Putting People First

A Socialist Health Service for the 1990s

October 1990


This is the second of two reports on health service funding and structures by the Socialist Health Association. The first report, entitled Their Hands in Our Safe, was a critique of the internal market and other policies developed by the Conservative Party during the Prime Minister’s Review of the NHS. This second report, Putting People First, proposes a Socialist alternative.

The report was written by Paul Brotherton, Joe Collier and Roger Harris, with contributions by members of the SHA Central Council and a number of experts in the health service field.

Publication of the report has been funded by generous donations from the SHA members and affiliates listed below —

  • David Blunkett MP
  • Dr Elizabeth Bunbury
  • Lilian Caplan Morgan
  • Stanley Cook
  • Hyman Davies
  • Anne Davis
  • Terry Davis MP
  • Dr E F Dott
  • G B Drummond
  • Gwyneth Dunwoody MP
  • M Eggleston
  • I M Elliott
  • Barry Greatorex
  • Dr Hermann Grunwald
  • Dr Leslie Milliard
  • Dr D Holdstock
  • M Jeffreys
  • Dr C R Kenchington
  • Irene Leonard
  • J O Lewis
  • A Loughborough
  • Dr A MacDonald
  • Brenda and Derek Marcus
  • N Mays
  • Joy Mostyn
  • Dr Douglas Naysmith
  • Laurence Nerva
  • B Pidgeon
  • M Potts
  • Dr W Rapoport
  • W A Reid
  • Mike Roberts
  • Ernie Ross MP
  • Gavin Ross
  • Richard Soffe
  • Dr Richard Stone
  • John W A Watt
  • Lucy Wedderburn
  • S E Whitefield
  • Barbara Whitehead
  • G Will
  • AEU Croydon
  • COHSE Colchester
  • Eccles CLP
  • Esher CLP
  • FBU
  • Kent Graphical
  • MSF Central London Medical
  • MSF Craft Sector Salford
  • MSF Edinburgh & SE Scotland
  • MSF London Regional
  • MSF Midland Health Services
  • NCU Leicester External
  • NUM Derbyshire
  • NUPE Leeds No. 1
  • NUPE Northampton Local Government
  • NUPE Sunderland Health Service
  • Portsea Island Co-op Party
  • SOGAT Mid
  • South & West Kent
  • SOGAT West of Scotland
  • TGWU 5/908
  • TGWU Hatfield Vehicle
  • Wimbledon CLP.

The Need for Change

This report argues for the transformation of the National Health Service (NHS). It is the second part of a two part study by the Socialist Health Association (SHA) on NHS funding. The first report, entitled ‘Their Hands in our Safe’1, was a critique of the internal market and other policies developed by the Conservative Party during the Prime Minister’s Review of the NHS. This second report, ‘PUTTING PEOPLE FIRST’ proposes a Socialist alternative.

The Need for Change

The NHS is now grossly under-funded. Despite the best efforts of staff and the excellent quality of care in some areas, the overall picture is of a service in decline. Waiting lists are growing, buildings crumbling and vital new services delayed year after year. The NHS is still orientated towards acute medicine rather than health promotion, choice has been reduced, health inequalities are growing and privatisation is rampant. Staff are poorly paid and face worsening conditions at work.

The NHS Review, which was partly prompted by a recognition of the severe funding crisis, has done nothing to bring more money to the health service. The NHS is threatened by being converted into a health care market, with fragmented services competing with each other in a cash-starved service. The private sector will receive a massive boost and patient choice will diminish as managers encourage general practitioners (GPs) to refer to the cheapest hospitals.

It is clear that an incoming Labour Government will need to reverse the NHS and Community Care Act almost in its entirety. The Party will also need to make a clear commitment to increase substantially NHS funding to repair the damage of the 1980s. But there will be a need to do more than simply call for increased cash for the health service. Extra NHS funding should be seen as a means of achieving Socialist health objectives rather than as an end in itself.

This report outlines the sort of health organisation and funding policies the SHA would like to see in Britain. It argues for a modern, democratic user-orientated NHS — one which enables us to achieve the Socialist objective of a high and equal standard of health provision throughout the country which is free at the point of access.

A Socialist Health Policy

Any consideration of funding and organisation must begin by looking at the overall purpose of the service. Service objectives must dictate funding levels — not the reverse as has so often been the case in the past. The NHS aims to improve health, treat illness and provide care for those who need it. The overall objectives of a Socialist NHS should be to create a system which reduces social and geographical inequalities, provides equal and good access to services, is publicly funded, is free at point of use, is effective and efficient, ensures equal opportunities, is democratic and responsive, and is a good employer. Moreover the NHS should increasingly work with local and national agencies to help create a healthier environment and to eliminate poverty in order to reduce health inequalities.

