Socialist in Surrey

swimming in a sea of blue

NHS and privatisation

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  Are there plans to privatise the NHS and does it matter if I still get treatment free at the point of use?

The short answer is yes, not just plans but plenty of private contracts have been issued taking the NHS down the privatisation route. And yes, it will matter to you when you have to pay for your treatment from medical insurance and risk bankruptcy if you require multiple or long-term care.  Now read on to discover how the ‘blueprint’ for privatisation was laid nearly 30 years ago and how close we are to the end game. 

In 1988 Oliver Letwin and John Redwood (conservative) laid down the blueprint for the privatisation of the NHS.  It is worth reading this document in full as it will explain both our current position and give insight into the next steps.

Starting with a negative analysis of the use of waiting times to ration resources they swiftly moved into the reasons why the NHS needs a fundamental overhaul.

At the end of 1986 (the latest date for which figures are available), there were almost 700,000 people on NHS waiting lists; of these, half were destined to wait more than two months for treatment and one in fifty for more than a year.

When compared to today’s figures of 3.66million waiting for routine treatment, up 11% from Dec 15 – Dec 16 and a target time now of 18 weeks (nearly 5 months) with 92% waiting significantly longer than that, House of Commons/Feb/2017  we can see the figures used by Letwin and Redwood actually reflected an efficient NHS service.   But then the premise for privatisation must start from the basis that the current system is broken.  

By chapter 2 they confirm;  [note the italics]

The need for change is now widely accepted.

The first step is to restructure at management level and make the NHS bodies independent to ‘give clear lines of responsibility’ which do not reach back to government.

  1. Establishment of the NHS as an independent trust.

  2. Increased use of joint ventures between the NHS and the private sector.

  3. Extending the principle of charging.

  4. A system of 1 health credits’.

  5. A national health insurance scheme.

It would appear that we are currently moving between point 2 and 3 of this agenda.

By chapter 3,  Letwin and Redwood introduce the notion of charging – an idea fundamentally at odds with the ethos of the NHS – free at the point of delivery.

Another avenue which has been tentatively explored by the Government is charging. In principle, this could be extended to the point of universality — a charge for every service. That could permanently solve the problems of waiting lists and of basic attitudes towards patients — since the NHS could charge enough for each service to ensure that demand matched supply, every patient would become a valuable customer, bringing funds to the system. If combined with the establishment of the NHS as an independent trust, this would in effect turn the NHS into a nationalised non-profit service competing on level terms with the private sector, and at arms-length from the Government.

The NHS was already a nationalised non-profit service, so what is new here is the idea that it should ‘compete on level terms with the private sector’ and be ‘arms-length from the Government.  ‘Charge enough for each service to ensure that demand matched supply’ indicates hiking prices on treatments in demand – in the same way that airfares rise in school holidays.  Aware that charging would preclude sections of the population from accessing health care the pair put forward the idea of ‘credit notes’ which would create a two-tier system.

Each individual patient would receive, from his GP, a ‘credit note’, entitling him to treatment for a specific complaint. This credit note would cover the charge ·levied by the NHS for the treatment in question. If the patient chose instead to go to a private sector hospital, he would be entitled to carry the credit with him making up any difference in cost out of his own resources or through private insurance.        

In order to bring in the ‘benefits of marketisation’ it is suggested that;

In short, increased competition would be created not only between the NHS and the private sector but also between one NHS hospital and another. Under such an arrangement, it might be possible to go even further than the establishment of the entire NHS as an independent trust or company: each major hospital or district could be separately established, with only a national funding authority left at the centre to administer the payment of credits.

And finally, we reach the end goal – a fragmented NHS service, competing with itself and private providers, funded by individual payments into a National Health Insurance Scheme. 

A method of overcoming the drawback of a pure ‘credits’ scheme is to ally it to a national health insurance system. Under such a system, every adult would contribute a fixed insurance premium each year to a national health insurance fund.

Having established that under this scheme the NHS would charge the full cost of each treatment to be reclaimed by insurance, Letwin and Redwood confirm;

The existence of a national health insurance scheme would not, of course, be to the detriment of the private sector. Indeed, under any of the variants, contributors to the national scheme could be given rights to carry some or all of the insurance cover to the private sector, either in the form of rebates for private insurance or in the form of ‘credits’ usable in private sector hospitals.

The insurance premium could be actuarilly adjusted, like car insurance, to reflect the varying risks associated with different categories of contributor though this would need to be balanced by subsidies to those who were not well off, and were either already ill or in a high – risk category.

