The NHS Sell Off

It has always been clear that the Tories have wanted to sell off the NHS. Lansley's (well, more likely Oliver Letwin, he's the one with the brains) plans has always been to take all hospitals out of public ownership. The NHS White Paper talks about "social enterprises" but it goes further than that. By definition a "social enterprise" is a not-for-profit company but they are still private businesses able to buy other businesses and to sell off parts of their business. This means that part of an NHS hospital could easily be sold off to a private company. Social Enterprises are a way for the government to rid itself of any responsibility for healthcare provision, but to the uninitiated there is something, well, "social" about them. The White Paper only says "social enterprises" to take the sting out of their real intent, which is to sell everything off.

Today Francis Maude launches a new programme to allow "employees" to "mutualise" public services. The idea is that "employees" will buy the asset off the government (school, hospital, community centre) and then run the service themselves. A social enterprise means that all profits are re-invested in the service, but the government, which has an extreme free market ethos, believes that the only effective incentive is pure hard cash, so the "mutualisation" route means profit share, which by definition means a for-profit organisation.

But who are these "employees"? Since the Internal Market was introduced all hospital trust balance sheets have to give the value of the hospital. My local hospital employees 2000 NHS staff and a further 1000 contract staff (mostly cleaning and catering); it has 450 beds and about 50 thousand admissions every year. The hospital is valued at £75m, its income is £105m and it makes a 4% surplus. So if the hospital is "mutualised" what will happen, will each and every one of those NHS employees be asked for £37,500 as their share of the £75m? Of course not. The idea of the employees owning their hospital is ludicrous.

The way it will work is that the hospital board will go to the City and ask them for a loan - just like any business would. The "mutualise" bit will be that a proportion of the surplus will divided out to the employees in proportion to their salary (note: and not invested as healthcare). A consultant on £150k will get a lot larger "profit share" than a porter. That may well be an incentive for the consultant, but the porter will be none the better. Since the "profit share" implies a profit, it means that if there is no profit then there is no "share", and we are heading for a financial crisis in the NHS.

I once worked as a software developer for a plc that introduced a profit share. Every time I was asked to work extra hours I was reminded "think of your profit share". Naively, rather than asking for overtime, I accepted the "profit share" argument. At the end of the year there was a company meeting. It turned out that the parent company had had a dodgy salesman who had lost a lot of money. All the companies in the group had to contribute to make up the loss and although our division had made a whacking great profit, all of it had to go to pay off the money lost by the salesman. There was no profit to share and the scheme was closed down. I decided at that point that I wanted "an honest day's pay for an honest day's work" and that the directors and shareholders could worry about profits.

A "social enterprise" is be outside of NHS terms and conditions (initially they will keep NHS T&C but after a few years they will no longer apply) so most staff will find that their salaries will fall because there is no national bargaining and schemes like the Agenda For Change increments will be abolished. Any "profit share" will not be enough to make up for the loss of those benefits. "Mutualisation" will not be in the interests of most employees.

Of course, you are now thinking that I am a doomsayer and that this cannot happen. Further, you may also say that the Labour party will be against this great sell-off of the NHS. Unfortunately, the entire policy is a New Labour policy.

For much of the last administration, Labour insisted on an ideology of purchaser-provider split, that is is, within the NHS some organisations provide healthcare, and others commission them. PCTs were supposed to be purchasers commissioning hospitals, community health services and GPs. (And dentists, opticians, pharmacies etc etc.) However, historically PCTs have provided services. In some cases it is accidental - for example in my area the PCT owns some GP practices because the original GP either had financial issues, or the GP died and the PCT wanted to continue the care in the same premises with a new GP. In other cases the services are part of what PCTs have always provided, and Community Health Services comes in this category.

The last government decided that PCTs should be purchasers only and so told PCTs to divest themselves of any providers, and this mostly means Community Health Services: community hospitals and clinics, physiotherapists, chiropodists and district nurses. PCTs were given two options. If there was a local Foundation Trust then they could bid to take over the Community Services (or the service could apply to be a Community Foundation Trust in their own right). Or the employees were allowed the "Right to Request" to create a "social enterprise" (as explained above). That is, under Labour the planned NHS sell-off began.

Few Community Health Services took up this option. Unite and Unison were against the concept of "social enterprises" fearing, rightly, what would happen to the employees, so every time a PCT arrange to divest itself of Community Health Services the unions campaigned against the "social enterprise" option. This did mean persuading employees to vote to join a Foundation Trust, and yet we now know that the FTs will become "social enterprises" themselves.

The one shining example that is held up is Surrey Central Health. Maude will tell you what a wonderful organisation this is. But the fact is, there are very few others like this. Remember that the idea is a "market" in healthcare. Surrey Central Health currently has the contract for Community Health Services in the area, but will it continue to do so in the future? The genie is out of the bottle, when the contract expires it can easily be handed to another non-NHS organisation, like one of the big US operators. at that point people will rightly ask "how did this happen?"

Yesterday saw the announcement of two rather rich people deciding to get married next year and expecting us to pay for their wedding. It was a "good day to bury bad news" since the media had gone gaga over what should be a personal announcement.  One very important piece of news was released and has not been followed up by the media. It is an announcement from the Department of Health about the latest NHS sell-off.

Thirty-two projects will form the third wave of NHS organisations that want to set up social enterprises, through the NHS ‘Right to Request’ scheme that gives public sector workers the opportunity to become their own bosses. ... Today’s announcement of the third wave of proposals means that, since it was set up in 2008, 'Right to Request' has generated a total of 61 innovative proposals from staff to take over the services they provide. These proposals will transfer an estimated £900m of services and almost 25,000 NHS staff into the social enterprise sector.

The bad news announcement yesterday was that the almost a billion pounds of NHS services (out of a budget of £105bn, so this is about 0.8%) will be  taken out of public ownership. The latest "wave" will double the existing number of "social enterprises" to 61. (Interestingly, the health service commentator, Andy Cowper, commented "Why so few takers for liberation? Genuinely quite surprised by that".)

This was bad news because it shows that the NHS sell-off is gathering pace. But have any news media reported this? No. The reason is that the government and the Labour party do not want to frighten the public. Neither of them want this to be seen as the great sell-off that it is. Look at the statement "third wave of proposals means that, since it was set up in 2008, 'Right to Request' has generated a total of 61 innovative proposals" You'll notice that this great sell off started under the last Labour government.

This is why I was cynical when Labour MPs and officials were spouting about yesterday being a "good day to bury bad news" and then desperately trying to find some "bad news" to report (for example, here on Labour Uncut). They all missed the really bad news because they were complicit in creating it.