Within such broad objectives there will need to be more specific objectives, and so the revitalised NHS would need to ensure, for instance, that —

  1. Services for elderly people should involve hospital inpatient care only where necessary, with better services in the community to prevent admission and facilitate discharge from hospital. Units should be small, and long stay nursing home provision should be expanded in the NHS, local authorities and the voluntary sector.
  2. The closure of mental health hospitals must continue, with a major boost for services in the community. Asylum, where needed, should be in small accessible units. A fundamental shift in services away from the hospital dominated model, as outlined in the SHA report ‘Goodbye to all that’2, is needed. Most services should be transferred to local authorities, who also need support for appropriate housing and social service provision.
  3. Alternatives to large hospitals for people with learning difficulties must also be developed and those hospitals closed. Community care must be varied and comprehensive in each locality, and is again best placed within a local authority context. Support for people in their own home must be increased, with respite facilities and help for carers. Services for people with disabilities should follow a similar pattern.
  4. Community services must be at the centre of a Socialist health service. They need a massive boost, with more services designed to prevent hospital admission and to assist early discharge. A major health centre building programme is required to promote integrated primary health care teams in each Liaison with hospitals and with local authority services must be developed.
  5. Family practitioner services need to concentrate more on prevention, and on carrying out treatments in doctors’ surgeries and community hospitals rather than in large general hospitals. Like hospital doctors, GPs should be salaried employees and their services integrated with those currently run by health authorities.
  6. Health promotion must take a central place, and should be focussed on reducing inequalities in health. Workplace health regulations should be strengthened and occupational health services extended. Environmental controls need to be tighter and local authority services reviewed to maximise their impact on good health. Health promotion in schools needs to be increased.
  7. Maternity services need more user choice and control. Advocacy schemes must be expanded to allow people to have more say in the services they use. Services should be flexible to meet fluctuating demand. Women should be able to choose to see a woman doctor, and there should be more continuity of care and a greater role for the midwife.
  8. Local Acute services require early detection of disease, and are dependent on good primary health care and access to high quality diagnostic services. They should not involve unnecessary treatment, nor unnecessary referral to hospital. Where consultant services are required they should be easily accessible, with decentralised outpatient services where possible. Treatment should be quick, involve minimal intervention and hospitalisation, and provide full information and choice for users.
  9. Specialist Acute services should be fully evaluated, with the patients’ point of view being to the fore. There should be no unnecessary treatment nor empire-building of wasteful facilities. Specialist centres should be fully integrated with district general hospitals (eg outpatient services), with people having equal access to services no matter where they Medical teaching should be broad based, with more concentration on communication skills, prevention and community health issues:

Some key funding and organisational implications that arise from these objectives are that:

  • there is an over-riding need for good primary health care, with an emphasis on
  • there should be good liaison between community and hospital services.
  • hospitals must   focus   on   early,   non-invasive, detection of illness and avoid unnecessary treatments.
  • services should be decentralised.
  • large mental   health   and   learning difficulty hospitals should be closed and replaced with more appropriate local services
  • better financial, practical and emotional support for carers are needed.
  • health and local authority services should be better integrated.
  • resources should be devoted to tackling inequalities.
  • User choice and empowerment should be central to all services in the NHS.
  1. Bridging the Funding Gap

The Eighties — A Decade of Decay

It is now generally recognised that in order to maintain standards in the NHS there needs to be an overall real growth rate in funding of about 2 per cent a year. This is made up of 1% to keep pace with the ageing population, 0.5% for the cost of new medical technology and 0.5% for costs associated with new policy areas, but it has clearly not been met.

The following table uses figures calculated by the King’s Fund3 (KF) and the National Association of Health Authorities4 (NAHA). It shows the annual growth in resources for hospital and community health services (HCHS) and family practitioner services (FPS) in England after health care inflation has been taken into account.

KF FiguresNAHA figuresNAHA figures

Because growth has failed to match the 2% increase in demand, health authorities themselves have reported that ‘In no year from 1980 onwards were the real increases in Hospital and Community Health Services (HCHS) expenditure high enough to cover the combined effects of a population which is growing older, of medical advances increasing the range of conditions that can be treated as well as the need to fulfil important central government policies’ 4 (p7). The sense of crisis in the NHS is partly because the service is failing to meet these growing demands and new developments have to be paid for by cuts in other areas.

Various organisations have calculated the reduction in ‘real’ purchasing power in the NHS during the 1980s – ie how much NHS expenditure has really failed to keep up with inflation and other demands on health resources. The House of Commons Social Services Select Committee5 has compared actual spending with needs, calculating a gap in funding of a £400 million by 1987/88, with a cumulative shortfall of £1,896 million between 1981/82 and 1987/88. The Kings Fund Institute3 has produced a similar figures — a distance from target of a £390m in 1987/88, and a cumulative shortfall of £1800 million between 1981/2 and 1987/88 – this is even after money “released” through Cost Improvement Programmes is taken into account.

More recent information from NAHA6 is even more alarming. It now estimates that the shortfall in funding has grown to £490 million in 1989/90, with a huge cumulative shortfall of £3,032 million developing between 1980/81 and 1989/90.

The Rising Demand for Health Care

It is worth looking at the different aspects of demand in more detail before considering views on how much more money the NHS needs.

An Ageing Population

Like most countries Britain has an ageing population. Because older people are admitted to hospital more frequently than younger people, and are admitted for longer stays, the level of health care resources consumed by older people is higher than for the population as a whole. In 1987/88, for example, although people aged 65+ accounted for only 15% of the total population, they occupied some 53% of all NHS beds. Similarly, people aged 75+ form 6% of the population, but used 34% of NHS beds6.

Even if the total population is static, therefore, the NHS needs to grow to compensate for the higher proportion of elderly people. The Kings Fund3 has calculated that in order to keep up with the requirements of an ageing population alone, the annual increase in real expenditure on Hospital and Community Health Services since 1985 should have been:

1985/86 – 1.3%
1986/87 – 1.0%
1987/88 – 1.0%
1988/89 – 1.0%
1989/90 – 1.0%
1990/91 – 0.9%
1991/92 – 0.7%

Increased resources in the community health services in particular, and a stronger local authority role, would help to ensure that older people have access to more appropriate services.

New Technology

The Department of Health estimates that because new medical techniques add to the cost of health services, the NHS needs to grow by an additional 0.5% each year just to keep pace with these developments.

