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The politics of health

While Labour may have won the war of Jennifer's ear, the Tories' election victory allows them to press ahead with their programme of NHS reforms.

Dr Michael Fitzpatrick, a GP in East London, looks at the past and future of the health service

The central theme of the Tory government's health service 'reforms' is the creation of an 'internal market' within the NHS. The idea is to introduce the supposed efficiency and consumer-orientation of the market by making a clear distinction between 'purchasers' of healthcare (health authorities, controlling centrally allocated budgets) and 'providers' (hospitals).

To promote the true spirit of competition and enterprise, the new legislation has encouraged GPs to become 'fundholders' controlling, on behalf of their patients, budgets allocated by the health authorities. By April 1992, more than 3000 group practices were running their own budgets, covering some 6.7m patients, 14 per cent of the population. The government has also encouraged hospitals to opt out of health authority control and become independent 'trusts'. At the outset of the scheme, in April 1991, some 57 hospitals opted out and in October a further 99 followed. However in London, where the first wave of trusts had run into serious financial difficulties, four hospitals were required to await the outcome of a special inquiry.


In fact, the 'internal market' is not a market at all, but simply a set of bureaucratic devices for imposing greater financial rigour and managerial control within the NHS. It is ironic that, far from presenting a model of free enterprise, the Tory health service reforms resemble nothing so much as old-fashioned attempts to reform the Soviet economy by decentralisation and the encouragement of local initiative.

Academic commentators have noted that what now exist in the NHS are 'administratively designed markets', rather than 'real markets' (N Flynn, Public Sector Management, 1990); others refer cynically to 'quasi-markets' (J LeGrand, 'The state of welfare' in The State of Welfare: The Welfare State in Britain since 1975, 1990). In the healthcare market in Britain, prices are defined more or less arbitrarily rather than set by competition. Though patients may be restyled 'customers', in practice their GPs act as 'proxy-customers' buying operations, etc, on the patient's behalf.

The government's pre-election drive to reduce waiting lists according to the targets set in John Major's 'patient's charter' had all the hallmarks of the bureaucratic drive to raise productivity in the Soviet Union in the thirties. The Tories arbitrarily declared the goal of reducing waiting lists to two years and set up a special team headed by star Merseyside surgeon Anthony McKeever to lead a national drive to reach the April 1992 deadline. Rather than trust the vagaries of the free market, the government threw £37m into the centrally directed campaign which inevitably fell short of the grand target.

It soon became clear that the two-year limit would be met by a number of classic Soviet-style expedients: by increasing the number of patients waiting for one year; by extending the time between the original patient referral and the outpatient appointment from which the waiting list time is counted; by removing en masse patients waiting for minor procedures; and by pushing forward patients who have been waiting a long time for relatively minor operations at the expense of those waiting a shorter time for more serious procedures.

In other words, the fact that the target was nearly achieved in quantitative terms disguised what was probably a qualitative deterioration in patient care. The only way to achieve a real reduction in waiting lists is by employing more surgeons, more nurses, more operating theatre staff in more operating theatres in more or bigger hospitals - in short, by spending more money on real healthcare, rather than by chasing phoney propaganda targets.

The irrationality of the drive to make healthcare subordinate to market forces has been pointed out by former Tory health minister and pioneering free marketeer Enoch Powell. Powell considers that the attempt to impose the market principle of 'delivering what the customer wants with the maximum efficiency and minimum effort' in the NHS (and in education) is fundamentally flawed, since 'where efficiency cannot be measured in money terms, the logic falters':

'Hence when the government tried to "privatise" outside the area where customers "pay as they go", they found themselves trying to measure education and healthcare, and desperately seeking a non-monetary unit of measurement which would enable them to allocate finance rationally while opting out of responsibility for management.' (E Powell, 'Lost in a maze of hopeless change', BMA News Review, February 1992)

As Powell acknowledges, as long as healthcare is free at the point of use and statutorily financed out of taxation, then a monetary measure is ruled out - and it is impossible to devise an objective measurement of healthcare standards.

Despite the irrationality of the government's NHS reforms, they have won minority support among doctors, managers and others working in the health service. They offer GPs financial independence and the prospect of holding the whip hand over hospital consultants for the first time. They offer hospitals autonomy from health authority control. Over the past two years, there has been a significant shift within the medical profession away from outright rejection towards a more conciliatory approach to the Tory reforms. The notion that the market offers doctors more independence from bureaucratic domination and financial strictures has attracted growing numbers of GPs towards fundholding, and hospitals towards opting out.

But, just as the free market in health is a myth, so is the notion that the reforms increase the autonomy of individual doctors and hospitals. Given the profound overall shortage of resources for the health service and the absence of any coherent method of planning or allocating resources, the inevitable effect of decentralisation is autarky - every GP and every hospital out for themselves, competing for inadequate resources, squeezing down the pay of other health service workers, and rationing services to patients.

The rational kernel of the government's reforms is the drive to decentralise financial regulation to a level at which austerity measures can be most effectively imposed on the service. There are two aspects to this process.

