the march of marketisation

The March of Marketisation The NHS and its Relationship with the Private Sector

Dr. Geoffrey A. Walker March 2015

The March of Marketisation - Dr.Geoffrey A. Walker 02/03/2015 1

Contents

Executive Summary 2

1. Introduction 3

2. The Purpose of the Report 3

3. Methodology 3

4. Privatisation, Marketisation and the Out-sourcing of Contracts 5

5. G4S and NHS Support Services 6. Cygnet Healthcare: Mental Health-related Services 7. ICT Software and Hardware 8. Alliance Boots: Beyond Dispensing Services 9. Agency Staffing Costs 10. Spire and Ramsay Healthcare: Private Hospitals and the NHS 11. NHS Trusts and the Private Finance Initiative (PFI) 12. Labour’s Zero-based Review: A Party Political Caveat 13. Looking Towards the Future Notes References

6 7 7 7 8 8 9 9 10 12 13


Executive Summary The march of the marketisation of the National Health Service (NHS) was set in motion by the Major government’s first Private Finance Initiative (PFI) of a hospital in 1992. The Blair government oversaw an expansion of PFI during its period of office and the substantial contracting-out of various ancillary services. However, a more rapid expansion of marketisation, following the implementation of the Health and Social Care Act (2012), has been undertaken and there is now a proliferation of private sector contracts in place in NHS Trusts and Clinical Commissioning Groups facilitated by NHSEngland. This report represents an attempt to place the marketisation of the NHS in the wider context of the privatisation of public services. It evaluates the extent of out-sourced contracts agreed by NHS Foundation Trusts in England and Clinical Commissioning Groups (2013/14) through analysis, examination and evaluation. It is the final part of a trilogy of reports on the NHS published in 2015. The first of these reports was ‘The Transparency of Trusts’; the second ‘The Clarity of Commissioning’. It offers an overview of the privatisation, marketisation and the out-sourcing of Contracts. It then examines a number of private sector organisations and their relationship with the NHS: G4S, Cygnet Heaklthcare, ICT consultants, Alliance Boots, Spire and Ramsay Healthcare and staffing agencies. The report then evaluates the NHS current relationship with PFI. The report goes on to provide a caveat regarding Labour’s Zero-based Review and its implications for the NHS if Labour were to form a government or be part of a coalition in 2015. The report concludes by looking towards the future of the NHS and how the NHS can and should be returned to the socialist roots envisioned by its founder, Nye Bevan.


1. Introduction

As the post Second World War mainstream party-political consensus, on the economy of the UK, began to disintegrate in the 1970s (Toye 2013), the door was opened to the neo-liberal marketplace of trade and barter of public services. Now, political thought is imprisoned by this marketplace (Lindblom 1982; Unger 2009) and politicians appear to be rendered incapable of thinking outside what can only be termed the closed box of the business model of government. However, numerous economists have pointed out that a national economy is neither a large corporate organisation nor can it be compared to a household budget (Blyth 2010). Politicians should take heed of the statement: not everything that is profitable is of social value and not everything of social value is profitable. The role of government is to protect the infrastructure for future generations not to sell it off to asset-stripping organisations and individuals whose only concern is to increase their bottom line. The health of economics has an identifiable and unique relationship with the economics of health which is compounded by an inappropriate role performed by successive governments. The globally-renowned statistician, Hans Rosling (2006) has consistently demonstrated that there is a direct correlation between the wealth of a nation and the health of its citizens. However, there is little doubt that unhealthy government can counteract this correlation and, in turn, leads to unhealthy citizens and that is what is happening in people’s daily lives, but, in the future, we may well not have a National Health Service to combat illness and promote well-being in the way we have known it until now as it appears that liberal-democracy is no longer fit for the purpose of protecting the wellbeing of the people it serves when it comes to health. A recent King's Fund's Quarterly Monitoring Report (2014) paints a depressing picture of the future of the NHS. There has been an overall growth in the amount spent on health from around 5.5% of GDP in the 1990s to a peak of over 8% in 2009. This has fallen slightly since then, but this report suggests that with NHSEngland projections of flat cash for the NHS and reasonable assumptions around forecast GDP growth, spending on healthcare could fall back to around 6% of GDP by 2021, equivalent of 2003's spending levels. This would result in a 25% reduction in available resources for the NHS. This should come as no surprise, given the frequently quoted £30bn savings requirement for the NHS upon its £110bn budget. It is for these reasons that finance directors are voicing their concerns. NHS staff have worked hard over the past four years to deliver savings more efficiently and effectively while public finances have been constrained. The challenge of retaining the NHS as fit-for-purpose, however, is becoming increasingly difficult.

