To be kept informed about events and site udpates, enter your email address and click on the arrow search
CPGB-ML Blog Hands off China Gallery (Flickr) Videos (YouTube) Radio (Soundcloud) Red Youth Lalkar Shop
Proletarian
Search Proletarian search

>>back to Proletarian index >>view printer-friendly version
Proletarian issue 13 (August 2006)
End in sight for National Health Service
Health care will again be accessed in proportion to wealth, with disastrous consequences for the working class
“Britain’s NHS, which established health care as a right, has been progressively dismantled and privatised by successive governments over the past quarter-century. The story is of course not unique to Britain. Universal health care systems are being dismantled and privatised across the world. Making health care once again a commodity to be bought, rather than a right, has become the standard prescription of the World Bank, the International Monetary Fund, the World Trade Organisation, and even the World Health Organisation …

“The dismantling process and its consequences are profoundly anti-democratic and opaque. The catchphrases of ‘Public-Private Partnership’, ‘modernisation’, ‘value for money’, ‘local ownership’ and the rest conceal the extent and real nature of what is happening; moreover the complexity of health care allows the reality of its transformation into a market to be buried under a thousand half-truths.”


With these opening words, Allyson Pollock introduces her study, NHS plc, which analyses in detail the accelerating process of health privatisation and the corrupt relationship between the government (which never tires of issuing its hollow claim to represent the interest of ‘its electors’ and hence be ‘democratic’) and big industrial and finance capital seeking to make a killing from the massive tax revenues formerly dedicated to financing key social services.

Much of the material in the following article is drawn from this very useful work in which the author fiercely defends public and universal provision of health, pointing out that “the real costs of privatisation are both dramatically increased financial costs of using private enterprise, which is really so much less efficient in providing health care, and the costs in terms of lost services, lost universality and lost equality”.

The market is, of course, the natural state of the capitalist economy, which gave rise to gigantic monopoly over a hundred years ago, concentrating at one pole vast wealth and power for a tiny minority and at the other poverty for the vast majority. Finance capital does not seek equality, it seeks domination. As such, there can be no real talk of “equality” between the multibillionaires, the emperors of finance capital, on the one hand and the working masses on the other.

When the spokesmen of finance capital (the Gordon Browns and Tony Blairs) talk of ‘maximum efficiency’, they mean squeezing maximum profit for their sponsors rather than providing the best products or services to ‘consumers’ (as patients have been rebranded). Contrary to the all-pervasive free-market fundamentalist dogma they push, the two aims (profit and service) are usually mutually exclusive.

By extension, the criticism of the market in health is really a criticism of the market in general, which is indeed “profoundly anti-democratic and opaque” . Health care is, of course, an emotive issue, one that highlights the severe consequences of poverty, inequality and exploitation of capitalism in the ultimate black and white terms: life or death.

But, as Frederick Engels and Karl Marx noted some 150 years ago in The Communist Manifesto, that brief but all-embracing and epoch-shaking work, capitalism, for all its ugliness “… historically, has played a most revolutionary part.

“The bourgeoisie, wherever it has got the upper hand, has put an end to all feudal, patriarchal, idyllic relations. It has pitilessly torn asunder the motley feudal ties that bound man to his ‘natural superiors’, and has left remaining no other nexus between man and man than naked self-interest, than callous ‘cash payment’. It has drowned the most heavenly ecstasies of religious fervour, of chivalrous enthusiasm, of philistine sentimentalism, in the icy water of egotistical calculation. It has resolved personal worth into exchange value, and, in place of the numberless indefeasible chartered freedoms, has set up that single, unconscionable freedom – Free Trade. In one word, for exploitation, veiled by religious and political illusions, it has substituted naked, shameless, direct, brutal exploitation.

“The bourgeoisie has stripped of its halo every occupation hitherto honoured and looked up to with reverent awe. It has converted the physician, the lawyer, the priest, the poet, the man of science, into its paid wage-labourers.”


Further, while Professor Pollock laments the betrayal of “principles” of the founders of the NHS, we must look further and see the NHS and the entire ‘social safety net’ of the Keynesian consensus for what it is: a product of dynamic social forces – more specifically, a product of the struggle between opposing classes: between the bourgeoisie, which inevitably seeks to maximise profit by decreasing wages (including the social wage, ie national insurance contributions, social benefits, pensions, housing, NHS etc) and lengthening working hours, and the proletariat, which has only its concerted social action to wrest a greater share of the national wealth from the ruling class.

In the case of Britain and other imperialist nations, the national wealth is not derived solely from the work of the British workers, but also from the superprofits extracted from the surplus labour of countless neo-colonial workers in the ’third’ world.

Growth of modern medicine and formation of the NHS

Britain has a considerable history of medical innovation, notably since the civil war of 1642-48 and spanning the period of its capitalist development.

Physicians and surgeons such as William Harvey (17th century) and John Hunter (18th century) helped deliver European medicine from the dark ages and began to stand it on the dialectical and materialist foundation of the scientific method; of reason in conjunction with experiment (in particular, detailed anatomical dissection and physiological study of the human body in motion). They helped to displace the dominant (not to say stagnant and metaphysical) teachings of Hippocrates, propagated widely via the massively influential Greco-Roman physician Galen for one and a half millennia (which attributed malady to imbalance of ‘the four humours’, to be corrected by blood letting and leeches!)