One is to create a formal separation between managers and senior doctors, allowing the bureaucrats to establish the financial framework within which the professionals work and so make the health service 'more businesslike'. The second is to decentralise budgetary responsibility and turn GPs into managers and accountants, thus encouraging those with direct control over spending decisions to exert discipline on service users: economising on spending on patient care. The fragmentation of the hospital service has the additional benefit of allowing managers to break the residual influence of the NHS unions. Already trust hospitals have withdrawn union recognition, introduced no-strike deals and pulled out of national pay agreements.

Would things have been any different if Labour, 'the party of the NHS', had got into government? Labour's response to the Tory reforms has been to romanticise the NHS as an island of caring socialism in a heartless capitalist world, and to denounce trends towards privatisation and the emergence of a 'two-tier' health service. In fact, 'the market', in the sense of the capitalist economy, has always dominated the NHS.

Ever since the foundation of the health service, the state of the wider economy has acted as an external constraint on spending. The postwar Labour government introduced cuts in the hospital budget in 1949, even before the NHS was formally inaugurated. Again, in 1976, Labour chancellor Denis Healey introduced drastic cuts in capital expenditure in the health service at a time of recession. Market forces have also operated within the health service: the postwar Labour government first introduced charges on prescriptions, dentures and glasses in an attempt to curb demand as well as to raise revenue.

There has always been a two-tier health service. Aneurin Bevan, the Labour minister who founded the NHS, made significant concessions to the medical profession and the middle classes. He agreed to keep private beds in NHS hospitals and allowed teaching hospitals to maintain a degree of autonomy within the system.

The private sector has expanded with the sort of generous government subsidy that was an essential ingredient of Thatcher-style private enterprise: some 7m people, 11 per cent of the population now have private health insurance. But the two-tier service goes much deeper than the public/private divide. Middle class patients have always succeeded in getting a higher standard of care in the NHS, by putting more pressure on their doctors, by securing beds in quiet side rooms rather than in open wards, and through many other discreet and informal methods.

Worse to come

The Tories aim to increase the subordination of the NHS to market forces, which will inevitably increase social inequalities in standards of healthcare. They have already privatised hospital laundry, cleaning and other ancillary services, and they aim to push ahead with the drive to reduce the burden of public spending on private profitability. Yet the same commitment was accepted by Bevan and Healey - and by Labour's current health spokesman Robin Cook, who never missed an opportunity in the election campaign to emphasise that Labour's spending plans for the NHS depended on the revival of the British economy out of slump.

Despite Labour's belated election campaign declarations that it would reverse hospital opt-outs and GP budgets, in the course of 1991 there were clear signs that Labour's policy towards health was drifting in the same direction as its policy on everything else - towards that of the Tories. Thus the policy document on health endorsed at the 1991 party conference made no specific commitment to stop GPs holding their own budgets.

Rhetorical resistance

An editorial in the New Statesman in October argued that 'the purchaser-provider split might be Labour's best hope of breaking the provider dominance that so fetters service development and delivery today. The division is one that - properly exploited - could mean a questioning of health providers' priorities and practices by purchasers, and a real reorientation of services around the needs of individuals and communities'. It is strange to find a traditionally Labourist journal not only professing such a faith in the market, but also identifying as staunchly conservative a body of professionals as GPs as the agents of a socially progressive policy.

This argument reflects the views of an influential body of pro-Labour social policy academics. In January, for example, Howard Glennerster of the London School of Economics published a report on GP fundholding. He declared that, though he had started out as a sceptic, he had been 'converted to seeing fundholding as one of the most innovative parts of the NHS reforms' (British Medical Journal, 1 February 1992).

In its sympathetic survey of Labour's health policy in February, the British Medical Journal noted the 'strong contrast between the political rhetoric and the specific proposals':

'The rhetoric is all about the elimination of "commercialisation" in the NHS, whereas the proposals themselves seem designed to salvage as much as possible from the reforms introduced by the Conservatives.' (29 February)

The BMJ was particularly struck by the fact that 'the crucial purchaser-provider split is to remain'.

It is clear that the Labour leadership made a cynical calculation of the electoral advantage to be gained by polarising the debate around the Tories' NHS reforms. It is equally clear that the voters were not impressed.

The BMJ's major criticism of Labour's programme was that 'above all, it makes no specific financial commitment about the funding of the NHS'. The British Medical Association calculates that £6 billion is required this year to bring spending on health in Britain up to the average of OECD countries (Britain currently stands in twenty-second position of the 23 countries in the league table on health spending). However, on 25 March, in the second week of the election campaign, Labour spokesman Robin Cook finally produced a specific financial commitment: £1.1 billion over 22 months.

Behind all the debates about the internal market stands the problem of the chronic underfunding of the health service. Standards of maintenance in hospitals are shameful, the ambulance service, in London at least, is in a state of disintegration, staff at every level are underpaid, overworked and demoralised.

Corrupt and cynical

Before the election the Tories went so far in the corruption of the civil service as to set up a 'good news desk' in the health department, charged with churning out propaganda on the benefits of the reforms. The Labour Party equally cynically exploited the victims of the underspending it is pledged to continue in perpetuity, in its tear-jerking television broadcasts. Whichever party won the election, we were always going to have a fight on our hands to win decent standards of healthcare and decent pay and conditions for those who provide it.

Reproduced from Living Marxism issue 43, May 1992

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