Why the next Labour Manifesto must pledge to legislate to reinstate the NHS

The 2017 Labour manifesto for health, like the road to hell, is paved with good intentions.

Its pledges include improving children’s and mental health services, more funding for NHS and social care, tackling obesity and other public health prevention initiatives. However, unlike the Beveridge report of 1942, which considered the social determinants of health in the round, with its plan to slay the five giants of want, disease, ignorance, idleness and squalor, this manifesto for health has no public health framework. It is puzzling to see the issues of tackling unhealthy foods, obesity, physical activity, smoking and alcohol tucked under public health and the NHS, when what is required is an appreciation of the wider health political economy and the roles of industry and poverty. Redistributive policies are absent as are legislative actions, apart from on food labelling, advertising and a sugar tax.

This health manifesto has cherry-picked the bits that those with the loudest voices have lobbied for, for example, the cancer fund, PrEP (pre-exposure prophylaxis), sexual health and HIV services, free hospital car parking, medicines review and regulation, the children of alcoholics, young smokers, mixed sex wards and special enquiries into blood contamination and the drug Valproate. It’s a jumble of ideas competing and jostling for priority. Each good intention is individually worthwhile but there’s no coherence as a strategy and no connection to rights to health and social determinants of health. What is missing is the big picture of what is really happening to the NHS, social care and public health.

The privatisation problem

Let’s start with the NHS and Social Care which are considered separately:

“The next Labour government will reverse privatisation of our NHS and return our health service into expert public control. Labour will repeal the Health and Social Care Act that puts profits before patients, and make the NHS the preferred provider.”

Care services have been relentlessly privatised over decades (See Pollock, 2005). The Health and Social Care (HSC) Act 2012 abolished and dismantled the NHS in England. Most social care and long-term care is delivered by for-profit companies and is means-tested. Public health has been pushed out to local authorities along with many sexual health, health promotion, HIV, and children’s services, and now the funding is being turned off and services closed. Long-term care has been almost completely privatised. These are structural changes. Yet Labour’s manifesto is virtually silent on the drastic and devastating system changes that have taken place as a result of the 1990 internal market and the 2012 Act. There is no whole-system approach, although the story that is being spun is one of integration of services and budgets.

“The National Care Service will be built alongside the NHS, with a shared requirement for single commissioning, partnership arrangements, pooled budgets and joint working arrangements. We will build capacity to move quickly towards a joined-up service that will signpost users to all the appropriate services at the gateway through which they arrive.”

There is nothing to differentiate these aspirations from the current Conservative administration’s articulation of its own policies. How exactly are sexual health, public health, mental health and children’s services, which are currently so fragmented – commissioned by so many different bodies and provided by a plethora of ‘providers’ – going to be reintegrated? How is long-term care provision, which is owned and operated by multinational for-profit companies, going to be integrated with publicly owned and publicly provided as well as privately operated health services? What are these partnership and joint working arrangements? How will pooled budgets and integration work, when NHS care is free and social care is charged for and means-tested? There is a marked disconnect in these aspirations.

Most worryingly is the manifesto commitment to make the NHS the ‘preferred provider’, continuing the problematic purchaser-provider split and market elements in the NHS. Is there any intention to take long-term care and social care back into public ownership and control and to have national services? Rather, the commitment is to mitigating market excesses: the manifesto declares: “We will introduce a new legal duty on the Secretary of State and on NHS England to ensure that excess private profits are not made out of the NHS at the expense of patient care.”

The manifesto makes no mention of commercial contracting being virtually legally compulsory for the NHS. What are excess profits – why have profits at all? In other words, the manifesto is committed to the status quo of commercial contracting, except for limiting excess profiteering. How exactly it is going to do that is a mystery.

As for new legal duties, the primary establishing legal duty on the Secretary of State since 1946 has been to provide universal healthcare throughout. It was abolished in 2012. Why doesn’t the manifesto commit the party to restoring the duty to provide, rather than saying: “We will reinstate the powers of the Secretary of State for Health to have overall responsibility for the NHS.”