Throughout this period, just as today, health provision mirrored the structure and trends of the society it served. Just as learning and the professions (medicine not excepted) were the preserve of the lesser branches of the propertied classes, so the provision of their services was prohibitively expensive for the overwhelming majority of workers until startlingly recently. (The time when “a surgeon’s fee was £2,000 – the cost of a house!” is but two generations distant and within the living memory of senior NHS consultants.)

Indeed, if we take a step back and look at the wider world, even today we see that hundreds of millions of workers stand effectively outside the sphere of health provision as their poverty renders them the subject only of occasional charity (and sometimes the victims of unscrupulous practice and research).

The driving forces behind popular medical provision as well as sanitary measures have come, on the one hand, from the capitalist class, who fell prey to diseases over-spilling their breeding grounds, the squalid and pestilential conditions modern capitalist development enforced on the industrial working class and, on the other, from revolutionary association of the workers themselves.

Trade unions, then socialist and communist parties, and finally, after 1917, entire nations (formed into the Union of Soviet Socialist Republics) first demanded better provision and later demonstrated the possibility of really providing a healthy and cultured life for all once exploitative relations were abolished and workers became masters of the social wealth their labour had created.

In 1911, the National Insurance Act conceded basic medical cover for British workers earning less than £2 a week. In 1926, some nine years after the October Revolution, as workers the world over looked to the bright example the Soviet Union was setting in social provision, a Royal Commission on National Health Insurance suggested separating the medical service from the insurance system and setting up, instead, a service that encompassed all public health activities paid for by public funds.

But throughout the 1930s, as the great depression sent the capitalist world into a spiral of decay, from which it only extricated itself through the horrors and mass destruction of the second world war, medicine remained chiefly the preserve of the wealthy, even in the heartlands of imperialism. Poverty gave rise to pandemics, precisely as pure science tantalisingly offered the means of cure.

As the Canadian surgeon Norman Bethune noted from his experience of the working-class districts of 1930s Detroit, tuberculosis fed on poverty, and poverty was on the increase everywhere. “There is a rich man’s tuberculosis and a poor man’s tuberculosis,” wrote Bethune in the journal of the Canadian Medical Association. “The rich man recovers and the poor man dies. This succinctly expresses the close embrace between economics and pathology,” a situation we are revisiting today. Maps showing worldwide prevalence of poverty and prevalence of TB or HIV look identical.

Commenting on the inadequacy of private medical provision, blatantly exposed by the absurdity of capitalist economic crisis, which, in the words of Frederick Engels, “left consumers wanting because the producers had produced too much of the means of subsistence” , Bethune noted that: “In the world at large ... millions were without clothes, and the US ploughed under its cotton fields. Tens of millions were hungry, but Canada burned its wheat. On street corners men begged a nickel for a cup of coffee, but Brazil dumped its coffee into the ocean. In Montreal’s working-class districts the children were bow legged with rickets, but oranges from the south were destroyed by the carload. And from the head of the Canadian Medical Association came the warning that disaster lay ahead for the profession and the people of Canada unless emergency measures were taken to provide medical services for the majority of citizens who couldn’t afford to pay, and for the doctors who couldn’t afford to treat their patients without payment.”

Bethune famously came to the conclusion that it was the job of the medical profession to “go to the people” , and heroically did just that, first organising the rudiments of free health care for workers in Canada, and then in China, where he gave his life setting up and operating Mobile Army Surgical Hospitals for the communist party’s Eighth Route Army, fighting Japanese colonial fascism.

In his diary he wrote: “One can’t help admiring the spirit of some of these people [militant US proletarians]. They have nothing, yet in their murky meeting halls, under the police clubs, they weave a rich and optimistic dream. It is hard to follow them sometimes, even harder sometimes to agree with their knotty theorising, but easy to share the excitement and enthusiasm minted of their wants, deprivations and single-mindedness. They have handed me a new honorary degree: I am now a Doctor of Medicine, a Fellow of the Royal College of Surgeons, and “Comrade Beth’. It is an honourable title.” ( The Scalpel, the Sword, p67)

Such were the social currents sweeping the world, which could not be ignored by the British, or indeed any capitalist ruling class struggling to hold onto its already senile rule. As the world war raged, as the Red Army repelled the blows of the Nazi war machine and the world followed every turn of events, with millions of workers sacrificing their lives to defeat fascism, there was an increasing feeling even in Britain that things ‘could never go back to the way they had been’.

“In 1942 Beveridge identified health care as one of the three basic prerequisites for a viable social security system and in so doing laid the foundations for the NHS.

“The white paper ‘National Health Service’, published in 1944, stated: ‘everybody, irrespective of means, age, sex or occupation shall have equal opportunity to benefit from the best and most up-to-date medical and allied services available’. It added that the services should be comprehensive and free of charge and should promote good health as well as treating sickness and disease."
( www.rcgp.org.uk)

Thus, to post-war Britain, the NHS was born in 1948. On superficial examination, it was delivered by Aneurin Bevin and the Labour Party, which has ironically (even as Labour demolishes the NHS) been identified with this ‘pro-working class’ institution and policy ever since.