2. The Purpose of the Report

The purpose of this report is to evaluate the extent of out-sourced contracts agreed by NHS Foundation Trusts in England (2013/14) through the analysis, examination and evaluation of a sample of Trusts. It is the final part of a trilogy of reports on the NHS published in 2015. The first of these reports was ‘The Transparency of Trusts’; the second ‘The Clarity of Commissioning’.

3. Methodology Freedom of Information requests were made on the number of out-sourced contracts to all 147 NHS Foundation Trusts. Trusts were also analysed in terms of information they provided in their FoI publication scheme and the online disclosure logs of FoI requests. Annual Reports for each Trust were examined and the degree to which Trust exhibited transparency of information online. Monitor (2014) produced an ‘NHS foundation trust annual reporting manual 2013 to 2014’. All Trusts appear to have conformed with the guidance in this manual. This financial year corresponded with the first financial year of NHS England (established April 1st, 2013). 87 (59%) of these Trusts replied leaving a significant minority that failed to respond despite having received reminders (41%). Responses to the request were classified, in 4 categories, as follows:


1. Unable to process: too expensive to retrieve the required information Trusts that used Section 12 of the FoI Act to refuse providing the requested information on grounds of cost were exemplified by this response from Durham and Darlington NHS Foundation Trust:

‘The Trust does not centrally record this information. In order to collate this information someone would need to manually trawl through thousands of records. We are therefore refusing your request for information pursuant to section 12 of the Act on the grounds that we estimate that the cost of complying with the request would exceed the appropriate limit. The appropriate limit at the present time is £450.00 which equates to eighteen and a quarter hours of work by a member of staff at the rate of £25 per hour.’

This response implies that the information requested is held in a non-digital format which begs the question as to how the Trust monitors and evaluates expenditure if central digital records are not held of levels of expenditure in any financial year. While it is acknowledged that some Trusts are relatively newly-formed, the initial step, in combining existing organisations would, normally be to collate levels and patterns of expenditure. 2. Unable to process: information required not available or held only within departments and not held centrally With some Trusts that offered the above response, it was unclear if the information was held in incompatible hard or soft copy formats: possibly in a combination of both. Where Trusts were an amalgamation of a number of Hospitals the issue of differing departments creating and storing information differently is clearly a problematic area. However, Trusts that responded appropriately and effectively often had invested considerable sums of money in installing new computer networks. 3. Processed: request only partially satisfied In some cases, Trusts failed to respond fully to the request, for example, by not providing information for the complete financial year or not covering all services. Others failed to provide details of the contract awarded or the contractor. Partial responses were queried but not always responded to appropriately or, in some cases, not responded to at all. Withholding the details of some contracts was considered, by some Trusts, to be in breach of confidentiality. However, no request was actually made for negotiated details of individual contracts, so, any rules or regulations of confidentiality do not apply. 4. Processed: request satisfied and further information provided Approximately 50% of Trusts responded in full to the request and within the 20 day period allowed by the FoI Act. Responses were received in various formats: Word, Excel and PDF. Most, but not all, information was tabulated in these formats. The most useful format is in Excel which allows further detailed analysis in chart and graphic representations. A minority of Trusts responded by offering extra information in the form of contract number, date awarded and started. Some published directly to their online disclosure log and provided the URL for the disclosure. Detailed responses which included further information tended to be provided by FoI teams that were led by the legal or financial team. 12 of the Trusts had failed to provide online access to their publication scheme, a requirement of the FoI Act. The quality of the information provided varied with some only providing basic details of all information available while others made sections of their publications available through an accessible webpage. Central and North West London NHS Foundation Trust, for example, provided an example of good practice. They divided the scheme into sections with clickable access to documentation in each section.