Notwithstanding the need to improve techniques, there remains a need to be vigilant. Expensive new equipment and procedures should not be introduced without full evaluation of their benefits and with management and democratic control. Some equipment gives more prestige to consultants and profits to medical suppliers than it does benefits to patients.

The SHA recommends that new techniques should be fully evaluated before introduction, and should only be introduced when they are of proven value and need in terms of patient welfare. Technology should be assessed in terms of whether or not it fits in with overall health policy objectives. Funding for new technology should be on the basis of proven need, and should be considered by an ethics committee with full lay representation before it is agreed. Certainly the introduction of new and expensive techniques should be agreed by an accountable health authority instead of being allowed to develop haphazardly without debate.

New Policies

New policy directives also add to health care costs, and an estimated additional expenditure requirement (not necessarily funded) of 0.5% per annum is often quoted. This is supposed to cover such developments as HIV/AIDs services, community care, organ transplants, reducing waiting lists and others which get added to the list year after year. It is woefully inadequate.

The SHA recommends that the NHS must reassess overall priorities and establish realistic funding targets to meet the new overall policy objectives. Priorities which would require very substantial extra funding would be those needed to:

  • repair the fabric of health buildings
  • tackle inequalities in health
  • boost primary care and health promotion
  • bring pay and conditions of service for those working in the NHS up to adequate levels

A Labour Department of Health would need to ensure that clear targets are adopted for reaching important national priorities, and that health services are funded accordingly (see section 4). It is important that a future more democratic health service is able to determine its own local priorities within an overall national framework and does not have to apply to the DoH for every new scheme.

The SHA recommends that NHS budgets should automatically increase to cover all the real costs of health provision, including population changes, new technology, new policies and pay and price inflation. This would help to eliminate the current wasteful practice of having to find savings by reducing services in the middle of each year because it becomes apparent that budgets are not sufficient to cope with rising costs identified during the course of the year.

International Comparisons

Calculations on overall funding targets for the UK health service should not be considered in isolation, rather they should be made in the context of a knowledge of expenditure elsewhere. For example the average health spending per person in 1987 was US$1776 in the USA, $1072 in France, $983 in West Germany, but only $627 in the UK. But comparison should not only be made in absolute terms. In addition it would help to consider health spending in relation to national income (gross domestic product; GDP). The table below compares health spending calculated in this way for Europe8.

Health Spending as % of GDP, 1986

  • France 8.5
  • Netherlands 8.3
  • West Germany 8.1
  • Ireland 7.9
  • Belgium 7.1
  • Italy 6.7
  • UK 6.2
  • Denmark 6.1
  • Spain 6.0
  • Portugal 5.6
  • Greece 3.9

Analysis by the Kings Fund has concluded that “per capita expenditure in the UK is nearly 30% below the level that would be expected in terms of the UK’s GDP per head3 (p10). Although some of the higher spending countries have a more substantial private health sector than we have traditionally had in Britain, the Kings Fund concluded that “even if private funding of health care increases, international evidence still suggests that public expenditure (in Britain) is up to £2 billion below its expected level”3 (p11).

The SHA recommends that overall health funding in Britain should grow to a level comparable with other European countries with a similar GDP. A specific target should be set in order to bring funding into line with the expected European level within the lifetime of one Parliament, with the increase being met entirely from the public sector. In addition there will be a need initially to inject special allocations to rectify part of the shortfall in services, staff and buildings expenditure outlined above.

Reducing Inequalities

New Funding Priorities

Funding for the NHS should ensure that there are adequate resources to meet policy goals, and that the resources are distributed equitably to service national and local requirements. It should direct funds to where they are most needed, favouring community based priorities rather than hospital based specialties. This section will look at the different ways in which a new funding system can be devised. Some criteria which should be met by a new funding system are that it:

  • ensures effective use of resources, and sees efficiency in its widest sense rather than as an excuse for cheapness.
  • looks at costs in their widest sense, including costs on other organisations and on users.
  • is based on local needs, using sound and realistic information.
  • avoids personal incentives for the over or under treatment of patients.

Possible areas of conflict need to be highlighted:

  1.  Central v Local control — Any new system will have to ensure that implementation of central government policy is properly integrated with local
  2. Equity v The Funding of existing services — The new system will need to do more than put resources into reinforcing the status quo. Without a policy of re-distribution, the allocation of funding solely according to caseload, for example, would reinforce existing inequalities in service provision and maintain the existing domination of the big teaching hospitals. Growth should be directed toward areas (clinical, geographical, social) where people have less access to services to overcome the fact that many are used disproportionately by groups that need them least.
  3.  Meeting demand v Controlling costs Although clearly not infinite, demand is at present legitimately much greater than supply, and the position will not necessarily be eased with time since as services improve so demands and expectations are also likely to increase. An unlimited health care budget is unrealistic and unworkable, so inevitably there must be a government-determined overall spending figure. Controlled expansion of the health budget can be achieved by allowing budgets to be flexible according to need while maintaining some central government control over key factors on the supply side.

European models

In Denmark a system has been devised to address all of these issues. Health services are run and funded by local authorities, which are locally elected and can set the taxes they think appropriate. Central government uses a system of block grants to equalise and supplement local resources. However local authorities have autonomy to use these funds in the way they wish. Central government has some overall control through the level of grant it distributes and through the numbers of doctors available.