In fact, with the international prestige of the USSR riding high, and workers of the whole world looking to communism to deliver them from the bloody barbarism of capitalist exploitation and war, concessions were being made to workers of ‘developed’ capitalist nations throughout Europe and North America. Franco granted similar concessions to the Spanish workers, notwithstanding the repressive fascist nature of his regime, and these conciliatory benefits of the Keynesian consensus were soon enjoyed even by defeated Germany, Italy and Japan (with help from the USA, which emerged from the carnage as the leading imperialist power and wished to resuscitate the latter nations’ capitalist regimes to fight the ‘Cold War’ against the victorious Soviet Union and wider progressive humanity).

This was a calculated bribe by the ruling classes of these nations to put ‘their’ proletarians off the revolutionary path. A conscious decision was taken to buy social peace at home at the expense of increased superexploitation of the remaining colonies and neo-colonies.

It is not a statement you will see paraded widely, but the NHS and other social concessions were won for British workers by the tremendous sacrifices of the Soviet proletariat (made to oust their tsarist and capitalist ruling classes, to build their economy and to withstand all the aggressive wars waged against their fledgling state) and the hammer blows of the Soviet Red Army, which defied the confident predictions of the chief capitalist gangsters (‘western powers’) by smashing Nazi Germany and in doing so shattered not just Axis fascism, but the complacency of the old order, making imperialism temporarily circumspect (though none the less rabid and reactionary in their hearts), liberating the entire eastern half of the European continent and ushering in a period of worldwide anti-colonial struggle.

Elements of private medicine preserved

From its inception, the NHS preserved elements of private medicine. While hospitals were nationalised (through massive negotiated payment rather than seizure), GPs, dentists, opticians and community pharmacists remained small businesses, independent practitioners contracting to provide the NHS with a certain amount of service. And while hospital consultants became salaried employees, they too were contractually free to pursue private medicine in parallel. Thus the wealthy have always been able to obtain the ‘special treatment’ they desire and the pathway back to predominantly private medicine has lain dormant within the NHS, just waiting for conditions favourable to its re-establishment.

“So patients with money, or employers willing to provide them with private medical insurance, have always been able to opt out into private treatment (and then opt back into the NHS again when the costs get too high – or if something goes wrong). The sight of hospital consultants offering patients the expedient of a private clinic appointment in order to be bumped ahead of the NHS queue for investigation and treatment soon became familiar. NHS legislation stipulates that private care should never be at the expense of NHS care, but this has never been strictly enforced.” ( NHS plc, p15)

For all that, the comprehensive service provided ‘from the cradle to the grave’ by the NHS, entirely free at the point of delivery and paid out of tax revenues, was a tremendous benefit to working people and the excellent quality of provision limited, for a time, the scope of private practice.

“Before 1948, doctors had to decide whether a patient could afford to pay or should go without care. The distinguished GP Julian Hart tells a story of a colleague leaving behind a pair of gloves on the hallstand so he had an excuse to visit a sick child again without charging. With a National Health Service such gestures were to be replaced by an ethos according to which providing health services would be neither an opportunity to make money nor a charity … there should be no link between service and payment in either the provider or the recipient.” (NHS plc, p14)

The NHS has become the largest employer in Britain, with a workforce of over one million men and women – proof, if proof be needed, that medicine in its broadest sense, like other human enterprise, has become truly socialised in its research and application.

The modern hospital is host to an army of coordinated and skilled labourers. Doctors and nurses in all their many guises and sub-specialities, health care assistants and scrub technicians, dentists (if you’re lucky) and pharmacists, physiotherapists and occupational therapists, radiographers and medical physicists, biochemists and microbiologists, laboratory staff of all descriptions, ambulance drivers, porters, cleaners, gardeners, secretarial staff, financial administrators, estate managers, cooks and canteen staff, electricians, plumbers, carpenters, maintenance engineers and more.

All these people in turn deliver and employ the products of entire industries producing drugs/medicines (from the ancient aspirin to the latest anti-cancer drug), medical and surgical equipment and supplies of all natures (from humble syringes and cotton wool to high tech MRI and CT Scanners, dialysis and cardiac bypass machines) and, of course, the hospital premises themselves.

Without any one group, the organism ceases to function. Cooperation is the key to enhancing exponentially the productivity of the labour of each.

“The bourgeoisie in its rule of scarce 100 [now 250] years, has created more massive and more colossal productive forces than have all preceding generations together. Subjection of nature’s forces to man, machinery, application of chemistry to industry and agriculture, steam-navigation, railways, electric telegraphs, clearing of whole continents for cultivation, canalisation of rivers, whole populations conjured out of the ground – what earlier century had even a presentiment that such productive forces slumbered in the lap of social labour?” ( The Communist Manifesto, ibid, 1848)

Dismantling the NHS

Such a massive organisation is expensive to run and directly serves no useful purpose to capital, which can function perfectly well with short generations of unhealthy workers and is very adept at heartlessly discarding its erstwhile employees onto the scrapheap of the unemployed or disabled. The British ruling class does just that wherever and whenever it can get away with it, all in the name of increased competitiveness – in the interests, of course, of the workers, who are informed that only in this way will some of them keep their jobs!

It is ever the loss-making economy that is nationalised and so with the National Health Service. There was, however, money to be made from the tax payers by selling the NHS supplies of all kinds.