Only 24 of the 87 (28%) disclosed their responses to FoI requests online in the form of a disclosure log. Dudley Group NHS Foundation Trust provided an example of good practice by making all its disclosures accessible through a clickable webpage.

4. Privatisation, Marketisation and the Out-sourcing of Contracts A popular definition of privatisation refers to the transfer of assets from the public sector to the private sector. On the other hand, marketisation is defined as the exposure of an industry or service to market forces. In reality, the Health and Social Care Act (2012) has established a combined process of privatisation and marketisation which is, more correctly, described as the out-sourcing of health services through a wide range of legally binding contractor-provider relationships. Some of these contracts are with the private sector, often referred to as the ‘independent sector’ by NHS England [1], other public sector organisations and the voluntary sector. Different forms of contract apply to different organisations. NHS contracts are issued in accordance with the technical guidance provided by NHS England. The standard contract is for use when commissioning healthcare services (other than those commissioned under primary care contracts) and is adaptable for use for a broad range of services and delivery models. The 2013/14 NHS standard contract reflects the requirements set out in Everyone Counts: Planning for Patients 2013/14 (NHS England). This out-sourcing of the NHS is taking place through a combination of the following: • The reduction of the role of government in regulating health provision. • The transfer of services to the private sector through commissioning from Any Qualified Providers (for example, Circle, Serco or Virgin Care). • Outsourcing of parts of services to the private sector (for example, ICT, cleaning, pharmacy, pathology, security). • The creation of market mechanisms for the distribution of funding within the NHS (for example, commissioning, payment by results mechanisms, the purchaser-provider split and ‘patient choice’ policies). • The use of Private Finance Initiatives (PFIs) that use private money to build new buildings and infrastructure. • The creation of Foundation Trusts which have the ability to raise funding through private patients that pay for services. • Limiting access to certain services previously provided by the NHS. Events, in recent years, provide an indication of how rapidly the NHS can be opened up to private sector marketisation through the out-sourcing of contracts. Virgin Care [2] won a deal worth £450m over five years to provide community and specialist nursing services in Surrey in 2012, the first contract of its kind. A total of 2,500 NHS staff were transferred to the company, which took over the running of seven community hospitals. Serco [3] followed soon after, winning later that year a £140m, three-year contract to run community services, including home care, in Suffolk. The deal involved the transfer of 1,030 NHS nurses and medics and has made significant losses for the FTSE 250 outsourcer of contracts. Twelve organisations, including two NHS hospitals, are in the running for £1.2bn of NHS cancer and terminal illness contracts across Staffordshire. The winning bidder will provide cancer diagnosis and treatment and care including radiology, radiotherapy, nursing and surgery for patients in hospitals, hospices and at home. The ‘project’ has been split into two lots: a £687m contract to provide cancer services across Staffordshire, and a £535m deal to provide support for terminally ill patients and care for old people in the county.


Due to start in July, the tender has been given ‘pioneer’ status by NHSEngland because of its scope and duration and because it involves the use of the private sector in some of the most important and sensitive medical care provided by the health service. Ali Parsa, the founder of Circle [4] and ex-Goldman Sachs banker, told a receptive media, in January 2015, that more “business culture” could work miracles on our underfunded hospitals. But the Care Quality Commission (CQC) found that management techniques borrowed from the car industry, such as “stop the line”, did not “empower” staff to halt proceedings and quickly raise concerns about patient safety – staff told the CQC they felt blamed if they used it. And the A&E waiting time management system based on Argos tills failed too – patients in Hinchingbrooke’s understaffed A&E were twice as likely as the average NHS A&E patient to wait so long that they gave up and left without being seen.