Across Europe there are four common models for allocating resources to hospitals:

  1. Annual Budget. This is a simple method which has the advantage of overall expenditure control but does not address issues such as quality or efficiency.
  2. Payment per day. This is also simple, and tends to create fewer quality problems. However it encourages long lengths of stay and involves no budget control.
  3. Payment per case. This method encourages more admissions. Fast throughput could affect quality, and the case mix could be affected by the details of the payments made.
  4. Payments per unit of service. This is based on the cost of work actually done, and can provide good quality and necessary services. It does, however, have problems of controlling work and case mix could be affected by the details of the payments made.

In its own study of funding during the NHS Review4, NAHA considered three methods of centrally allocating monies to health authorities. These were based on RAWP (formula based on a proxy for needs), Service plans (funding specific developments) and Costed workload (reimbursement for work done). NAHA concluded that the most practicable solution would be to improve RAWP, ensuring speedier flow adjustments, better measurement of need, a form of incentive mechanism and a better carry­ forward facility to assist in planning.

Towards a Socialist Policy

Health services are extremely varied and there is no reason why there should be just one overall component in allocating funds to health authorities. Bearing in mind the need for funds to match service objectives, to ensure a balance between central and local control and to be flexible, the SHA recommends a three-pronged approach to funding:

  1. A basic allocation for primary care and priority groups which would be:
  • population based, weighted for age and social factors, including housing
  • linked to minimum standards or targets of provision (eg places/beds per 1000 population; level of community care services)

2. Additional allocations for special policy objectives, particularly reducing inequalities in health (see section below).

3. A flexible allocation based on caseload in acute hospitals. This would involve:

  • linking funding to standard costs which would be based on units of workload, eg using DRGs, and adjusted to take account of local factors;
  • funding predicted notional workload, then adjusting for actual work carried out;
  • funding to be where the work is, with no need for extra adjustments for cross-boundary patient flow;
  • special funds for setting up  more accessible services;
  • special monitoring and control to avoid over-treatment, eg examining referral and surgical intervention rates, and controlling drug use and new

The overall allocation would be spent in any way by HAs, but would be within overall policies and standards and subjected to inspection by local and national bodies. If health authorities were to be integrated more closely with local authorities, a local taxation element could be built into the system. Health authorities would also be able to engage in non-clinical income generation schemes, where these are of proven value to patients and do not interfere with health goals. The proceeds of such schemes would be directed in accordance with health authority priorities, not to the more glamorous areas of medicine.

Apart from the fixed element of its own grants, some areas in which central government would be able to have overall control over resources include:

  • control over drugs costs and usage
  • consultant posts
  • evaluation of technology
  • wage levels
  • building schemes

Funding to Reduce Inequality

Inequalities in health have not only persisted in Britain, but have widened. The Black Report9 pointed out that the 1970-72 Standardised Mortality Rate (SMR) for males in Social Class 1 was 75, while that for males in Social Class 5 was 121. A more recent analysis using 1979-80 and 1982-83 data10 reports an SMR of 74 for males of Social Classes 1 and 2 aged 20-64, but 129 for those in Social Class 4 and 5. The corresponding figures for females aged 20-59 were 76 and 116.

The Health Education Council report suggested that “It is now also beyond question that unemployment causes a deterioration in mental health and there is increasing evidence that the same is true of physical health”10. There are difficulties in examining trends over time, but there is “convincing evidence of a widening of health inequalities between social groups in recent decades, especially in adults”. Although overall health is better, the increase has been faster in the non-manual groups than the manual ones.

What is clear is that these gaping inequalities are as much to do with wider social and economic conditions in Britain as they are to do with changes in the NHS. As the Health Divide concluded: “The evidence suggests that policies to reduce inequalities which focussed entirely on the individual would be misguided. The importance of social and material factors highlighted by the research suggests that broader policies incorporating structural improvements in living and working conditions would be required”.

The policy response to health inequalities must cover all areas of Government. The WHO Health For All targets include measures designed to reduce inequalities in health by 25% by the year 2000, by raising the level of health of the poorest. However targets such as providing suitable housing for all by the year 1990 are clearly more fantasy than reality in today’s political climate. Health targets must be achievable and involve a real commitment and substantial change in public policy if they are to have any real effect.

In relation to the NHS, targets for health districts such as reducing infant and perinatal mortality rates, and deaths from strokes, cancer, heart disease and infections such as whooping cough all demand a shift in resources towards health promotion, primary and community health services. In Finland a major programme to reduce inequalities has entailed a shift to funding from the rich South and West of the country to the poorer North and East, from the cities to the rural areas and from hospitals to health centre buildings.

The Use of Social Indicators

A British strategy for reducing inequalities would need to use social indicators as a major, not a peripheral, part of a future resource allocation model. It would need to encourage imaginative community based schemes for promoting health and ensure that clear targets are set for action to reduce inequalities. Health authorities would be monitored according to their success in these schemes instead of on current criteria such as ability to privatise support services.

The Black report outlined three major areas for action; giving children a better start (eg increase in child benefit, better child health services), improving health promotion, and better care in the community. Current estimates suggest that this would cost around £3 billion a year, a price which has to be paid if a serious attempt is to be made to realise the benefits of reducing health inequalities.

Reducing inequalities will largely depend on a wide range of actions outside the NHS, including steps to improve housing and environmental conditions and reduce poverty. In a Socialist NHS health workers would collaborate closely with local and national agencies on projects to improve health; advice to patients on social security and other benefits could, for example, be made available at doctors’ surgeries. Some areas in which there might be greater coordination are examined in detail in “Towards Equality in Health” a series of reports currently being prepared by the SHA.