As soon as the workers were off their guard, the NHS was progressively starved of resources. During the thirty-year period from the mid-1950s to the mid-1980s (interestingly as Khrushchevite revisionism was dismantling the USSR from the inside) it was estimated that the health service needed an increase in funding of 2 percent in real terms per annum to keep pace with the British people’s needs. It received about half of this, thus producing a much beleaguered service by the time Thatcher came to power in the early 80s. The NHS remained vastly popular despite financial difficulties, but the tide was turning.

“The need of a constantly expanding market for its productions chases the bourgeoisie over the whole surface of the globe. It must nestle everywhere, settle everywhere, establish connexions everywhere.” ( The Communist Manifesto, ibid)

Threatened by impending crisis, contraction of the world market and the need for continued profitable avenues of investments, and confident that the revolutionary storm had been weathered, US and British capital felt sufficiently emboldened to set its eyes on the public services paid for out of tax revenues worldwide. The NHS, as a flagship for public health, was a key asset to lay hold of, but a strategy would have to be devised to wrest it by degrees from the British working class, lest this sleeping giant be roused.

“The US health care industry was in the doldrums. It needed to find new markets and had identified Europe, with its high spend on health care, but low penetration by commercial providers, as an unopened oyster. But European health care systems were well protected against market predators. In the UK the funding and organisation of health services were particularly well integrated through area planning and national ownership and control. The private sector needed an entry point to tap into health care revenues. In 1991 this was finally provided by the Conservative government’s institution of the so-called ‘internal market’.

“The NHS now became the laboratory of market mechanisms – mechanisms that would in turn be exported for use across the other welfare states of Europe. By 2003 there was not a single European country that had not embarked on a similar process of market-driven reform. Belief in the superior efficiency of the private sector became the new shibboleth … The Labour Party, which had created the NHS, became dedicated to its destruction.”
( NHS plc, p17)

Private medicine had existed in parallel with the NHS throughout its existence, as outlined above, but from 1980 it became official government policy. Margaret Thatcher came to power in the period of declining Soviet power and worldwide counterrevolution and reaction. Accordingly, the job fell to her government of initiating a campaign to redefine the expected conditions of life of the British workers, to lower wages and increase profits. Famously, the miners’ strike of 1984/5 was her key campaign to break British workers’ resistance, leaving the way open to introduce widespread attack on workers’ pay, conditions and security of tenure throughout all sections of the economy.

Thatcher’s government identified three key obstacles to their desired manipulation of the NHS. These were the power of hospital consultants on the one hand, the nursing and health unions on the other, and the well-integrated, planned economy of the entire infrastructure.

1983 Griffiths Report prescribes ‘business culture’

Accordingly, the first salvo was fired in a report compiled in 1983 by Sir Roy Griffiths (a supermarket manager!), who slated the “stagnant culture” of the NHS. Market ethos was praised for its efficiency, and it was suggested that huge savings could be made by introducing a ‘new business culture’, with people – like himself in fact (!) – from industry being transplanted to shake things up.

A gradual shift in power was effected, with ‘chief executives’ on ‘performance (cost-cutting) related pay’ soon gaining a greater say in the planning of health provision than senior hospital doctors. Already, in 1986, there were 1,000 senior managers, and management was consuming over 5 percent of the NHS budget. By 1995, there were 26,000 senior managers, and with the introduction of the ‘internal market’, a whopping 12 percent (about £4bn!) of the entire NHS budget was consumed by the bureaucracy of ‘efficient’ capitalist management.

For its part, on coming to power in 1997, Labour would embrace and accelerate these practices, as if in a bid definitively to prove that bourgeois ‘democracy’ “is connected by a thousand threads to the ruling class” (VI Lenin), which together squeeze out the interests of working people and ensure real dictatorship of the bourgeois class:

“The incoming Labour government imported a cohort of mainly young people from the private sector to be civil servants on secondment, thereby opening what rapidly became a great revolving door between the public and private spheres [to the profound, not to say corrupt, benefit of the latter - Ed]. Briefly heading the PFI unit in the NHS, for example, was Robert Osborne, on secondment from the construction company Tarmac, a major beneficiary of PFI (later PPP) contracts. Richard Granger, a 37-year-old former management consultant for Deloitte & Touche, was appointed Director General of NHS IT at £250,000 a year – £90,000 more than the NHS Chief Executive, Nigel Crisp, received.

“Another key figure in the commercialisation of the public service was Dame Sheila Masters (later Baroness Noakes) from KPMG, another large management consultant firm … She had been instrumental in persuading the Conservative government to abandon the Ryrie rules – rules that protected public sector expenditure from the inroads of venture capitalists and bankers … Labour put her in charge of a review of NHS ‘estate’ – its land and buildings – making her a key player in the ensuing great sell-off of NHS property. Her report, Sold on Health, had extensive input from private sector property owners, developers and agents.”
( NHS plc, p4)

NHS divided: ‘core’ and ‘peripheral’ workers

In another example of seamless Labour-Tory government, the Conservatives set the scene for Labour’s privatisation by dividing NHS activity into ‘core’ (clinical) and ‘peripheral’ (not directly medical), stating that it should concentrate on the former. As pointed out above, this is a totally artificial division, aimed at softening the blow of privatisation, as well as singling the most vulnerable workers for the first assault, but inevitably setting the scene for privatisation of the entire organism of the hospital.