Before concluding;

To a great degree, the divisions between the public and private sector would fade.

Indeed, given that we would all be paying the full cost of treatment from our own insurance policies.  If you have recently taken a pet for treatment at your local vet you will know the eye-watering cost of a single blood test, let alone the management of a long-term condition.  Although apparently convinced by their own arguments, they realised that moving from a universal system of free treatment to one where we individually cover our own care through differentiated insurance, would need time.

A system of this sort would be fraught with transitional difficulties. And it would be foolhardy to move so far from the present one in a single leap. But need there be just one leap? Might it not, rather, be possible to work slowly from the present system towards a national insurance scheme? One could begin, for example, with the establishment of the NHS as an independent trust, with increased joint ventures between the NHS and the private sector; move on next to the use of 1 credits’ to meet standard charges set by a central NHS funding. administration for independently managed hospitals or districts; and only at the last stage create a national health insurance scheme separate from the tax system.

‘…and only at the last stage create a national health insurance scheme separate from the tax system.’   The last stage is presumably when the entire reorganisation is complete and we have no option but to take out insurance.

The internal market

In 1990 under Major, the conservatives brought in the National Health Service and Community Act, which paved the way from the internal market and for increased independence from health authority control.

 Trusts are ‘self-governing’, but remain within the structure of the National Health Service (NHS). They are run by boards of non-executive directors and report directly to the Secretary of State, bypassing the district or regional health authorities.


In order to achieve ‘trust’ status the hospitals were required to meet tight financial plans and this focus on costs over care led directly to the Mid Staff crisis where it is estimated that 1,200 patients died due to neglect.

It is commonly known as the Mid Staffs scandal because Stafford hospital was and is run by the Mid Staffordshire NHS hospital trust, which in 2008 acquired foundation trust status, making it semi-independent of Department of Health (DH) control. Decision-making and especially cost-cutting as part of its pursuit of that status was later cited as a key reason why poor care took hold and was allowed to persist for so long.


This scandal came to light due to the fierce protest of Julie Bailey and her campaign team, many others failed to hit the headlines.  This was the first step towards creating a competitive market with a strong management focus on cost efficiency. 

Private Finance Initiative (PFI)

Introduced by Major in the 1990’s but continued at a pace by the Blair/Brown government PFI saw private money used to build new hospitals with extortionate rates of interest.  Governments can always borrow at the lowest rate but using private finance shifted the locus of control from public to private.

PFI deals have been universally criticised as horrendous value for taxpayers, likened to “paying for a hospital on your credit card” by BBC Panorama.  PFI is significantly more expensive than Government funded projects with the cost of borrowing at least two times higher than Government financed works according to a 2011 HM Treasury Report.PFI rewires the relationship between the citizen and the state, so that our public services are no longer owned by, or directly accountable to us.


In 2016 the total PFI debt stood at £300bn for projects worth only £55bn.   independent./nhs-funding-pfi-contracts  Servicing this debt, which is estimated to be £3,700 every minute, has served to cripple efficiency in the NHS.  Given that few would willingly move to individual insurance for plans, it is a necessary first step to dismantle the existing system leaving no other option.

Health and Social Care Act 2012 (HSC)

Despite the fact that there were no plans for a top-down reorganisation in the 2010 Conservative manifesto; quite the opposite with ‘NHS safe in my hands’ mantra.  In 2012 Andrew Lansley as part of the coalition government delivered the most far-reaching reforms in the 64-year history of the NHS.

One of the reasons given for introducing the HSC Act was because of the financial issues facing the NHS and the huge pressure on its services, but the Act failed to address these. The government also said that the HSC Act was largely about increased patient choice and ‘putting GPs in the driving seat’ by giving them the job of commissioning (i.e. planning and buying) the majority of health services. Others saw the Act as primarily about providing the legal framework for fragmenting and privatising the NHS, and time is now confirming their fears.

This act is complex and comprehensive and it is difficult to believe that the conservative government did not have such a plan waiting in the wings when they went to the country in 2010.  A fairly concise summary can be found here

Its central aim was to divide the NHS up into competitive units ready for marketisation.  Remove responsibility and therefore accountability from government and require both primary (GPs) and secondary care (Trusts) to compete for service contracts introducing massive tendering costs into the NHS budget.  The HSC Act transferred children’s services, mental health, dental health, immunisation, screening, sexual health and health protection programmes to cash-strapped local authorities, causing a crisis in social care but giving provision for these services to be chargeable in time.  It abolished the Primary Care Trusts (PCT) who handled 80% of the NHS budget to buy in services covering a whole local authority.   Commissioning was then given over to smaller CCG’s made up primarily of time-strapped GPs, who had no option but to take on the role of commissioning services often without sufficient expertise.  This move is rather like making all Tesco stores compete with each other to buy in goods at the lowest price – reverse market economics.