Health Goals, Health Standards

Health Rights and Health Needs

A central theme of any new funding arrangement is that it will be able to provide the resources to ensure equal health service provision throughout the NHS. But this end can only be achieved if provision is defined. In essence the Labour Party will need to commit itself to produce a charter of health rights and health goals, for it is against defined goals that monies can be allocated, services checked, and health outcomes measured. Moreover by defining goals that can be applied nationally there will at last be a mechanism for checking against the geographical, social and clinical inequalities that have plagued the NHS since its introduction.

Goals, which would be set to reflect the needs and rights of patients, would determine health priorities, and would honour reasonable expectations within an overall budget. Once service requirements have been defined the NHS could act more positively to integrate primary, secondary and tertiary care, with a mind to ensuring that goals are achieved throughout the UK.

A first step would be to define the basic health rights and needs of the public in general, and patients in particular, and to ensure that these are met equally throughout the UK. Many of these basic considerations are already defined in UK law or professional codes, or contained in EC or WHO regulations and recommendations. Such rights and needs, which would be embodied in the new NHS and made explicit and amenable to the public, would be given appropriate status such that some would be enforceable in law, some firm recommendations, and the remainder advisory. Information on rights and needs would be reviewed regularly, say six-monthly, and made widely available to health workers and the general public.

Health Rights

Health rights would include such personal rights as the right to be on an NHS doctor’s list; to be seen promptly by a doctor if ill; to receive treatment within specified waiting times; to be treated with equal concern and provided with equal services whatever the patient’s gender, race, beliefs or means; to obtain a second opinion; to receive treatment free at the point of service; to have the details of treatments and procedures explained so that the patient can make up his or her mind before embarking on them; to be able to see and hold copies of notes and letters about them written by the doctor; to have freedom of access to information on health matters held by government or other agencies; to have a clear and accessible appeals procedure in the event of mishap and to receive compensation in the event of medical injury.

These personal rights would be buttressed by community rights such as the right to be protected from harm by substandard or adulterated food or water, by environmental factors (carbon monoxide, irradiation) or by poor working conditions.

Working conditions, terms of employment and the provision of information for staff within the NHS itself would be reviewed and altered so that they satisfy the new charter. In all respects the NHS should serve as an exemplary employer.

Health Needs

It would be more difficult to determine. At a basic level housing conditions and nutritional requirements would be defined, and the state, working through the local authority, would ensure that everybody could expect such minimum provision. Ultimately government, local or central, would guarantee that shelter would be made available with minimum standards in terms of temperature, moisture, sanitation, safety, occupancy rates. Moreover for those ill at home there would be guaranteed home help, district nursing and realistic support for carers.

The charter would recognise that prevention was a legitimate goal and ensure that preventive measures were provided as an integral part of the health service and made available to all members of the community. Preventive measures would include, for example, immunization programmes, childhood health checks, call-and-recall arrangements for breast and cervical cancer screening, well women and well men clinics and medical advice at pensioners’ drop-in centres.

It would be essential that such provision would be coupled with health education which would be more closely integrated with other health services. This would cover general issues such as the importance of prevention, of general hygiene, of recognising symptoms, of first aid, of eating habits, of physical fitness. It would also concentrate on specific issues such as the dangers of cigarettes, alcohol and drug abuse, or the issues arising when living and working with people with HIV/AIDS.

The Provision of Guidelines on Optimal Pathways of Treatment (OPTs).

There needs to be a major overhaul on how treatment is managed and perceived within the NHS. Patients should become the central “players” in the therapeutic process, with policies designed around their needs rather than the present arrangement where patients tend to be packaged around doctors’ policies. The classical divisions between health authorities, hospitals, general practice and the community should be loosened and give way to a system of care which cuts across these artificial barriers. The new system would ensure that patients’ needs were defined and integrated into pathways of treatment in which key stages/branch points could be monitored and evaluated.

Eventually, a large part of medical provision would be arranged on a basis of such optimal pathways of treatment (OPTs). Accordingly, for clinical findings

(eg high blood pressure, irregular heart beat), specific laboratory diagnoses (eg positive cervical smear, bacterial infection of the throat), or common symptoms (eg chest pain, swollen joints) there would, wherever feasible, be a defined and costable OPT which would advise on optimal provision from, for example, a patient’s first presentation to the doctor in the community, through possible referral to a specialist, and then back to the community.

Each OPT would be based on the current best practice that is either theoretically possible or currently available in leading health centres. OPTs would be devised by groups with particular interest in the field, including medical and paramedical staff, local authorities and voluntary organisations.

Key Stages and Norms

The intention would be for each OPT to offer advice on key stages and norms for managing the particular condition. Some parts of each OPT would be universal, such as statements on appropriate waiting time in the doctor’s consulting room, or time on a waiting list before seeing a specialist or having an operation. Others would be specific, such as the particular diagnostic tests that are appropriate, on when and how specialist advice should be sought, on what treatment is optimal and on how patients are best returned to full autonomy.

OPTs would be advisory and alternative approaches could be followed if they were seen to hold advantages to the patient. However, services would be arranged around OPT guidelines, NHS publications and information would generally be orientated around OPTs, and the NHS would sponsor and promote them fully.

Various mechanisms

Mechanisms for implementing the various steps would vary from district to district as might certain details of provision, but every effort would be made to ensure a universal approach so that by referring to the OPT advice, health professionals would have a basis for treatment, patients a basis for their expectations, economists a basis for costing, and managers and others a basis for audit. OPT guidelines, which would be designed in such a way as to be readily usable, would initially deal with the more common conditions only. Gradually, as experience grew, the scope of the system would broaden. But whatever the scope, OPT guidelines would be continually reviewed and up-to-date advice published regularly in a booklet and/or disc which would also incorporate advice on rights.