5. G4S and NHS Support Services Outsourced cleaning, catering and portering services provide a huge chunk of G4S’s NHS revenue. G4S is paid to provide such services by hospitals from Sunderland to Hertfordshire. It has a £12million, 6 year contract at Liverpool women’s hospital, and a £4.5million a year contract with South Warwickshire NHS Trust. At Birmingham Heartlands NHS Trust it receives £6.7million a year. And it recently picked up a similar contract for four hospitals in the Pennine Acute Hospitals NHS Trust in Manchester, earning it £56million over 5 years. At North West London Hospitals Trust - currently facing the loss of several A&E departments due to a funding squeeze - virtually all areas of support services from cleaning, portering and security to reception and catering are contracted out to G4S. It also supplies a ‘premium service’ with ‘dedicated hostess, chef and housekeeping services’ in private patient units in 2 of the North West London NHS hospitals. G4S has been heavily involved in the hugely expensive Private Finance Initiative, including the orthopaedic and cancer centres at the Oxford University Hospitals NHS Trust. It runs health centres under the LIFT scheme (equivalent to PFI) across large parts of London including East London and the City; Bexley, Bromley and Greenwich; and Brent, Harrow and Hillingdon; as well as in Wolverhampton and Walsall. G4S provides patient transport services for NHS Trusts including Barking, Havering & Redbridge; Surrey; St George Healthcare NHS Trust (£2.7million a year), and Epsom & St Helier (£3.5million a year). At St Georges, G4S pays below the minimum rate for non-emergency ambulance drivers, turnover is high, morale low, and training insufficient. At Epsom & St Helier NHS Trust, where a double amputee died when his unsecured wheelchair tipped over as he was being transported to hospital in a G4S ambulance, an inquest found that G4S employees “were not sufficiently trained in the safe transportation of passengers by ambulance”. G4S is moving into prison healthcare, ‘forensic and medical services’, drug treatment and mental health. It “provides security for mental health services for Tower Hamlets, East London, Oxfordshire and Buckinghamshire”. G4S is being paid £50,000 a year by Gloucestershire’s Mental Health 2gether NHS Trust to assess mentally ill patients. At Northumberland, Tyne and Wear NHS Foundation Trust G4S is providing “planned and reactive secure transport for patients suffering from mental ill health”. Mental health staff are apparently being replaced by security staff, particularly on night shifts. In A&Es across the land, as queues lengthen and medical staff are cut, security guards are picking up the slack as frustrated tempers fray. G4S aren’t just ‘securitising’ patient care, but also staff. Low paid G4S cleaners and porters at Mile End hospital are forced to hand over personal data and use biometric clock-in machines. In April 2012 G4S won a 5 year contract to provide Non-Emergency Patient Transport to embattled Lewisham hospital. A local resident submitted a Freedom of Information Request. The reply came in: to


reveal the value would “breach commercial interest”. Lewisham was paying between £127,000 and £146,000 a month for these services.

6. Cygnet Healthcare: Mental Health-related Services Cygnet Health Care is one of the UK's largest independent providers of mental health and social care pathways, providing high value integrated services to a wide range of individuals. Cygnet operates 18 centres with more than 730 beds. In addition to their 14 mental health hospitals they have two units that are registered nursing homes providing long term and respite care for private fee-paying elderly residents. We provide autism short stay residential care in the North West as well as a short stay and respite home in Kent for people with autism and asperger's syndrome. 80% of their operational revenue is drawn from NHS contracts with Trusts and CCGs.