The NHS started sacking large numbers of employees, many of whom were immediately re-employed by contracting companies to perform the same jobs with worse pay and conditions. If the NHS employed 260,000 ‘non-clinical’ workers in 1981, this figure had fallen to 157,000 in 1990 and just 120,000 in 1998.

“Within months of Labour’s coming to power Adrian Montague (a corporate lawyer and co-head of global project finance at the merchant bank Dresdner Kleinwort Benson) had become the £160,000-a-year head of Gordon Brown’s Treasury taskforce on PFI, Partnerships UK (PUK), responsible for drawing up the rules for handing over the future of schools and hospitals to banks and construction firms. His PUK role was in addition to his one-day-a-week, £30,000 a year job as Private Finance Advisor to the Minister of Transport on the privatisation of the London Underground – and yet another as adviser to the giant French bank, Société Générale, the largest shareholder in Alcatel, one of the firms bidding to privatise the underground. Within months of Montague’s appointment to the treasury taskforce the first PFI contracts were being signed and ancillary staff were being transferred to the private sector, with the subsequent erosion of rights for all employees.” ( NHS plc, p5)

No wonder, then, with Labour’s devotion to privatisation and big business and its ‘link’ to the trade unions (ie, its monopoly and control of the union leadership), UNISON and other health unions were so reluctant to support the few workers who stood for the whole working class in attempting to halt these corporate sharks profiting at the expense of the poorest workers within the NHS and the poorest patients whom it would no longer serve so well.

The Hillingdon Hospital strikers stand out in this regard, having had to fight UNISON for recognition and support as much as their employers Pall Mall (part of the Davis Group) and the Labour government, who all joined hands against them.

Privatisation of dentistry: model for future NHS

Decreased universality of health services was another casualty of the 1980s.

“Dentists, like GPs, were mostly ‘independent contractors’ within the NHS. So from the later 1980s onwards, the government simply capped spending on dental services until fewer and fewer dentists were willing to provide their services at NHS rates, and more and more started declining to take new patients ‘on the NHS’. By 2002, 51 percent of all dental spending was accounted for by private provision. The NHS had thus already become a ‘residual’ dental service, offering a basic treatment mainly for children up to age sixteen and adults who are unable to pay the full cost of private treatment – a model, in fact, for the rest of the NHS as the private health care industry envisaged it.” ( NHS plc, p39)

Routine optometry and long-term inpatient care were also axed. Funding for the latter was switched from the NHS to local authorities, which introduced means testing and thus shifted the hefty bill to patients. Further, local authorities were forced to farm out these vulnerable elderly and disabled patients to private care companies, creating a massive new nursing and residential care home industry overnight. By 2003, 69 percent of this sector was private.

Inevitably, the poorest patients, dependent on government funding alone, receive the poorest care, as testified by anyone who has worked as a GP or in A&E and regularly has to pick up the pieces. This cynical industry effectively harvests the lifetime savings (including family homes in many instances) of workers, depriving them of comfort and their families of any inheritance.

During the period between 1980 and 1997, the NHS was starved of capital investment, with only seven major (costing £25m or more) hospital building and renovation schemes nationwide.

Internal market: deliberate vandalism of efficient planning as prelude to privatisation

In 1987, nursing unions and the royal colleges began to protest over decreased investment in the NHS. Thatcher announced a sudden ‘reversal’. There would be increased funding, but it would be linked to ‘reform’. Another businessman – this time an American named Alan Enthoven, formerly employed by US arms manufacturer, Litton Industries – was commissioned to write a report, which, once accepted, would shake the foundation of the NHS.

An ‘internal market’ was created by splitting the NHS into two opposing camps (‘purchasers’ and ‘providers’). The purchasers are the Health Authorities (HAs) and some GPs (who were invited to become ‘fund holders’) that would now control the budget, no longer simply referring their patients to see consultants, but purchasing services from ‘providers’, namely hospitals and community health services (maternity, health visitors, community psychiatric teams, palliative care teams etc). The hospitals were split into 400 autonomous ‘trusts’, to be run on business lines and required to break even.

Only two years of increased expenditure actually materialised (1992-3: 6 percent and 1994-5: 4 percent) and this was entirely swallowed up by costs of expensive reorganisation, allowing for such essential functions as “contract negotiations, billing, contract monitoring, enforcement, etc” , layers of bureaucracy without which a profit cannot be made. So much for the lauded ‘efficiency’ of the market system! The pattern was not repeated, and subsequently the NHS was asked to make annual ‘efficiency’ savings of 3 percent.

The NHS actually owed its former great efficiency (in terms of health provision, rather than profitability to private enterprise) to its integrated structure under the management of centralised health authorities whose function included planning resource distribution and service provision in accordance with scientific statistical knowledge of actual and projected clinical need on a large regional basis.

Now, “The planning capacity of the NHS was run down. Health Authorities were reduced in number and scale, shedding and devolving to [the newly created] trusts their responsibilities for human resources, planning and payroll, and dispersing the expertise of their staff; while some of the new hospital trusts, being too small to handle these functions efficiently on their own, were obliged to resort to expensive outside help from management consultants.