OPTs would form a logical basis for doctors’ continuing education. It would become the responsibility of the Health Department, possibly in conjunction with the Department of Education and Science, to provide audio, video or word processor tracts on OPTs, and to offer postgraduate meetings on the various OPT topics. Moreover it would be expected that the NHS and the Department of Health would sponsor research appropriate to OPTs, even generating research projects to help determine future management.

Apart from the inevitable changes in OPTs as therapy improves, OPTs are bound to require additional revision as, for example, diagnostic techniques improve, the population ages or morbidity patterns change. There must be a move to make Health Departments more active, not only in initiating and introducing change, but also in investigating and publishing as information accrues.

Drug Usage

Once OPTs have been defined the drugs available “free” on prescription in the NHS should be restricted to those needed to service such provision. The current NHS limited list would be extended to cover drugs necessary for implementing the OPTs. Drugs would be available that were of proven benefit and offered the best promise in terms of efficacy, safety, cost and convenience. Wherever possible generic alternatives would be used and fixed dose drug combinations lost. Naturally there would be no place for ‘me too’ products. Arrangements such as these could also be made to apply to other materials purchased by the NHS. This would include disposables, such as gloves, syringes, needles, giving sets, linen, beds, diagnostic materials, and capital equipment, such as ECG machines, X-Ray equipment, scanning devices etc.

Contract Compliance

OPTs would also provide a basis for the control of any services that might be contracted out if they could not otherwise be provided by the NHS. Carefully planned and detailed arrangements would require that contractors primarily serve the interests of the public and the patient. Accordingly contractual terms would not only consider the service provided but also the conditions and wages of those employed. Contract compliance would be a key component of any such arrangement.

Partnership in Control

The health charter must be designed so as to create a framework within the NHS in which users, facilitators and health professionals can work together to provide health care that meets publicly stated goals. It is envisaged that users, armed with knowledge of these agreed and published goals, and involved closely with policy making, will become the guardians of the system insuring that provisions are met.

The SHA believes that it is justifiable to determine funding by taking into account the concepts of the rights and needs of patients. Moreover by defining such nationally applicable goals, and making them explicit, it should be possible to eliminate the inequalities that currently bedevil the NHS. By its very nature, an NHS resourced and dedicated to provide such a service would be a sound investment for the future.

Structures for Local Accountability

A key to a Socialist policy for financing health care must be that it provides a workable mechanism for planning, delivering and monitoring health care. Any new system must avoid the many pitfalls found in the current arrangements. These include:

  1. Annual budgets and the difficulties for forward planning. In general budgets are determined annually and under the present arrangements budget figures often reach the District level well into the year in question. This system makes detailed planning impossible, and certainly works against the development of long term strategies.
  2.  Centralisation There is little involvement in the setting of overall budgets at a local level. DHAs accept what the Department and the Region allocate to them. It is a process characterised by a downward flow of information rather than a upwards assessment of what is required;
  3. Specific grants. Over recent years the financial policies of the Conservative government have been increasingly characterised by a move towards central grants being given for specific projects,eg AIDS, waiting list initiative, breast While all this money has been welcome it has again minimised the input from the District Health Authority and given a direct line of command from the civil servant in Whitehall to the general managers in the Districts.
  4. A failure to assess local needs. The financial allocation revolves around complex formulae calculated centrally with no real attempt to define local problems and target resources to meet the needs identified by local communities.
  5. Increased reliance on charges. Prescription and other charges now make up an increased proportion of the amount of money spent on the NHS. Such a system of levy at the point of service inevitably disregards the original aims of the NHS, as it switches from funding raised on the ability to pay (income tax) to one in which earnings are virtually
  6. Reliance on “efficiency savings”. The government has used efficiency savings to create an impression of growth, but this notion cannot be sustained as such savings are often cuts by another name.

Guiding Principles

It has long been the view of the SHA that there needs to be better planning, more local decision making, a finance policy based on need and closer integration between local authorities and health authorities. The SHA wishes to suggest some of the guiding principles which could form the basis of a future Socialist structure for financing health care.

(i) Local Accountability. The current structure is excessively centralised. People feel powerless to influence decisions in the health authority. Local autonomy must be enhanced. Clearly this cannot be at the expense of national government policies but we believe that setting standards, stating them clearly, and having strong investigative and implementing bodies at a local level should ensure that local services are maintained.

(ii) Planning: Local health authorities must have a clearer idea of their future budgets and these should be provided for periods of longer than one year at a time.

(iii) User Involvement: Every local health authority must have a clear strategy for involving users in their decision making and budget allocation. This could be done by having management committees for health centres with a devolved budget; joint projects run by users and the local health authority; patient participation council’s for hospitals — acute and long stay.

(iv) Teaching Hospitals: It is our view that the needs of teaching have dominated the needs of the local communities in which those teaching hospitals have been based. A correct balance of community needs, acute services and teaching facilities must be realised in every District — in fact every District should become a teaching District.

(v) Strategic Overview: The SHA recognises that some form of regional health authority is essential in order to help integrate health policy. However the existing regional boundaries are illogical and raise difficulties for local health management and for identification by local communities. Also the SHA sees a real advantage in integrating Family Health Service Authorities (FHSAs) and DHAs, so facilitating more cooperation and integration amongst all healh care workers at community level.