7. ICT Software and Hardware A major area of expenditure for NHS Trusts in 2013/14 was on ICT hardware, software and consultancy. They were forced to pick up the cost of the failed national NHS Care Records system. A report by the Public Accounts Committee (PAC), in 2013, concluded an attempt to upgrade NHS computer systems in England has ended up becoming one of the "worst and most expensive contracting fiascos" in public sector history. Ministers initially put the costs of the NHS scheme's failure at £6.4bn. Officials later revised the total to £9.8bn, but the PAC said this latest estimate failed to include a price for terminating a contract with Fujitsu to provide care records systems and other future costs. The project was launched in 2002, with the aim of revolutionising the way technology is used in the health service by paving the way for electronic records, digital scanning and integrated IT systems across hospitals and community care. Hit by technical problems and contractual wrangling, it was effectively disbanded by the government two years ago. MPs on the PAC said some outstanding costs remain and committee member Richard Bacon said:

The taxpayer is continuing to pay the price for the ill-fated national programme for IT in the NHS. Although officially dismantled, it continues in the form of separate component programmes which are still racking up big costs. This saga is one of the worst and most expensive contracting fiascos in the history of the public sector. He highlighted a government decision to renegotiate £3.1bn worth of contracts with outsourcing company CSC, charged with setting up a care records system known as Lorenzo in the North, Midlands and east of England.

8. Alliance Boots: Beyond Dispensing Services Boots the Chemist was founded in 1849 in Nottingham and has long been an icon of the British high street. In 2006, however, Boots merged with European pharmacy wholesaler Alliance Unichem Plc. to form Alliance Boots. Alliance Boots now receives an estimated 40% of its UK revenue, £4bn , directly and indirectly from the NHS through dispensing and related services. Tax avoidance and evasion are extremely common and many transnational corporations avoid paying tax in ways that may be legal, but which are clearly unethical and wrong One of these is the parent company of the UK’s well-known high-street pharmacy, Alliance Boots.


Alliance Boots has a reputation for dispensing but is equally renowned for tax avoidance. One study estimates that the tax illegitimately avoided by Alliance Boots since 2007 amounts to £1.21 billion enough to pay for 85,000 new nurses for one year, or to cover the prescription charges for the whole of England for almost three years. Although Alliance Boots is not alone in practising legal but illegitimate tax avoidance, it does provide a good case study of how the NHS is simultaneously being starved of finance whilst being turned into a cash cow for profit-hungry firms. But there are other reasons for health professionals to be concerned about Alliance Boots. Far from the friendly high street chemist we would like to it be, since its amalgamation into a multinational conglomerate, it appears that the ethos of Alliance Boots has shifted to focusing on profit generation at the cost of customer health, safety and satisfaction. In other words, Alliance Boots also provides a good case study of the corporatisation and commercialisation of health care. Even if the pharmacy retail sector is to be left predominantly in the private sector, it should function as a proper and fair market not one which profits from both professional pharmacists and the general public.

9. Agency Staffing Costs NHS Foundation Trusts spent £4.3bn between 2010-11 and 2013-14 on agency and temporary staff. Other NHS Trusts spent £1.2bn in 2013/2014, but figures were not available for these trusts over the previous years, meaning the total bill for the last four years could be closer to £10bn.The figures show that, despite repeated pledges to cut spending on this, the cost to NHS Foundation Trusts has gone up by around 20% for each of the four financial years of the coalition government. In the last year of the Labour government, NHS Foundation Trusts spent £734m. In 2013-14 that had doubled to £1.3bn. Reliance on agencies, at a cost of up to £1,800 per day per nurse, has happened while the number of nurse training places in England has been cut. In the last year of the Labour government, 20,829 nurse training positions were filled in England. That fell to 17,741 in 2011-12 and to 17,219 in 2012-13, rising to 18,009 in 2013-14. Trusts are now facing what Monitor, the NHS regulator, calls “unprecedented financial pressure” due to their reliance on expensive agency staff. The most recent quarterly report from the regulator warned that the current spending on agencies was unsustainable. It said: “Foundation trusts continue to experience difficulties in recruiting and retaining permanent staff. Given the growth in demand … a planned year-on-year reduction in agency staff usage has not materialised. Instead, spend on contract and agency staff is double the planned figure. In the medium to long term, this level of spend on temporary staff cannot be sustained.”