On the workforce, the manifesto says:

“To guarantee the best possible services for patients, Labour will invest in our health and care workforce. A Labour government will step in with a long-term workforce plan for our health service that gives staff the support they need to do the best for their patients.”

Once again the manifesto fails to mention the enormous deregulation of terms and conditions that has occurred as a result of commercial contracting and the internal market. NHS Foundation Trusts are structurally 49% non-NHS and can set their own terms and conditions and determine staffing levels. In the mainly private for-profit long-term care sector, most employees are low-paid women and un-unionised. This is going to get worse under current government plans for partnerships.

Partnerships and fragmentation

Commercial contracts and joint ventures with the private sector are at the heart of the current government’s plans for radical changes to the NHS and its new models of care, termed Accountable Care Systems (ACSs) and Accountable Care Organisations (ACOs). Currently NHS England and Clinical Commissioning Groups (CCGs) are tendering for many thousands of contracts each year with multiple NHS providers and private companies bidding, all at great cost.

In future this could reduce to a few hundred contracts. The Government plans to bundle up services into giant contracts which will be awarded by CCGs and local authorities to the above-mentioned ACOs. Organisations, known variously as Multi-speciality Community Providers (MCPs) and Primary and Acute Services (PACS) comprise these private and/or public NHS providers. These large contracts will be for ten years minimum. ACOs (MCPs and PACs) will in turn manage the risks and costs of care through subcontracts – which in turn may also sub-subcontract for services.

NHS providers and private providers can form Special Purpose Vehicles (SPVs). According to accountants PWC, this is an

“off-balance sheet vehicle comprised of a legal entity created by the sponsor or originator, typically a major investment bank or insurance company, to fulfil a temporary objective of the sponsoring firm. SPVs can be viewed as a method of disaggregating the risks of an underlying pool of exposures held by the SPV and reallocating them to investors willing to take on those risks. This allows investors access to investment opportunities which would not otherwise exist, and provides a new source of revenue generation for the sponsoring firm.”(1)

So SPVs are a mechanism for bringing in private health insurers and property companies and investment bankers. This is what integration means in the market place – bundling up services into giant contracts and tendering them out. This Labour manifesto shows no sign of distancing itself from, and abolishing the market with necessary legislation.

Labour is also committed to a new model of care:

“We will work towards a new model of community care that takes into account not only primary care but also social care and mental health. We will increase funding to GP services to ensure patients can access the care they need. And we will halt pharmacy cuts and review provision to ensure all patients have access to pharmacy services, particularly in deprived or remote communities.”

But Labour is utterly silent on how it will do this and how it will engage with the current Government’s radical ‘new models of care’ or joint ventures, through which it is transferring risks and its responsibilities for funding and providing services to private providers and ultimately patients. The manifesto’s references to partnerships and integration are ominous when there is no pledge to taking back public ownership and renationalising the NHS and social care. GP services are being cut and increasingly run by private for profit companies.

“Labour will halt and review the NHS ‘Sustainability and Transformation Plans’, which are looking at closing health services across England, and ask local people to participate in the redrawing of plans with a focus on patient need rather than available finances. We will create a new Quality, safety and excellence regulator – to be called ‘NHS Excellence’.”

Sustainability and Transformation Plans (STPs) and ACOs are the key mechanism for privatising NHS clinical services and for introducing alternative sources of funding for health care, namely health insurance and charges. Although there is as yet no legislation for STPs, ACSs and ACOs, the Government is pushing through these new organisational forms and contracts at breakneck speed, under the parliamentary radar and without public knowledge and consent, in order to bind the hands of future governments.

