Alex Miller
The National Health Service (NHS) is facing its biggest financial crisis since its inception in 1948. It is estimated that NHS Trusts throughout England have a total deficit of up to £800 million for the 2005-06 financial year, which ended on April 6. This has led to an unprecedented spate of cuts, with 6000 job losses announced in the past six weeks alone.
The job cuts affect all kinds of hospital workers, including nurses, doctors, administrative support staff, managers and consultants. Thousands more jobs losses are expected to be announced in the coming months.
British PM Tony Blair's government and its minions in the corporate press are citing the financial crisis as an example of public sector inefficiency and as the result of pay increases won by NHS staff. Yet Martin McIvor spelled out in the March 2006 edition of Red Pepper that despite record levels of public investment, "The NHS is being bled dry by private corporations who have taken a lion's share of the new money, through the Private Finance Initiative (PFI) and preferential contracts for routine treatments. They are now circling for the kill as the government prepares to turn our health care over to a chaotic marketplace in which everything will be up for grabs."
In the same issue of Red Pepper, Colin Leys explained further how the NHS is being privatised by stealth: "NHS premises are increasingly owned and operated by private corporations. In the case of hospitals this is occurring through the PFI. Of the 100 hospitals promised in the 2000 NHS Plan virtually all will have been procured via the PFI, while local investment finance trust companies are set to own a fast-growing proportion of primary and community care facilities.
"Non-clinical work — hospital cleaning, laundry, catering and so on — has long been outsourced to private companies, and services such as radiology are also beginning to be privatised. Assurances were always given that direct clinical work with patients would stay public — with hospital doctors salaried, and GPs independently contracted with the NHS. But from 2000 onwards this also changed. Now clinical work is being handed to private companies too."
PFIs involve public NHS trusts paying the private sector to build new buildings and hospitals, which remain the property of private consortia. The public trusts then lease back the buildings and infrastructure at lucrative rates that guarantee massive profits for private investors.
For example, the February 4 Socialist Worker reported that a planned £1.2 billion PFI is threatening to bankrupt the Barts and Royal London Hospitals NHS Trust. If the project goes ahead the trust will face repayments of £111 million a year for the next 42 years. Worryingly, the Blair government is planning to extend PFI via a new con trick called LIFT, the Local Improvement Financial Trust scheme. Socialist Worker explained: "This is an attempt to push PFI-type deals beyond hospitals and into primary care — using private finance to fund basic, frontline services such as GP surgeries."
Red Pepper cited the case of the Queen Elizabeth Hospital in Greenwich as an example of the detrimental effect PFI schemes have had on the public sector: "An accountant's report for the Audit Commission showed that the trust would have a deficit of almost £20 million in 2005-06, in spite of having achieved an efficiency level above the national average. Half of the deficit was due to the extra cost of the PFI."
The article also explained how "payment by results", introduced in April 2005 for elective surgery and to apply to most hospital procedures by 2008, has contributed to the deficits. "Instead of having secure revenue for blocks of work commissioned in advance, hospitals will be paid in arrears for the work they do on every individual patient ..."
Moreover, "In the mid-1970s, Charles Webster, the official historian of the NHS, estimated its administrative costs at 5-6 per cent of its total spending. Today they are probably approaching 20 per cent .. The difference means that something like £10 billion is being consumed annually by administration, due mainly to the replacement of the NHS by a market."
Leys concludes that "By 2008, if no real resistance is aroused, New Labour will have done what Thatcher couldn't, and replaced the integrated, economical and egalitarian health service created by Nye Bevan with a fragmented, expensive service, based on ability to pay".
[For more information, and details of the campaign to prevent the sell-off of the NHS, visit <http://www.keepournhspublic.com>.]
From Green Left Weekly, April 26, 2006.
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