10. Spire and Ramsay Healthcare: Private Hospitals and the NHS Spire Healthcare plc is the second largest provider of private healthcare in the United Kingdom after BMI Healthcare. Spire Healthcare was formed from the sale of Bupa Hospitals to Cinven in 2007, followed by the purchase of Classic Hospitals and Thames Valley Hospital in 2008. It is listed on the London Stock Exchange and is a constituent of the FTSE 250 Index. It is currently engaged in a significant financial relationship with CCGs in the North East to the value of £7, 096,000. Its hospitals are displayed as an option in the ‘choose and book’ scheme. Under ‘choose and book’, patients have the right to choose which hospital provider they are referred to by their GP. This legal right, which was introduced in April 2009, lets patients choose from any hospital provider in England offering a suitable treatment that meets NHS standards and costs.


Patients can choose which hospital they are seen in accordance with what matters to them most, whether it is location, waiting times, reputation, clinical performance, visiting policies, parking facilities or other patients' comments. A choice of hospital is available for most patients and in most circumstances. Exceptions include emergency and urgent services, cancer, maternity and mental health services. If you need to be seen urgently by a specialist (for example, if you have severe chest pain), your GP will send you where you'll be seen most quickly. David Gallagher, Chief Officer of Sunderland Clinical Commissioning Group, has said, ‘the provision of surgical services from Spire and other independent sector providers is essential in helping patients achieve their constitutional rights of treatment within eighteen weeks. Ramsay Healthcare was established in 1964 and has grown to become a global hospital group operating over 100 hospitals and day surgery facilities across Australia, the United Kingdom and Indonesia. In 2007, Ramsay Health Care realised its offshore expansion plans acquiring Capio UK, the fourth largest operator of private hospitals in the UK. It is another example of a private sector interest acquiring NHS assets and services through the manipulation of off-shore hedge funds.

11. NHS Trusts and the Private Finance Initiative (PFI) The NHS is saddled with extortionate debt from decades of misguided PFI deals. NHS hospitals owe £80bn in PFI loan unitary charges – in other words, the ongoing costs of maintaining PFI hospitals and paying back the loans. Next year alone, trusts will make some £2bn in repayments. Trusts like Peterborough and Stamford Hospitals NHS Trust, which is locked into making £40m in repayments a year on the PFI it took for Peterborough City Hospital, or Sherwood Forest NHS Trust, which is spending 15 per cent of its annual budget on the annual repayments on a PFI loan it took to expand the King’s Mill Hospital. The initial investment made by PFI companies is rewarded at a massive rate. As Joel Benjamin of Move Your Money points out: “Typically the unitary charge is three to five times the capital cost and on more egregious PFI projects as high as seven times”.

12. Labour's Zero-Based Review: A Party Political Caveat If Labour formed a new government in 2015, they would implement a zero-based review of public services (2014). Under this review, the NHS will be subject to public sector efficiency and scrutiny in the same way as all other public services have been previously. At Labour’s National Policy Forum in 2014, an attempt to commit Labour to abandoning coalition spending plans for 2015-16 was heavily defeated at the end of the conference described as a "radical rethink" of what the party stands for. Ed Balls, the shadow chancellor, said the vote showed there was widespread support in the party for a manifesto based on "big reform, not big spending" and that members endorsed the tough fiscal position adopted by the leadership. What are the implications of this position for the NHS? The Zero-Based Review has already established a series of working groups and two of these: one on procurement of services and another on the use of agency staff have direct implications for the future of the NHS. Questions being investigated as part of the procurement of services working group include: • How much procurement is carried out under open competition, through frameworks, or using the restricted procedure?