NHS England has already appointed clinical leads and managers to many of the 44 STPs, and has spent over £20m on management consultants and staff.(2) For example, a contract worth £2.7m has been awarded to Capita by Nottinghamshire and Nottingham STP to support the area’s sustainability developments. Capita in turn has subcontracted with Centene UK, an American insurance company, to provide expertise and run its STP as it moves to ACS status.(3) Centene’s core business in the US is in the Medicaid Managed Care market, whereby private insurers control government budgets for the poor, contract with providers, and pocket the difference. Following some highly profitable acquisitions in the US, the company announced its intentions to expand abroad and already has a partnership arrangement with the Valencia government’s corporate partner in the Alzira health service, Ribera Salud. Ribera Salud is currently under police investigation for corruption.(4)

It’s also been recently announced that Nottingham CCG has tendered a contract for community services worth £205m as part of the intended ACS. Given those now involved in the ACS formation, it can safely be assumed this will be awarded to a private company. At least eight other STPs are reported to be following suit in developing ACSs, and will receive £450m of transformation funding from NHS England.

Halting and reviewing STPs is a first step but it won’t go far enough: the changes are being driven by NHS England. The Labour manifesto is silent on the fact that most Foundation Trusts (FTs), which since 2012 have had new powers to enter into join ventures and to generate 49% of their income from private patients and other non-NHS sources, are entering into giant contracts of their own with property management companies.

Funding

“Labour will boost capital funding for the NHS, to ensure that patients are cared for in buildings and using equipment that are fit for the 21st century. And we will introduce a new Office for Budget Responsibility for Health to oversee health spending and scrutinise how it is spent.”

But there is no mention in the manifesto of the crippling costs of the Private Finance Initiative (PFI). A recent study by the Centre for Health and the Public Interest calculated that £831m had been made in pre-tax profits by PFI companies over the past six years, money which has not been available for patient care. This figure is equivalent to at least a quarter of the total NHS hospital deficit over the same period.

The Department of Health’s annual capital budget has been frozen in cash terms over the five years to 2020-21. Much of its revenue funding has been rebadged as capital, for example, relabelled Research and Development revenue funding, depreciation and previously committed expenditure. Moreover it is being used to balance growing revenue deficits in the NHS Trust sector. In 2016-17 the DH Annual report and accounts reported that £1.2 billion of capital was moved to revenue expenditure in that year, a recurring pattern year on year.(6)

To get around the lack of capital as well as the affordability, debt and deficit problems, FTs, especially those with PFI and deficits, are entering into various forms of joint venture in order to transform estate ownership and control. A hospital trust entering into an SPV with the clinical services income attached will have the additional attraction of being able to generate income from such services to pay the heavy debt charges and to raise borrowings for new capital using existing NHS property and to refinance PFI schemes.

University College Birmingham NHS FT has, for example, recently linked up with the Healthcare Corporation of America (HCA) to build a mixed economy facility of 72 public and 66 private beds. According to the Trust, all capital has been provided by HCA. As an FT it can generate up to half its income privately. As such it is well positioned to become an ACO model. HCA currently has four joint ventures with NHS hospitals, including University College Hospital London and the Christie in Manchester.(7)

Another form of joint venture, is the Strategic Estate Partnership (SEP). These 55 partnerships between the public and private sectors are intended to give the former greater control through non-exclusive contractual relationships where different stages of the process will be open to renewed tendering. In theory at least, this will mean a continual appraisal of value for money arrangements. In practice, however, SEPs are largely about maximising revenue creation in as many ways as possible, including developing retail outlets, car parking, patient hotels, sales and disposals, and private patient units.(8) Indeed many former PFI companies, such as Interserve, Prime and the Rydon Group, have simply transferred their attention to this new model which, given the scale of investment opportunities involved, could be considered a type of ‘PFI Plus’.

There are currently more than eight SEPs reported on commercial and contracting websites, though it is hard to find any detail on Department of Health and NHS websites. The first SEP was at Lancashire Care Foundation Trust, with others now including Cheshire and Wirral Partnership FT, University Hospital Southampton FT, Isle of Wight Trust, Yeovil District Hospital FT and one at Hinchingbrooke following the collapse of Circle’s management of the Trust. Several more are in the pipeline. These include North West Anglia NHS FT, Oxleas NHS FT, and Whittington Hospital NHS Trust.

