Welcome to the economic casino

The Labour movement column

By Anthony Painter

The Prime Minister is sufficiently worried about his public service reforms that he has decided to hit the airwaves to defend them. So much for Chairman Cameron. He’s going to have to improve in his Chief Executive role though. Such a potentially seismic change as the wholesale reorganisation of the NHS will require a bit more than then reciting of buzzwords and quoting Tony Blair’s memoirs.

And in response to the reforms, healthcare experts, professional organisations (which the BBC has now decided to call ‘unions’), the unions, and patient groups, warn of ‘risk’, ‘a gamble’, ‘too far, too fast.’ When Cameron hears this, he responds with a shrug of the shoulder, this is what you get when you are truly radical, on we go. Sweeping past the doorman, he deposits his coat, and heads straight into the Casino. There waiting at the table for him is his chum, Andrew. The croupier spins the wheel; the game is on. On the adjacent poker table, George is piling up the chips; he has a great hand. Or so he thinks. Danny and Nick – there to serve – keep the bourbon on the rocks flowing as the excitement mounts. NHS roulette or economy poker anyone?

It is often assumed that the outcome of the next election will be determined by the state of the economy. This assumption overstates the case. The impact of these NHS reforms are critical too. If they go badly wrong – outcomes worsen, hospitals close, patients are moved around the system like pieces in the board game Risk, and inequalities widen further – then the NHS will be a central issue too. If it loses at either NHS roulette or economy poker then the coalition could find itself in deep political trouble. Their political futures are not of any great concern; the detrimental impact on people’s health and their livelihoods are most definitely so.

The easy response is to reject any boat-rocking reform when the NHS is under its most challenging financial environment in its history. In this case the cautious response is the correct one. Anyone with their head screwed on would have sympathy with caution in this context. A measly 0.1% real increase per annum to 2015 hides the fact that some social care expenditure is being shifted into the NHS, population change is swelling demands on the service, and healthcare inflation is higher than CPI. What this means in practice is that the NHS has to find £20 billion of savings.

Amidst all the focus on what universal GP commissioning will mean, this cost saving driver of the change has been missed and it has important consequences. ‘Why now?’ experts cry. ‘If not now then when?’ replies the Prime Minister. And that’s the point. It is completely and utterly about the now. It is about getting through a five year efficiency drive. Sure, there will be short term costs as PCT managers are fired but after a couple of years the cost savings will start to register.

Let’s be clear, any government in power now would be facing this enormous cost control pressure. It has never before been achieved. The NHS already had redundancy plans in PCTs in place. It would also have had to go further. In reality there are only three ways you can hold a budget steady over a five year period, either alone or in combination: (i) Reduce the amount you deliver; (ii) Increase productivity; or (iii) reduce the price you pay for what is delivered. The first basically means giving up on providing the same level of healthcare, the second is very difficult to secure, so the third becomes attractive.

So the coalition’s objective is to reduce costs and this massive, convulsive and revolutionary top-down reform is the means (yes, it’s a broken promise but what isn’t these days?). The key element is the introduction of provider competition. That means GPs will compete with polyclinics who will compete with the private sector who will compete with Foundation hospitals and NHS Trusts. Price competition will be allowed – it has to be in the logic of what the Conservatives are doing and indeed it is. It is nothing to do with increasing quality or choice- in fact often it will be a case of the patient getting what they are given. It is about price and costs.

Good you might say but there are incredible risks to this. Firstly, markets mean destruction. It is entirely plausible that GP consortia will contract with private sector brokers who will buy cheap healthcare from private providers looking to get a toehold in the market. The price will not be sustainable but will be convenient in the short term. Secondly, and partly as a consequence of this, hospitals will go bust which will lessen access to local healthcare potentially. Thirdly, price is transparent; quality is less so. A price is visible but the quality of a healthcare, even when regulated, can slip. Fourthly, and as a consequence of NHS bodies going bust, assets will seep out of public hands so rebuilding a saner system in the future may be very difficult. And finally, the unforeseen consequences, perverse incentives, etc that go along with this change will produce all sorts of malign impacts that we can’t even predict as things stand.

So it’s a bad idea. This is Labour’s moment to tear this healthcare bill apart page by page. What’s more, they can propose changes that genuinely enhance patient choice and quality in a way that these reforms do not in the process. It will also need to propose an efficiency enhancing package of its own but based on current structures and evolutionary change.

The public values of the system must be safeguarded if the system is to work for patients in the future. That is all undermined by this reckless adventurism. And what is worse, these reforms have a Humpty Dumpty like quality to them. Once the system is broken, all the King’s horses and all the King’s men won’t be able to put Humpty together again.

By all means, David, George, and Andrew can play their games of chance while Nick and Danny keep them well oiled. Feeling lucky? Because I hope you are as millions of lives and livelihoods depend on it.