Proposals for Change

In relation to these guiding principles the SHA makes the following recommend­ations —

  • That health authority members are elected and that the elections take place at the same time as those for the local Council.
  • That Family Health Service Authorities (FHSAs) in England and Wales are abolished and that DHAs incorporate their function. Arrangements should be made to ensure that such integration results in the FHSA getting smaller rather than the health authority getting larger.
  • That at the Regional level the existing Regional Health Authorities are integrated into the Regional tier of government proposed by the Labour This will allow for a much greater overview and strategic policy making function as well as improved management.
  • That decision-making should be de­centralised as far as possible, to allow greater user involvement and local
  • That it should be possible for a local authority and a health authority to agree that services for a particular client group should be merged into a unified structure to allow closer working relationships and avoid unnecessary overlap.
  • That every publicly elected body should have an establishing charter which clearly defines the aims and objectives of that body. Within that establishing charter there must be explicit statements about user rights, complaints procedures, advocacy and consultation.
  • That Community Health Councils need  reorganisation. They should become independent investigative bodies on behalf of the public with powers to monitor all health services. They would have a duty to ensure that both the health rights and health needs of the public are being fulfilled. They would have the power to refer the matters to the Regional tier or independent inspectorate for further investigation. This would not replace the existing national monitoring bodies, nor would it replace the CHCs’ primary role of representing users. It would, however, strengthen the role of CHCs in speaking for the public.

Reversing Other Tory Inroads

Capital Finance

NHS buildings are in a poor state of repair. The Tories have reduced central government capital expenditure to the NHS and have expected Regions to supplement their capital budget by the use of land sales. This is a highly volatile market and in late 1989 and early 1990, with the fall in the price of land, Regional Health Authorities have faced serious problems with their capital budgets.

There are major problems with the current system of financing capital expenditure —

  1. The process of getting major capital projects agreed with an Approvement in Principle (AIP) document and going through the Region and the Treasury is complex and bureaucratic. It is also centralised and leaves the Districts with little control over key decisions;
  2. Although returns from land sales may help finance the NHS they offer no advantage to local authorities and voluntary organisations which make an increasing contribution to community care;
  3. There is a tendency for capital resources to be diverted into high tech areas and new hospital buildings. Community needs, such as a community home or a disabled access, are usually given a low priority;
  4. If Districts do get capital items, either through the Region or through donations, they may find difficulty in meeting the extra revenue consequences for which they have not budgeted;
  5. DHAs do not have the power to borrow money although proposed Hospital Trusts will be allowed to borrow within certain There is a view that DHAs should be given more freedom to borrow money to finance new developments.
  6. Lack of resources for maintenance is now NHS property is generally old and demands vast resources for general upkeep and repairs and the provision of fire and other safety requirements. For many years now these requirements have not been adequately met.
  7. There is little evidence of user involvement in a number of recent capital developments. There are examples of health centres built without disabled access and mental health facilities built without any privacy.

A Socialist alternative would have to tackle many of these problems urgently. A massive injection of capital resources is essential if we are to prevent many of our buildings falling into disuse; more user involvement and decentralisation of decision-making is paramount. DHAs must be more resistant to the pressing demands of high technology and make long term, imaginative use of capital money. A health centre building programme, transport, disabled access and health and safety requirements must have high priority.

Joint Finance

The purpose of joint finance, which was started in 1976, was threefold:

  1. It gave an actual budget to the newly created Joint Consultative Committees (JCCs);
  2. It was envisaged that joint finance would act as a mechanism for financially binding health authorities and local authorities into joint projects;
  3. It was felt that this “new money” would act as a catalyst for initiating community care projects.

Joint finance has remained largely unchanged since it was introduced. It is essentially health service money which is supposed to “pump-prime” projects with a taper of five or seven years, at the end of which the scheme is fully picked up by either the health or local authority.

Problems of Joint Financing

By its own criteria joint financing has not been a major success:

  1. It has always represented a very small percentage of resources available. In 1988 the average joint finance allocation per JCC was approximately a £500,000. This amounted to 3% of the total personal social services expenditure or less than 1% of NHS spending. Moreover this allocation was provided on a tapering basis which meant that in any one year the amount of money provided for new schemes was usually less than a £100,000;
  2.  The financial constraints placed upon health authorities and local authorities have made them reluctant to agree long term projects because they were unable to guarantee that they could pick up the Accordingly capital projects, short term projects or limited life trial/research projects have found more favour, while long term financing of care in the community programmes have been cut.
  3. It is arguable as to what extent JCCs have existed as a forum to enhance joint planning and joint collaboration. Joint work has usually gone on despite the JCC not because of it.
  4. The voluntary sector was added to the list of bodies represented on the JCC in 1985. However, there remain problems about voluntary sector access to joint finance. Often local authorities and health authorities will consider it THEIR money. Voluntary organisations often feel isolated from the joint planning process and sometimes have difficulty in funding projects in the long term.

The Future for Joint Financing

It is the view of the SHA that the joint finance arrangements have only been of limited success. What success there has been has resulted from the fact that it has brought in a small amount of new money and because a number of the projects supported by joint finance have been experimental and innovative. It has meant that some new ideas have been supported and that it has been possible to develop projects that would not have got support from mainstream finance. Finally, it has given some impetus for joint collaboration with joint officer working parties.

Joint finance to smooth the transition of the closure of long stay hospitals and the care in the community programme has not been successful. Clearly the scale of the extra finance required was never adequately calculated by the government.

The SHA recommends the continuation of joint financing arrangements especially as they can be used for encouraging new developments and innovative thinking in all the relevant agencies, especially the voluntary sector.