The Labour manifesto does not mention the selling off of NHS assets to create revenue for the Treasury. Yet a key attraction of joint ventures, which allow investment bankers and property management companies to partner in health care, is the sale and disposal of NHS assets. Since the HSC Act 2012, the government has paved the way for privatisation of non-FT estate with the abolition of NHS Estates and creation of two Department of Health-wholly owned companies, NHS Property Services and Community Health Partnerships. NHS Property Services holds the estate of Primary Care Trusts and Strategic Health Authorities which was not transferred to trusts and is among the largest property owners in Europe. It is now charging exorbitant market rents to the NHS and GPs, to such an extent that small GP practices are closing and trusts and CCGs are struggling to pay. Community Health Partnerships includes 49 Local Improvement Financial Trust Companies with investment of £2.5 billion and 339 facilities involving 29 companies.

NHS England has created six regional public-private partnerships to help speed up disposals, and once approval has been obtained, these will be advertised in the Official Journal of the European Union in six lots worth more than £3bn. Codenamed Project Phoenix, “private companies will work with the NHS to achieve the best market price for the sales without the requirement of upfront public investment, with profits shared between the NHS and its private partners. Details of the profit split have yet to be revealed”, according to the Health Service Journal.(9) In August this year Primary Health Properties, Octopus Healthcare and Assura came forward with a combined offer of £3.3bn of investment, which they say would provide the entire private capital necessary to embed STP plans and fund up to 750 new primary care centres at an approximate rental value of £200m per annum. All three companies incorporate both investment and property arms and are based offshore.(10) According to a LaingBuisson market report on primary care from 2015, the three companies, at a combined aggregate of £2.27bn, already had a 19% share of the estimated asset value of all GP premises in the UK.(11) Harry Hyman, managing director of Primary Health Properties, has been quick to say that this is not a form of PFI, rather a “continuation of our business model where we own the properties and rent them for the period of the lease.”(12)

The manifesto makes four pledges for increasing funding:

“We will increase the social care budgets by a further £8 billion over the lifetime of the next Parliament, including an additional £1 billion for the first year. This will be enough for providers to pay a real living wage…Labour will commit to over £30 billion in extra funding over the next Parliament through increasing income tax for the highest 5 per cent of earners and by increasing tax on private medical insurance, and we will free up resources by halving the fees paid to management consultants.”

Of course more funding is necessary. By 2015–16, NHS commissioners, NHS trusts and NHS FTs reported a combined deficit of £1.85 billion, a greater than threefold increase in the deficit position of £574 million reported in 2014–15. Provider trusts’ overall deficit grew by 185% to £2.45 billion, up from £859 million in 2014–15, against a total income of £75.97 billion.

In addition, two-thirds of NHS trusts (65%) and NHS FTs (66%) reported deficits in 2015-16, up from 44% of NHS trusts and 51% of NHS FTs in the previous financial year. The number of CCGs reporting cumulative deficits was 32 in 2015–16, up from 19 in both 2014–15 and 2013–14.

However, the Labour Manifesto fails to address where the money is going, namely the transactions costs of the market (12-30%), the high costs of PFI and prices of drugs and technologies which rise ahead of NHS pay and the costs of management consultants. It is silent on the enormous costs of administering a market, a market which it plans to retain, stating only that it will free up resources by halving the fees paid to management consultants.

The NHS Reinstatement Bill

Most surprisingly, the manifesto makes no mention of what will replace the HSC Act 2012 and no mention of the NHS Reinstatement Bill, which Jeremy Corbyn and John McDonnell supported before becoming leader and shadow chancellor respectively. This Bill has been tabled three times in the House of Commons, most recently by Margaret Greenwood MP.