“The sums did not add up and services did not improve. By 1996-7 one third of all hospital trusts were failing to meet at least one of their financial targets, and waiting times … failed to fall, and even rose slightly. But the fragmentation of the hospital service into hundreds of separate trusts with purely financial obligations, and the ‘purchaser-provider’ split, set the NHS on a radically new path. These measures began the destruction of the NHS’s capacity to plan and distribute resources on the basis of the health needs of the population, and opened the way for the later moves toward the privatisation of clinical services.”
( NHS plc, p42)

Reliable and complete data on the effect of NHS policies is no longer centrally and reliably gathered. Planning became institutionally impossible. The NHS had been effectively decapitated, deprived of its central nervous system, with its fragmented trusts acting as independent and competing commercial companies, run by boards of directors appointed from industry. Chief executives are appointed by Secretary of State for Health, whose directives they are bound to implement. They are, however, otherwise largely unaccountable.

Senior clinicians became ‘clinical directors’ of their given departments, with a fixed budget based on number of ‘finished consultant episodes’, and have less and less say regarding overall management of hospitals, which are increasingly geared toward financial rather than clinical targets. Gagging clauses preventing their criticism of trust policy are commonplace. “One trust chairman, Roy Lilley, even declared that doctors’ duty to their trust came ‘before the professional duty to the patient’.” ( NHS plc, p43)

“The internal ‘quasi-market’ also led to quasi-pricing of more and more activities. One of the great original strengths of the NHS was that all its activities – from public health to family medicine to heart transplants – were integrated, the cost of one activity becoming a saving in the cost of another. For example, preventative care, or early hospital admission, can save having to provide more complex and expensive care later. Savings of this type can only be taken into account when costs are considered together. They disappear, in that they are no longer taken into account, when costs are counted only for individual units or departments. The remarkable cost effectiveness of the NHS, ‘a system in which wealth was distributed according to need, and nobody knew the cost of anything’, hinged significantly on service integration and cost sharing. Moreover, no part of the NHS had to charge, or pay charges to, any other part, which also kept its transaction charges to a minimum.” (Ibid, p44)

In other words, social provision and planned economy are far more efficient at providing cheap (on average), good quality service to all. This is the best way for society to provide for its population en masse. Knowing the budget available and overall services needed by a large population clearly made provision cheap and effective. For example, the NHS found it was cheaper to cater collectively and give food free to patients, staff and visitors all at NHS expense than to organise the mechanisms of sales and accounting necessary to charge, and in the 1950s and 1960s the NHS used to do just that. No wonder it became vogue among Tory and Labour MPs to denounce the NHS as ‘Stalinist’!

“The internal market progressively destroyed these advantages.” ( Ibid.)

Capital charging

A further scheme to hasten the demise of the NHS was cooked up in the form of capital charging. Trusts were forced to pay interest on the values of their fixed assets (estate, hospitals etc) at commercial rates to the government! This was supposed to increase efficiency by forcing them to sell expensive assets in favour of cheaper ones. On a background of budgetary shortfall, it was a crushing blow to many trusts running hospitals built on expensive, inner-city sites.

These trusts then embarked upon programmes of clearly unsustainable asset-stripping and ‘surplus’ estate sell-offs in order to balance the books in the short term. Some trusts closed down central hospitals and relocated peripherally. Clinical services were soon under the axe and it was not long before minor hospital closures were widespread. The result was an overall decrease, as well as a regional discrepancy, of service provision.

In fact capital charging was to pave the way for the next great leap towards privatisation of the NHS: so called ‘public-private partnership’.

The number of beds dropped progressively and precipitously beyond the level justified by decreases in length of stay realised by new technologies (day care etc) from 536,000 in 1970 (similar to 1950s bed-state) to 458,000 in 1980, 338,000 in 1990 and just 242,000 (less than half) in 2000.

“The long term decrease in the average length of stay in hospital, made possible by new therapies, including ‘day surgery’, had levelled off, but hospitals were kept under pressure to cut costs and increase ‘throughput’ of patients, so that throughout the 1990s the number of beds continued to fall.” ( NHS plc, p47)

In order to balance the books and gain additional income, NHS hospitals introduced private wards, to accommodate patients with private insurance. Private wards with better accommodation, run in part at taxpayers expense as they are served by NHS nurses, are now considered expedient in order to derive ‘extra’ revenue from insurance companies.

Labour accelerates privatisation (1997–Present)

So cash-strapped was the NHS that the Walness Report estimated that £2bn was needed for urgent maintenance backlog and a further £40bn required for modernising estate over 20 years. The path was thus cleared for Private Finance Initiatives (PFI): industry was invited to ‘pay’ for rebuilding NHS.

While Frank Dobson, as Health Secretary, made noises against the internal market, he did not, in fact, abolish it, but massively extended it, with the reorganisation of the UK’s 30,000 GPs into primary care groups. At first, there were 480 of these groups, serving an average population of 100,000 each, but they progressively merged (in order to benefit from economies of scale, though obviously not to the extent of the previous organisation under HAs), and in 2003 there were just 303 left, each serving an average population of 170,000.

Initially, the groups were billed as advisory bodies for ‘primary care led service’ aimed at making care more ‘patient centred’. However, these groups became elevated to trust status and the new Primary Care Trusts (PCTs) were made responsible, by 2003, for spending 75 percent of the NHS budget. In other words, all GPs were now in fund-holding practices, buying services for their ‘clients’ on the internal market from any hospital they pleased.