CCGs have been central to the Coalition’s ‘reforms’. After the HSC Act, all GP practices had to belong to a CCG. The Coalition government said that CCGs were introduced to put clinicians at the heart of commissioning because they were thought to know patients’ needs best. However – and especially because CCGs were set up so as not to have responsibility for a defined population – others believe that the HSC Act  brought in  CCGs so that, over time, they could become competing insurers, similar to Health Maintenance Organisations (HMOs) in the USA. Like HMOs, CCGs are independent organisations that take on full financial risk: they cannot look to the government to bail them out if things go wrong.

The fragmentation of the NHS delays treatment for multi-disciplinary conditions as each aspect has to go back to the CCG for funding.  Just as they would go back to an insurance company for a decision on policy coverage. No treatment without payment.  NHS Patient Stuart Finch explains the situation as it stands now in the NHS.

NHS services are fragmented and trying to get a multidiscipline team approach is impossible, I presented in AE with chronic migraines shunting around belly button and passing out the Dr said I had Neutropenia and sepsis and I was in Hospital for 5 weeks. Once the sepsis had gone and because my full biopsy results hadn’t come back, I asked if they could look into my migraines and belly shunting but they said I would have to go back to GP to be referred.  So they still don’t know what’s wrong and all other investigations are stopped – crazy.  The doctors can’t communicate between specialties because funding needs to go through GP Commissioning groups so patients fall through the gaps.

Take a peek into the insurance model future as outlined by

Jeremy Hunt – Minister for Health


 Jeremey Hunt visits Kaiser Permanete

The HSC act also set up Monitor to cover the provision, pricing and procurement of NHS services and prevent anti-competitive behaviour.  Monitor set about preventing ‘anti-competitive behaviour’ by consulting jointly with McKinsey & Company, a global management consulting firm who were given exclusive access to designing the structure and detail of the HSC Act. 

A Mail on Sunday investigation, based on hundreds of official documents disclosed under the Freedom of Information Act, has revealed the full extent of McKinsey’s myriad links to the controversial reforms. Many of the Bill’s proposals were drawn up by McKinsey and included in the legislation wholesale. One document says the firm has used its privileged access to ‘share information’ with its corporate clients – which include the world’s biggest private hospital firms – who are now set to bid for health service work.

The company is already benefiting from contracts worth undisclosed millions with GPs arising from the Bill. It has earned at least £13.8million from Government health policy since the Coalition took office – and the Bill opens up most of the current £106 billion NHS budget to the private sector, with much of it likely to go to McKinsey clients.

The National Health Action Party (NHA) was formed by health care professionals who could see from the inside the damage caused by the restructuring process. Because the conservative government have never stated publicly that the NHS is to be privatised it is difficult to debate the issue – hence the formation of a political party in order to put it on the agenda. Their website reveals the following information regarding the influence of McKinsey.

“Unleash the growth potential of education and health.UK health care could be a £200bn industry by 2030. We need to think about these sectors as international growth opportunities rather than public sector cost centres. NHS organisations need to be able to restructure and compete for private demand without restrictions, while additional private capital will be needed to support the growth of health care to meet domestic demand in the UK.”
McKinsey ‘Seven priorities for UK growth’ November 2010

 ‘Unleash the growth potential of education and health’ – and put both into the hands of private shareholders, seems to be the message here.   McKinsey was also behind the severe cuts imposed on the NHS between 2010 and 2015.

“In February 2009 McKinsey was instructed by the Department to provide advice on how commissioners might achieve world class NHS productivity to inform the second year of the world class commissioning assurance system and future commissioner development. The advice from McKinsey, in the form of a set of slides, was provided in March 2009.”
Department of Health, May 2010
The advice formed the QIPP report, commissioned by Labour, used by the Coalition, QIPP is the basis of the ‘Nicholson Challenge’ which forced £20bn ‘efficiency savings’ on the NHS between 2010 – 2015. The advice has been described as ‘entirely without evidence’ by senior health policy analysts.

The Health Service Journal in 2015 highlighted the significance of links between MPs and private health groups.