Diane Abbott, in her brief tenure as shadow health secretary, told Bill supporters outside parliament that Jeremy Corbyn had made a point of returning to the Commons to be present for the debate. It appears that the lack of manifesto commitment to the Bill comes from quarters within Labour other than Corbyn and his allies. The next Labour manifesto must now remedy the catastrophe that is unravelling and commit to the NHS Reinstatement Bill. Unless this happens, there will be no NHS.

The Bill proposes to fully restore the NHS as an accountable public service by reversing 25 years of marketisation in the NHS, abolishing the purchaser-provider split, ending contracting and re-establishing public bodies and public services accountable to local communities. This is necessary to stop the dismantling of the NHS under the HSC Act 2012. It is driven by the needs of local communities. Scotland and Wales have already reversed marketisation and restored their NHS without massive upheaval. England can too.

The Bill provides flexibility in how it would be implemented, led by local authorities and current bodies. It would:

reinstate the Government’s duty to provide the key NHS services throughout England, including hospitals, medical and nursing services, primary care, mental health and community services,
integrate health and social care services,
declare the NHS to be a “non-economic service of general interest” and “a service supplied in the exercise of governmental authority,” so asserting the full competence of Parliament and the devolved bodies to legislate for the NHS without being trumped by EU competition law and the World Trade Organization’s General Agreement on Trade in Services,
abolish the NHS Commissioning Board (NHS England) and re-establish it as a Special Health Authority with regional committees,
plan and provide services without contracts through Health Boards, which could cover more than one local authority area if there was local support,
allow local authorities to lead a ‘bottom up’ process with the assistance of CCGs, NHS trusts, NHS FTs and NHS England to transfer functions to Health Boards,
abolish NHS trusts, NHS foundation trusts and CCGs after the transfer
abolish Monitor – the regulator of NHS FTs, commercial companies and voluntary organisations – and repeal the competition and core marketsation provisions of the 2012 Act,
integrate public health services and the duty to reduce inequalities, into the NHS,
re-establish Community Health Councils to represent the interest of the public in the NHS,
stop licence conditions taking effect which have been imposed by Monitor on NHS foundation trusts and which reduce the number of services they currently have to provide,
introduce a system for collective bargaining across the NHS,
centralise NHS debts under the PFI in the Treasury, require publication of PFI contracts and also require the Treasury to report to Parliament on reducing NHS PFI debts,
abolish the legal provisions passed in 2014 requiring certain immigrants to pay for NHS services
declare the UK’s agreement to the proposed Transatlantic Trade and Investment Partnership and other international treaties affecting the NHS to require the prior approval of Parliament and the devolved legislatures,
require the Government to report annually to Parliament on the effect of treaties on the NHS.

Conclusion

By 2011 David Bennett the former head of Monitor, the economic regulator of the NHS, was telling the Times: “The NHS is ripe for dismemberment.” He declared to the House of Commons health select committee: “We, in the UK, have done this in other sectors before. We did it in gas, we did it in power, we did it in telecoms… We’ve done it in rail, we’ve done it in water, so there’s actually 20 years of experience in taking monopolistic, monolithic markets and providers and exposing them to economic regulation.”

On Sep 27th 2016, Diane Abbott, then shadow health secretary, stated at the Labour Party conference:
“Under Jeremy Corbyn’s leadership, the Labour Party will be committed to halting and reversing the tide of privatisation and marketisation of the NHS. The Health and Social Care Act has fragmented the system, making it so much easier for the private sector to move in. Conference, Labour in government will repeal the Health and Social Care Act. This means returning our NHS to what is was originally conceived as: a publicly owned, publicly funded, publicly accountable universal service as outlined in the NHS Reinstatement Bill now being expertly piloted through Parliament by my colleague Margaret Greenwood, MP for Wirral West, with the support of the Labour leadership.”

We must all hold the Labour Party to that pledge.