“GPs lacked the knowledge and skills to take on this responsibility, having received no training in the complex policy and economic issues at stake. If hospital trusts lacked the epidemiological and other planning expertise previously available from health authorities, most PCTs lacked it even more … the principle that the best health care should be offered everywhere alike was seriously jeopardised.” ( NHS plc, p51)

For example, PCTs now had devolved control of their local drugs bill, which was fixed. If for any reason there were geographical variations in population distribution (as there are bound to be), and a particular PCT had a higher requirement for expensive drugs, with the result that the money allocated locally for drugs ran out, these drugs could not be prescribed. Already, there have been numerous court cases regarding the unfair ‘post code lottery’ of treatment, and this situation can only worsen. The solution suggesting itself to the middle class is clearly private insurance and further extension of private provision, but, as ever, this is not an option for the poor.

Private Finance Initiatives

Under PFI, “‘Special Purpose Vehicles’ – ie, consortia of construction companies, facilities management companies and banks – would raise money, by issuing shares and borrowing, to build, own and operate public services like hospitals and schools. Hospital Trusts would lease the buildings, complete with maintenance and support staff, under contracts lasting twenty-five to thirty years or even more. As well as offering rich returns to the private sector the PFI was presented as a way of getting new buildings without raising taxes, at least in the short run … The public would still be paying for hospitals, but payment would be deferred, like hire purchase (but minus the purchase, since when a PFI hospital contract comes to an end the land and buildings will in most cases still belong to the private owners, not the NHS).” ( NHS plc, p52)

In other words, instead of spending tax payers’ money on actual buildings, supplies and clinical services, PFI now gives us the ‘opportunity’ of spending the money on servicing huge debts, mortgaging ourselves to the hilt. Indeed, the public sector has the ‘opportunity’ to fall into a regular ‘third world’ debt trap so beloved of finance capital and enforced with disastrous consequences for exploited nations by the WB, IMF and G8.

“Within weeks of taking power Labour announced its support of PFI … The government’s 2002 White Paper ‘Delivering the NHS Plan’ said that in addition to the 34 PFI contracts completed or signed, 55 major hospital schemes would be carried out ‘mostly through the PFI’.” ( NHS plc, p53)

PFI is very expensive, even before the schemes overrun at NHS expense because the contracts are so loaded in favour of the ‘private partners’. It locks the public sector into costly repayments out of trust annual operating budgets for 30-60 years (sometimes longer than the NHS has existed, in other words!), during which time needs will change radically. More importantly, it cements changes in focus of service planning away from health needs of the local population towards the requirements of banking capital.

A blatant example of this is the fact that built into all the PFI schemes, in order to keep down already prohibitively expensive construction costs, are further reduction in bed numbers totally divorced from the real needs of the population. Clearly, capital is not a charitable institution and is only entering into the hospital construction schemes in order to generate a ‘healthy’ profit.

“Plans now tended to be based on corporate ‘mission statements’ and ‘visions’ rather than assessments of need and projections of resources. Population based planning, involving epidemiology and other public health specialities, was disparaged … The once outstanding effectiveness of the NHS had been sacrificed to parsimony and market dogma for so long that Britain now began to lag behind some other comparable countries in survival rates for serious conditions such as heart disease and cancer, and even in infant mortality.

“The average reduction in bed numbers in the first wave of PFI hospitals was 30 percent, while budgets and numbers of clinical staff were cut by up to 25 percent.

“By their nature PFI’s effects are long term because the contracts are long term. New hospitals have been built more expensively than if they had been publicly financed in the traditional way, and for this reason they have been kept small, so as to minimise health care needs. North Durham PFI hospital, for example, costing £97m, was built with too few beds to handle local demand. As a result the hospital trust was forced to divert money intended for service improvement to pay surgeons to treat NHS patients in nearby private hospitals ‘to stop waiting lists spiralling out of control’.”
( NHS plc, p57)

The NHS Plan 2002/3

And so we come full circle. On the one hand, ‘core’ activities are increasingly privatised, and budgetary shortfalls (PFI Trusts spend between 12 percent and 20 percent of their annual expenditure for the next 30-60 years on servicing the capital borrowed to rebuild!) mean cutting clinical staff and services in one specialty after another, eventually rendering hospitals unsafe and ultimately unsustainable. This in turn rams home the point that, in order to ‘protect their families’, those that can afford it will have to purchase private health insurance, so that more and more services will be directly catered for by the private sector, while the poor will be left to fend for themselves in a skeleton NHS.

So expensive are these PFI schemes that Gordon Brown made a great show of increasing health spending when introducing ‘the NHS Plan’ in 2002/3. Many more services were promised, paid for by increases of 6.1 percent over the next four years – amounting to an overall increase in expenditure of some 30 percent. What was not made clear was the extent to which this was being diverted to private companies to encourage their ongoing participation in PFI schemes. “The government wanted pledges from every service, including the breakdown of professional barriers and the introduction of flexible labour markets.” ( NHS plc, p62)

The NHS budget of £74bn in 2004 is set to rise to £92bn by 2007. A staggering 15 percent of this goes to pharmaceutical companies. A similar amount (over £10bn a year) is already handed over to the construction industry in association with bankers, venture capitalists and ‘service providers’:

“Companies like Balfour Beatty, Tarmac, Jarvis and Siemens are reaping the rewards of multi-million pound PFI hospital contracts … On the fringes are a myriad of advisers and sub-contractors vying for contracts for supplying anything from IT and building and equipment maintenance to Human Resources and agency nursing staff. The grand London offices of large legal and accounting firms such as Herbert Smith, Eversheds, PricewaterhouseCoopers and KPMG are now furnished to a significant extent from fees paid out of NHS funds … and now pressing forward centre stage are the big national and increasingly trans-national health care corporations such as BUPA, PPP, United Health Care, Kaiser Permenante, Westminster Health Care and Capio, seeking new market opportunities through joint ventures with the NHS.