As the [Unite] union points out, many such MPs from David Cameron down get donations to their constituency parties and other help (loopholes can be found), sometimes from the same people: hedge fund manager, Crispin Odey, is one; Andrew Law, British head of major US healthcare investor Caxton Associates, is another. Law has given £1.2m to party HQ and £32,000 to Jeremy Hunt’s constituency

Many private contracts have failed to deliver services and have had to be bailed out by the NHS, or they have cost far more than the original provision.  Many shocking cases of waste and lack of oversight can be seen here:

Repeated cuts to the NHS have put the system into crisis, increasing waiting times and rationing both procedures and drugs.

 The Treasury’s comprehensive spending review of 2015 confirmed that the past decade was the most austere the NHS has ever faced. NHS spending is falling as a proportion of GDP and is projected to fall further by 2020, well below the European average. As a consequence, the combined deficits of trusts (NHS providers) were £2.5bn in 2015/16 and are rising.


The King’s Fund confirmed in 2015 that, over the past parliament the annual average real increase in UK NHS spending was 0.84 percent, the smallest increase since the second world war and only a quarter of the average 3.3 percent increase required to keep pace with demand.

Simon Stevens CEO of NHS England called for £21bn in funding to deal with the crisis as part of his Five Year Forward View.  He was allocated just 8bn with a further 2bn promised.   10bn sound like a good amount of money until you realise that the NHS is the 5th biggest employer in the world and that there have been years of cuts to all sectors.  The maps below, produced by the Health Foundation, show graphically how the NHS has been forced from surplus to debt. independent./nhs-hospitals-austerity-finances

nhs funding maps

There has been a 1% pay cap on public sector workers and this has contributed to the shortage of staff across the board.  Agency staff are paid at a higher rate.

  • Between 2013 and 2015, there has been a 50% increase in nursing vacancies, from 12,513 to 18,714.
  • For doctors, the number of vacancies went from 2,907 to 4,669 – an increase of roughly 60%.
  • In England and Wales, there were 1,265 vacancies for registered nurses in emergency departments – about 11% of the total.
  • For consultants in emergency medicine there were 243 vacancies – again 11% of the total.
  • Paediatric consultants – specialists in the care of babies, children and young people – were also hard to recruit, with 221 vacancies – about 7% of the total.

It takes a long time to train up specialist medical staff so the shortfall needs to be met by recruiting from overseas.  In-house recruitment and staff-bank services have been replaced by a private provider, just as costs are rocketing.  The NHS now pay a fee for every staff member provided and recruitment from overseas costs between £5,000 to £6,000 for a single nurse.  Once we come out of the EU costs will rise again as the NHS pay a similar amount to recruit trained staff from EU countries.

The Government is to privatise the NHS’s in-house, publicly-owned provider of agency staff, ministers have announced. NHS Professionals, the health service’s main staffing agency, provides 90,000 health workers to around a quarter of NHS trusts, covering two million shifts a year.  In a written statement issued on Thursday as most MPs headed back to their constituencies, the Government announced it would sell off a majority stake in the organisation to the private sector with the aim of “creating a profitable business model”.

Agency staff costs have soared in the NHS in recent years, with a £600 million increase in spending on them in the most recent financial year despite attempts to control costs.  A report by the Public Accounts Committee earlier this year said around 50,000 frontline NHS jobs were vacant – positions that usually need to be filled by agency staff.


In Surrey Virgin Care now run many of the services provided under the NHS banner.  Although a private company, with shareholders to pay it has to date run these services at a loss.

Over the past six years, Virgin Care has been awarded numerous NHS contracts and now runs over 200 NHS services, but despite the scale of its involvement, the company shows no signs of making a profit. Indeed, according to its accounts, since 2010 the company has recorded an annual loss of £9 to £10 million in the UK. As Virgin Care Ltd makes no profit in the UK, the company pays no tax in the UK. However, Virgin Care Ltd is a small entity in Richard Branson’s Virgin empire. Virgin Care’s parent is Virgin Group Holdings registered in the tax haven of the British Virgin Islands.

As nice a man as Richard Branson may be he is a very successful businessman and would not have taken such a large slice of NHS contracts without an eye on his return.

The end game – introduction of NHS charges

Ironically, we have now come full circle and back to the excessive ‘waiting lists’ cited by Letwin and Redwood to find alternative means to pay for the NHS.  In March 2017 the NHS abandoned it 18-week target for operations with over 360,000 people waiting beyond that time.

