There are many contradictions within the NHS. I think the division between health and social care is a bigger issue than having GPs or dentists, optometrists or pharmacists, for example, operating as independent contractors. In the main, when it was a case of family GPs operating on their own terms, this wasn’t a huge problem for the NHS. At times, they even offered a counterbalance to the more centralised system. And many were salaried, of course.

There are more problems today because there is much greater corporate penetration of primary care by US healthcare providers, in particular. You’ve got companies like Centene, who own Operose Health, one of the largest players in the United States, and they are now entering the primary care market. They also own one of the largest private hospital providers, BMI Circle. I think these companies will be asking if they can get some benefits from capturing the revenue that goes from primary care into secondary care.

I think you’re right to say that the primary care system is in crisis. It is massively under-resourced at the moment. We just don’t have enough primary care practitioners to meet the population need. That’s another way that the two-tier system is emerging: people are responding to under-resourced primary care within the NHS by paying privately to go to a GP. We’re seeing increasing numbers of companies setting up private GP practices, or thinking of ways in which you can, for example, get a cataract referral without going through your GP. Then there is also what Julian Tudor Hart called the inverse care law, where the places that most need healthcare services often have the fewest resources. That applies beyond GP care to basically every service — if you look at who has the best access or who can get appointments quickest, it maps onto the wealthier areas.


If you were to lay out a policy agenda to secure the future of the NHS, what would it look like?


You have to start with the determinants of health. You have to start with the things that are making people unhealthy — we have to shift the focus, away from how many hospital beds and how many doctors we have. You have to start with things like housing, the terms and conditions of people in work, poverty and inequality. Healthcare systems have some impact, but the root of public health lies elsewhere. We need to move away from thinking just in terms of A&E waiting times, ambulances, doctors, nurses. We need a public health policy that focuses on interventions which will improve life expectancy or reduce the number of people presenting with diabetes.

The NHS has to be an emblem of a society which takes seriously the collective responsibility for the health and wellbeing of the population. That’s how it was conceived by Bevan. It can’t survive for long in the absence of that wider approach to redistributing wealth and power within society. The NHS was always intended as a corollary of a much more comprehensive welfare state that covered housing, employment rights and adequate welfare benefits. Unfortunately, what’s happened over the period of time since the NHS was created is that the various other aspects of the welfare state have fallen away. We need the opposite: to expand the collective idea that underpins the NHS into other areas aspects of society, starting with social care so that people are not penalised as a result of getting dementia but these risks of ill health are shared across the population.

The NHS can survive. Even when the service is in a terrible state, the idea of it has popular support because amongst other things it is a symbol of national pride, an expression of our collective solidarity. Given what has happened to other public services which have been privatised — such as energy, water and transport — the public are also aware that shifting to another way of providing and funding healthcare services, involving large corporations, will mean paying more money for less healthcare. Despite the challenges of the two-tier system, despite the increased outsourcing of provision, despite the problems we see in social care, I don’t believe there will be public support for a private system over the next 20 or 30 years. But, unfortunately, what is likely to happen is that the offer which comes from the NHS will be smaller. People will have less high-quality care, less access, and the system will be increasingly overburdened. The onus is on whoever comes in next to fight that trend.

About the Author

David Rowland is director of the Centre for Health and the Public Interest. He has worked for over a decade in senior positions in health regulation and has written extensively on health and social care reform. In 2013 he was co-author of a report which looked at nhs preparations for a pandemic.

About the Interviewer

Ronan Burtenshaw is the editor of Tribune.