“No one knows quite how much NHS money is being diverted out of clinical care into the pockets of the private sector, because the public expenditure data do not reveal it, and neither do the NHS accounts.

“The NHS plan would be accompanied by a much more radical marketisation of the NHS, both by opening it up to private providers of healthcare and by making even the publicly owned institutions of the NHS more and more like commercial companies,”
forced to break even, as with the North West London Hospitals NHS trust (and so many others) by sacking 10 percent of staff in all departments, including nursing and medical, with disastrous consequences for the quality of health provision as well as the working conditions and morale of NHS staff. ( NHS plc, p63)

In other words, we are paying, from our taxes, a massive ransom to private industry in return for which we receive ongoing privatisation and accompanying erosion of our health care system.

Further, we are beginning to see the first wave of trusts achieving the much vaunted ‘Foundation Status’, in which NHS and Primary Care Trusts will be able to opt out of NHS control entirely, becoming independent, ‘non profit’ businesses, taking 50 years’ worth of invested assets (those that have not already been ‘stripped’) with them.

The only guarantee is that privatisation of the NHS will bring profitable dividends for all the ‘respectable’ companies involved in the theft, as well as one or two lucrative positions on their boards for compliant ministers and civil servants. The British workers, of course, will be footing the bill.

Capitalism in crisis

The size of the NHS and the complexity of the schemes hatched by successive governments (be they Labour or Conservative, equally serving the contemporary interests of the capitalist ruling class as outlined in our introductory remarks) makes it impossible to touch upon every event. However, the key elements have been laid out above. We hope the reader will appreciate the reasons for the introduction of the NHS and equally understand that with the temporary retreat of the world revolutionary movement and the submissive stance of British workers, the NHS has been singled out for privatisation.

No doubt a skeleton service will remain (much like the dental service currently available on the NHS), but whereas private wings have become commonplace in NHS hospitals, it will only be a matter of time before the ratio of provision is inverted and our hospitals are primarily private, with perhaps a subsidiary NHS wing and emergency service (as with dentistry). The impact upon the health of the nation will undoubtedly be greatly detrimental, but this is not the prime concern for capitalism, which is engaged in a life and death struggle to survive.

The drive to privatise the NHS must be seen in the context of and as part of capitalist imperialism’s desperate search to extricate itself from impending crisis of overproduction, for just as feudal society was unable to contain the burgeoning capitalist economy that grew upon its soil, “Modern bourgeois society with its relations of production, of exchange and of property, a society that has conjured up such gigantic means of production and exchange, is like the sorcerer who is no longer able to control the powers of the nether world whom he has called up by his spells.” ( Communist Manifesto, op cit)

Professor Pollock rightly points out that there is a new climate of privatisation sweeping the earth, for capitalism faces a crisis of overproduction. Having impoverished the vast masses of humanity through individual accumulation of society’s wealth, imperialism cannot sell its produce, even though humanity is crying out in need. “The conditions of bourgeois society are too narrow to comprise the wealth created by them.” ( Communist Manifesto, op cit)

Now, as in the 1930s, capitalism is forced into a rabid frenzy over the globe, competing for ‘profitable’ avenues of investment. Just as Anglo-American imperialism is engaging in an orgy of destruction in Iraq and Afghanistan in a vain attempt to ensure its ongoing monopolisation of oil profits and client states’ economies in the Middle East, so the imperialists want to seize on all public assets held by nation states, no matter how essential the services they provide to the local populations.

Water companies are being privatised in sub-Saharan Africa, regardless of the fact that the killings made on the stock exchange are mirrored by the killing of the poorest inhabitants of the countries who can no longer afford clean water. The same is true of schooling, council services, and, of course, health provision.

Imperialism can only seek to extricate itself from crisis “on the one hand by enforced destruction of productive forces [mergers and acquisitions, decreasing productive capacity, ruination of the tiger economies, mobilising its war machine]; on the other, by the conquest of new markets [colonial conquest, inter-imperialist rivalry, privatisation of essential services], and the more thorough exploitation of the old ones. That is to say by paving the way for more extensive and more destructive crises, and by diminishing the means whereby crises are prevented.” ( Communist Manifesto, op cit)

So long as the capitalist system survives, social services, the social wage, like wages in general, will reflect the organisation and militancy of workers. Any concessions won today can be taken back tomorrow. While fighting to defend the NHS and other services that so greatly improve workers' lives, we must remember that we are fighting a holding battle, with the effects rather than the causes of our insecurity.

We cannot protect the health of the nation or of the wider world without taking up the struggle against this rotten, parasitic, decadent and moribund system of exploitation itself.


> Railway privatisation - February 2006
>>back to Proletarian index >>view printer-friendly version