Waiting list for non- urgent operations in England. nhs waiting list

The idea of paying for healthcare at the point of use is an anathema to the British public.  They will resist on all levels.  Excessive waiting times and rationing will push more people into private insurance schemes to get the healthcare they need.  Equally, as it becomes more difficult to see your GP  it has been proposed to introduce a small fee of £30 – £4o.  You will recall how charges were proposed to make ‘supply fit demand’.

In an official motion to be discussed at the BMA’s Local Medical Committees conference, it argues that the NHS must focus on reducing demand for GP appointments ‘and that the most effective way to do this would be to introduce a token “charge” for GP consultations’. To soften the blow it proposes ‘a mechanism to reimburse the elderly and those on low incomes’.

This is the thin end of the ‘charging for use’ wedge and as more services are cut and more drugs are rationed we will all have to stretch our finances or go without.

It is therefore in the interest of the private providers that the NHS maintains staff shortages, recruitment from overseas due to lack of home-grown staff (cut to nurse bursary), keep long waiting lists and continue to ration drugs and services. 

In April 2017, Theresa May hints at a ‘centrepiece gem’ in the forthcoming manifesto in order to deal with the crisis in social care (mostly caused by the 2012 Health and Social Care Act).

She said her ministers were plotting a long term solution to the growing crisis in services for the elderly and disabled. Chancellor Philip Hammond has already opened the door to a compulsory insurance system to help Brits to pay for their care in old age in March’s Budget.

As the crisis in NHS continues to deepen, no doubt ‘compulsory insurance’ will become more acceptable.   US companies such as Tenet Healthcare are keen to get in on the action.  Healthcare provided through insurance cover is their bread and butter.  Mrs May has refused to rule out access to the NHS from US providers following Brexit.

Tenet also noted to investors that “privatisation of UK marketplace, given market inefficiencies and pressures on the National Health Service, should create organic and de novo opportunities” for the US company. The publicly traded Tenet employs more than 130,000 people and operates more than 470 outpatient centres, 84 acute care hospitals and 20 short stay hospitals in the US.


You may be thinking that with the US companies the NHS will benefit from the latest technology and treatments.  But consider how much you would have to pay for your insurance when it costs on average $1,119 for an MRI scan and $29,067 for a hip replacement.

It would appear that canny Mr Branson is playing the long-game.  Aware that charging through insurance is just a matter of time, he has secured a lucrative position in the market.  The irony is that most people will pay on average £250 per month to have health care insurance which will not cover pre-existing conditions, will not cover pregnancy, cancer or dementia and will rise every time you make a claim.   Yet an increase in tax of  £250 per year would plug the black hole of NHS finances as everyone pays in to protect everyone else.

It will be impossible to hold any of the fragmented, private services to account should things go wrong.  Private healthcare is not covered by the Health Service Ombudsman.  And it won’t be easy getting these services back from the private providers given that they have the resources to sue the NHS for lost contracts and profits. Virgin Care sues the NHS after losing out on Surrey childcare deal

Now we have the Naylor Review which is essentially the forced selling of NHS land and assets. See the video below.


In five more years the Conservative party will be able to finish the job.


NHS Jenga – once it topples – game over.



Dominic Raab, MP for Esher and Walton has voted in line with government policy since 2015.  Here are a selection of his votes. 

In 2015 leading up to the last election he wrote;

One of the key challenges we face locally, with a rising birth rate and an ageing population, is to tailor local health services to the specific needs of our community. In cash terms, this government has increased funding for the NHS by almost £13billion since 2010. More operations are being delivered, and waiting lists are down. Nationwide, there are 17,200 more clinical staff, and 20,200 fewer administrators. With 1,000 more GPs, we’ve seen 40 million more appointments each year at local doctor’s surgeries.

Which makes everything seem rather rosy – especially when he adds;

most people feel increasingly confident about the NHS: the British Social Attitudes Survey recently found public satisfaction in the NHS had risen to 65%, a 30 year high.

Except that these figures do not match those reported by BBC news.

The biggest ever rise in public dissatisfaction with the NHS was recorded last year, according to a long-running survey. The British Social Attitudes Survey has been tracking satisfaction since 1983. The 2015 poll of nearly 2,200 people showed satisfaction with the NHS at 60% – down from a peak of 70% in 2010. Some 23% said they were actively dissatisfied – a rise of eight percentage points on the year before and the biggest single jump in a year.

funding social care 2

nurse bursaryopposes mental health impSTP plansnhs funding 2junior doctors


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