Marketisation and the NHS

The Socialist Health Association believes that our model of NHS has to become part of a National Care System in which social care is also free at the point of need funded out of general taxation.

Use of markets

The NHS can only accommodate the use of markets to a limited and marginal extent. The allocation of resources cannot be achieved through any form of market, and these decisions must be taken by elected representatives. In our NHS patients are generally the commodity and they do not buy their health services as consumers, so a true market is impossible.

The evidence from the two periods when market reforms have been used (under two different governments) shows that the claimed benefits in terms of increased productivity and increased quality cannot be demonstrated despite significant additional transactional costs being incurred.  Changing the model yet again to try using GPs as commissioners is no more likely to succeed than previous attempts and failure will be costly.

Other approaches that work better

We oppose the idea that marketisation is necessary to deliver a world class NHS. We support an NHS which is more integrated, sensitive to patients’ needs and democratically accountable; founded on values of professionalism, cooperation and partnership not on financially driven competition.

The SHA supports continuing development of the many non market mechanisms, such that have been shown to improve quality of patient care. The key to reform is to harness the huge pool of experience, knowledge and enthusiasm which already resides within the NHS.  Many existing successful initiatives such as the National Service Frameworks and local implementations of integrated planning and commissioning are actually undermined by market type behaviour.

Choice and patient and public involvement

The SHA supports patient choice and greater involvement by patients in their own treatment.  Patients should have the free choice of GP and Consultant, informed by high quality and reliable information.  The SHA opposes the assertion that patient choice and payment by volume is the best mechanism to improve services.  Services which deliver poor quality should initially be subject to review and remedial action within the NHS family. In cases of serious or sustained poor service or where a provider is no longer able to deliver a service then an open competitive process could be followed to find a suitable replacement.

NHS Providers

The SHA opposes the assertion that the NHS can be improved by greatly expanding the use of the private sector to provide services based on giving greater choice, and opposes covert and overt attempts to privatise the NHS.

NHS provider bodies will increasingly be various forms of Foundation Trust but this model of community ownership is deeply flawed and must be greatly strengthened to make them accountable to the communities they serve.

Foundation Trusts should remain within an NHS family, with a duty of partnership, and with limitations on any income they receive from non NHS functions.


Commissioning as a function is necessary so the provision of services is planned and so the funding provided for services is properly used.  Commissioning must be based on evidence; used to ensure there is the right distribution of services; managed so that services deliver value for public money and are in line with the national and local priorities for improving health and reducing health inequality.

Commissioning must be separate from provision (though it could reside in the same organisation) and free of any form of conflict of interest, and responsibility must reside in a public sector body; commissioning responsibility cannot be given to the private sector under any circumstances.

The SHA believes that the Tier 1 Local Authorities should have responsibility for the integrated commissioning of all care at least at the strategic level. Local service providers, especially GPs, and patient groups, should have a central role in advising commissioners and in the identification of priorities in their locality. Commissioning decisions should always be based on evidence which should be freely available for scrutiny.

Funding to commissioners should be determined by weighted capitation and funding by commissioners should be based mainly on local strategic needs evaluation and value for money.  In areas such as public health, community care and emergency care funding should be provided on a stable non market basis to ensure the quality and continuity of delivery.

Public Health

The SHA believes that public health should be adequately and separately funded and should take a steadily increasing share of NHS resources over time.  Responsibility for public health should be with the local authorities which should be accountable for improving health inequalities.

Procurement and private providers

Whilst some benefits may be obtained from open tendering for services in some circumstances this can only rarely apply for clinical services.  It should be recognised that comparison of price alone is inappropriate for awarding contracts and a best value approach is necessary recognising the need to assess the impact of any change on the whole of the NHS. It should be acknowledging that there is additional inherent value in existing NHS providers. All providers to the NHS must waive any rights to commercial confidentiality and must comply fully with all requirements for provision of information.  Private providers should not be subsidised either directly or indirectly, and no NHS funds be spent on any form of market development.

Private providers have always been ubiquitous in the NHS, making everything from equipment, pens and buildings. However, private providers of health care, in general, carry unacceptable risks. They are unstable partners, following the money. The profit motive distorts the focus on patients and makes their services more expensive. They are more likely to cut corners and sacrifice quality.  These risk factors must be included in any contract for services.


Some may argue that GP services are currently privately provided and it is a system that works well. However, GP services are not owned by private shareholders, and in many respects, eg, payment of infrastructure costs, pensions and disciplinary processes, these services are classed legally as belonging to the NHS.

On the other hand, the GP service is shaped by financial drivers that ensure that practices frequently behave like private businesses. These behaviours are often not the most effective and efficient. The independent contractor status can disrupt relations with other community service providers. Standards between practices are variable, partly because their independent status has made it more difficult to regulate them.

The SHA accepts the role for GP practices tied to the NHS through contracts but believes that the relationship should be better regulated and managed to remove unnecessary variation and to deter inappropriate behaviours.  The SHA does not support GPs being responsible for commissioning although they must be centrally involved, alongside other key stakeholders, in local commissioning decisions.

Funding and GDP

The SHA believes that using around 10% of GDP to fund care is in line with spending by other developed democracies and is a reasonable charge on public funds. Funding out of progressive general taxation is the fairest and most just method.