• What joint procurement has been undertaken with other departments, or shared between different organisations? • What are the largest contracts in each departmental group, and how well are these performing in terms of actual versus planned costs and savings? This work is being led by Professor Dermot Cahill, head of Bangor University Law School. Questions being investigated as part of the work on the use of agency staff include: • What is the scale of agency staff and contractor use in this departmental group, and what are they doing? • What are the gaps in skills and capacity that drive the use of agency staff and contractors? • What are the Departmental controls for specifying, monitoring and managing performance of consultants and agency staff? This work is being led by Baroness Jeannie Drake, former member of the Turner Commissions on Pensions and former President of the TUC.

13. Looking Towards the Future The Callaghan government of the 1970s eased open the door to the dominance of neo-liberal thinking on economic policy in the UK. Thatcher's and Major's governments advanced this thinking at a much more rapid rate. In the case of Thatcher, public services were, in many cases, devastated. Privatisation of state assets was extended and the full power of the British state was targeted on organised labour, 'the enemy within', (Milne 2014) as exemplified by the case of miner's strike of 1984/85. Then, Blair, a self-confessed admirer of Thatcher, continued to impose savage cuts on local government and public services while opening up the privatisation of the NHS through the Private Finance Initiative (PFI). The coalition government of Cameron-Clegg continues the assault on public services, supports corrupt use of the sale of state assets, ineffective and inappropriate financial institutions and tax-avoidance on an unprecedented scale. The Conservatives, in particular, appear not to believe in the ‘privatisation’ of public services but in the ‘marketisation’ of all services regardless of the role they play in the socio-economic infrastructure of the nation. The Health and Social Care Act (2012) has increased this marketisation at an exponential rate. Would a future Labour government, however, correct the multiple maladies of the UK economic system and, in particular, save the NHS from extinction? The current evidence is that those at the top of the Labour Party think the coalition government has not gone far enough in subjecting public services to ‘efficiency and scrutiny’ (Labour 2014). But, as Albert Einstein, a life-long socialist, said: "The real purpose of socialism is precisely to overcome and advance beyond the predatory phase of human development." If we truly desire to advance beyond the predatory phase of human development, a National Health Service, free at the point of access must be at the very core of a socialist vision of a future society. To realise this vision, there is a need to advance beyond the dictatorship of no alternatives (Unger 2013) to where various options for change, management and transformation are explored systematically before taking decisions on service delivery. As noted in the introduction to this report, The King's Fund's Quarterly Monitoring Report (2014) paints a depressing picture of the future of the NHS. It highlights an overall growth in the amount spent on health from around 5.5% of GDP in the 1990s to a peak of over 8% in 2009. This has fallen slightly since then, but the report suggests that with NHSEngland projections of flat cash for the NHS, and reasonable assumptions around forecast GDP growth, spend on healthcare could fall back to around 6% of GDP by 2021, equivalent of 2003's spending levels. This would result in a 25% reduction in available resources for the NHS.


This should come as no surprise, given the frequently quoted £30bn savings requirement for the NHS upon its £110bn budget. It is for these reasons that finance directors are voicing their concerns. NHS staff worked hard over the past four years to deliver savings more efficiently and effectively while public finances have been constrained. The challenge, however, is becoming increasingly difficult. It is clear that there is a need to redesign and adapt services in order for quality not to be compromised. Many finance directors are calling for the pace of service transformation to be quickened to help with delivering high quality, safe care in an efficient and appropriate manner. It is unmistakable that the future success of the NHS depends on the clinically-led transformation of services, utilising the expertise and skills of NHS staff to help this to happen as effectively as possible but not at the cost of asset-stripping of core services by private sector predators. It is crucial that there is an open and honest debate with politicians, the public and service users about the quality and scope of services that is available to ensure the NHS is fit-for-purpose and the future. Ultimately, there needs to be a clear focus on obtaining the maximum value for every pound spent and available to the NHS but this is only achievable if the will of the people to have a healthy economy supporting the economics of health is recognised as essential by future governments.