The Private Sector and Health Charges

Since taking office the Tories have worked to make the private sector thrive and to increase direct charges to patients. Consultant contracts were soon amended making it easier for them to work in the NHS while earning large amounts in the private sector. The Government has also increased existing charges and introduced new ones, so increasing the non-means-tested contribution to the NHS. In addition they pressured health authorities to make increased use of private beds as a source of income. For example, the Royal Free Hospital now receives an annual income of £2M from its private beds, nearly double the figure of only a few years ago. This has a distorting effect as major teaching hospitals in London in particular find it easy to attract private patients, especially from abroad.

SHA Objectives

SHA seeks the ultimate phasing out of the private sector. Clearly this will be a gradual process. To this end the SHA would wish to see:

  1. a change in consultants’ contracts to encourage more full-time working in the NHS;
  2. charges for dental check ups and eye examinations abolished immediately, and all other health and community charges phased out by the end of one parliament;
  3. steps taken to remove pay and amenity beds from NHS hospitals by the end of one parliament;
  4. tax subsidies removed from private health care;
  5. controls on the location of private hospitals introduced to ensure that private hospitals cannot open near NHS hospitals;
  6. a levy raised on the private sector for the training of all professionals in the health service;
  7. a greater separation of private and NHS services, discouraging switching between the two sectors to jump waiting lists.


In this report the Socialist Health Association (SHA) sets out proposals to transform the National Health Service (NHS) into a service that puts people first and puts resources where needs are greatest. It proposes major changes in the funding system, in defining standards of care and in accountability. It offers ways of shifting the balance of the NHS from cost cutting to meeting needs, from confusion to clear user rights, from central control to local democracy. A central theme is to expand primary care and help tackle the huge inequalities in health that still persist.

Section One argues that more funding is required in order to achieve Socialist health objectives. The service must become more democratic and responsive, and more directly targeted at reducing inequalities. The section examines service objectives for different care groups and concludes that there should be a shift to primary care and more decentralisation of services.

Section Two demonstrates that current services are severely underfunded, both in relation to increasing needs and in comparison with funding in other countries of equivalent wealth. It recommends that NHS funding should be increased to a level comparable to that in other European countries with similar GDPs to the UK, and that this increase should be achieved in the lifetime of one parliament.

A new funding system is proposed in Section Three. Health Authorities would receive three financial allocations; a population-based allocation for primary care and priority groups, special funding to tackle health inequalities, and a flexible allocation to fund acute hospital care. This system would go hand-in-hand with targets and standards of health care provision, and with controls to ensure that services are appropriate to users’ needs.

Health standards are further examined in Section Four. The health rights and health needs of patients and the general public should be defined and made explicit. A new way of setting standards for the management of illness is proposed in which “Optimal Pathways of Treatment” (OPTs) for common conditions will be defined and introduced throughout the NHS. A definition of standards will provide users with a basis against which they can judge the service they receive.

Section Five argues that with these changes there should be a new structure for the NHS to ensure democracy and local accountability within a national framework. It recommends that Family Health Service Authorities (FHSAs) should be abolished and their services brought under the control of elected District Health Authorities (DHAs). Health services should be further integrated with local authority functions, and Regional Health Authorities (RHAs) integrated into a system of regional government.

Finally Section Six addresses some of the other vital issues affecting the NHS. It proposes improvements in the Capital Funding and Joint Finance systems, and outlines ways of reducing the level of private health care. Proposals are also made for mechanisms to ensure that services will be available on the basis of need rather than the ability to pay.

We hope that the Labour movement will embrace these proposals for revitalising our NHS. However changes in the NHS alone will not be enough to improve overall welfare and if our proposals are to succeed they must be taken as part of a wider strategy to combat poverty and create a healthier environment.


  1. “Their Hands In Our Safe” (1988), published by the Socialist Health Association.
  2. “Goodbye To All That” (1990), published by the Socialist Health Association.
  3. “Health Finance — Assessing The Options” (1988), published by the King’s Fund Institute.
  4. ‘ ‘The Nation’s Health — A Way Forward” (1988), published by the National Association of Health Authorities.
  5. Social Services Committee “First Report 1988-89 Session” (1988), published by
  6. National Association of Health Press Release 9th May 1989.
  7. Social Services Committee “Eighth Report 1988-89 Session” (1989), published by HMSO.
  8. OECD figures published in Hansard 2,November 1989, Columns 309-310.
  9. “Inequalities in Health: The Black Report” (1982) by Townsend P and Davidson N. Published by Penguin.
  10. ‘ ‘The Health Divide” (1987) by Whitehead M. Published by The Health Education Council.

The Socialist Health Association founded in 1930 as the Socialist Medical Association, is working for a health service based on Socialist principles. It campaigns for

  • A health service freeto all the time of use, financed from general taxation
  • An end to low pay in the NHS
  • Action to reduce inequalities in health and to prevent illness
  • A democratic NHS, sensitive local health needs
  • Properly financed community based care
  • An occupational health service and an attack on hazards at work
  • Freely available services for birth control, abortion and sterilisation
  • The abolition of private practice and commercial medicine.

Membership is open to all individuals who support the aims and constitution of the Association. Organisations may affiliate nationally or locally, and affiliates include trade unions, labour parties, trades councils and local health campaigns.

Annual subscription rates (1990-1991):

individuals £12.50 (£4 unwaged)

affiliates £75 (national) £12.50 (local)

Further information from: SHA, 195 Walworth Road SE17 1RP Tel 071-703 6838