Notes 1. NHS England is an executive non-departmental public body of the Department of Health. It oversees the budget, planning, delivery and day-to-day operation of the commissioning side of the NHS in England as set out in the Health and Social Care Act 2012. It also holds the contracts for GPs and NHS dentists. It comprises of approximately 6,500 staff in 50 sites around England. The bulk of its staff previously worked for the decommissioned Primary Care Trusts and Strategic Health Authorities. 2. Virgin Care is a private provider of services to the National Health Service in England. It owns 24 GP-led provider companies that provide NHS services through networks of GP surgeries and community-based NHS services. 3. Serco Group plc is a British outsourcing company based in Hook, Hampshire. It operates public and private transport and traffic control, aviation, military weapons, detention centres, prisons and schools on behalf of its customers. There has been a history of problems, failures, fatal errors and overcharging. It is listed on the London Stock Exchange and is a constituent of the FTSE 250 Index. Serco operates in Continental Europe, the Middle East, the Asia Pacific region and North America but the majority of its turnover comes from the UK. 4. Circle Health is 49.9% owned by its staff and 50.1% owned by private investment funds. The 49.9% owned by employees is via the company Circle Partnership registered in the British Virgin Islands. Majority ownership (50.1%) of Circle is in the hands of large private equity companies. As of April 2013, the leading institutional shareholders are as follows: Lansdowne Partners 29.1%; Invesco Perpetual 23.2%; Odey Asset Management 21.5%; Balderton Capital 9.8%; BlueCrest Capital 7.1%; and BlackRock 5.4%. (7,13) Lansdowne Partners is a hedge fund with $16 billion under management, co-founded by Paul Ruddock, a generous donor to the Conservative Party. Ruddock and co-financier David Craigen have donated more than £300,000 to the Conservative Party, most of it since David Cameron became leader. Lansdowne made £12 million by exploiting the collapse of Barclays shares in 2009.

Invesco Perpetual is an independent asset management company and part of the US company Invesco Ltd, which is incorporated in Bermuda, but headquartered in Atlanta, Georgia, USA. Invesco is incorporated in Bermuda as a means to reduce the amount of tax the company pays in the USA.

Odey Asset Management is a £3 billion hedge fund, run by Crispin Odey, a donor to the Conservative Partyand to the Christian Party, whose slogan is "Proclaiming Christ's Lordship". In addition, he has donated £18,000 to Libertas EU.

Balderton Capital is an early-stage venture firm founded by Benchmark Capital in 2000. Balderton manages approx $1.9 billion in venture capital. The bulk of the capital comes from university endowments, charitable foundations and pension funds.

BlackRock is the giant money-management firm established 23 years ago by Larry Fink, which controls or monitors more than $12 trillion worldwide. BlackRock has around $3.56 trillion in assets under its direct management.

BlueCrest Capital Management LLP is Europe’s third largest hedge fund or “alternative asset management company” based in Guernsey.


References Blyth, M. (2010) Austerity Accessed at: http://www.youtube.com/watch?v=go2bVGi0ReE&feature=youtu.be&a&safe=active King’s Fund (2014) How is the NHS Performing? Available at: http://www.kingsfund.org.uk/publications/how-nhs-performing-july-2014 Labour (2014) Zero-Based Review London: The Labour Party Lindblom, C.E. (1982) The Market as Prison The Journal of Politics Vol. 44, No. 2 , pp. 324-336 Cambridge University Press Accessed at: http://www.jstor.org/stable/2130588 Milne, S. (2014) The Enemy Within London: Verso Monitor (2014) NHS Foundation Trust Annual Reporting Manual 2013 to 2014 Accessed at: https://www.gov.uk/government/publications/nhs-foundation-trusts-annual-reporting-manual-2013-to-2014 NHSEngland (2013) Everyone Counts: Planning for Patients 2013/14 Rosling, H. (Ed.)(2006) Global Health Stockholm: StudentLiteratur Toye, R. (2013) From 'Consensus' to 'Common Ground': The Rhetoric of the Postwar Settlement and its Collapse, Journal of Contemporary History 48#1 pp 3-23. Unger, R. (2009) The Left Alternative New York: Verso

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