The Government is paying the political price for the lack of open policymaking in its reforms to the NHS

The NHS is facing significant financial pressure as a result of austerity with smaller increases in spending, which are not keeping pace with demand. This has meant that the NHS has to find £20 billion in efficiency savings by 2015. At the same time the health service is facing one of its biggest upheavals ever, which will result in a greater involvement of private companies in the health services. The reforms to the NHS have been introduced in the face of stiff opposition and in many ways represent the opposite to open policymaking – and the Government is now paying the political price.

The opposition to the Health and Social Care Bill was substantial and included the majority of the main health bodies, many of whom were not invited to attend the infamous Downing Street health summit to discuss the bill earlier in the year. Notable non-attendees included:

  • British Medical Association
  • Royal College of GPs
  • Royal College of Midwives
  • Royal College of Nursing
  • Chartered Society of Physiotherapists
  • Royal College of Pathologists
  • Royal College of Radiologists
  • Royal College of Psychiatrists
  • Unite
  • Unison.

Opposition to the bill was widespread in the workforce of the health service. One survey found overwhelming opposition from hospital doctors, with 9 out of 10 professionals opposed to the bill. Strong opposition to the reforms was also apparent amongst the grassroots of the coalition parties. ConservativeHome came out in opposition to the reforms, arguing that it could cost the Conservatives the next election and would distract from important reforms to welfare and education, whilst Liberal Democrat party members opposed the reforms by 2 to 1.

Much of the opposition about the reforms has centred on how complex and fragmented the new health system will be. Clare Gerada, Chair of the Royal College of GPs, has argued that the move to a market-driven health care system will result in a culture of ‘my disease is more important than your disease’, with GPs at the centre of this trying to balance these competing voices. She has flagged her concerns about the lack of experience of GPs in managing relationships with the charities and lobbyists they will face when commissioning in future.

Andy Burnham, the Shadow Health Secretary, agrees on the point of fragmentation of health care, arguing that “my answer is simple: markets deliver fragmentation; the future demands integration.” He has called for a single system for health and social care which addresses the physical, mental and social needs of the nation. He has argued that central government should decide what health services should be delivered and local government how.

Despite the overwhelming opposition, ministers have been happy to write off the protests as ‘business as usual’ when it comes to NHS reform. Simon Burns, the then Health Minister, stated that the opposition from these ‘vested interests’ was to be expected and scare stories about ‘creeping privatization’ are par for the course. Andrew Lansley, the former Health Secretary and architect of the reforms, argued that the Royal College of Nursing only opposed the reforms because of pension changes, accusing them of being ‘a vested interest indulging in trade union -like behaviour’. The appointment of Jeremy Hunt as the new Health Secretary does not inspire hope about a change of policy course, given that he is seen as a proponent of greater involvement of the private sector in a market-driven health service.

The reforms have now received Royal Assent and the Government seems committed to accelerating the involvement of the private sector in the NHS. Research by the Labour Party using freedom of information requests to NHS primary care trusts found that contracts for almost 400 NHS services worth a quarter of billion pounds were signed in early October, representing the biggest act of privatization ever seen in the NHS. The research found that in a quarter of cases, the primary care trust had not been open about its intention to outsource, resulting in a considerable amount of privatisation by stealth.

The biggest privatisations so far have been in community services – those healthcare services offered outside of hospitals including musculoskeletal services for back pain, adult hearing services in the community, wheelchair services for children and primary care psychological therapies for adults. Children’s health care in Devon is now delivered by Virgin Care, as are GP services in Northampton and sexual health services in Teeside. This week’s Channel 4 Dispatches programme entitled ‘Getting Rich on the NHS’ uncovered poor quality services delivered by Virgin Care and concerns from local residents that their local services have been privatised often with little or no involvement from the community in this decision.

Paul Corrigan, the former Labour health adviser, argued in September that outsourcing of services should go further. He proposed that the private sector should be allowed a greater role in the NHS to ‘save’ failing hospitals. This argument is ironic given that this week it became apparent that the flagship outsourcing of Hinchingbrooke Hospital in Cambridgeshire to the Circle Partnership is not delivering on the initial expectations. The hospital, in private hands, has racked up losses of £4.1 million in the first six months of the contract – £2 million more than was expected. Given that the private sector was involved to save the hospital from financial ruin, the experience so far does not bode well.

This closed approach to policymaking and reform is having a real and significant political impact on the Government. A recent survey by IpsosMORI on which party has the best policies on healthcare found that the Conservative’s ratings are at pre-Cameron levels. Only 16% of voters believe that the Conservatives have the best policies on healthcare and they seem to have lost the battle in convincing the public that the NHS is safe in Tory hands. A further recent poll by IpsosMORI points to a re-toxification of the Conservative brand, with a sharp increase in people who don’t like the Tories since they came into government, which the reforms to the NHS are clearly a part of. The Government is paying the political price for the lack of open policymaking in its reforms to the NHS.


The West Coast fiasco points to the real problem with open public services

The West Coast mainline franchising fiasco shows that the current approach to outsourcing public services has serious flaws that need to be addressed – the much too complicated and secretive nature of outsourcing is the problem, rather than the people handling the process.

Last week Patrick McLoughlin, the new Transport Secretary, cancelled the West Coast Mainline franchise deal. The Department for Transport has been on a damage limitation exercise ever since, with McLoughlin blaming the fiasco on officials at the DfT “because of deeply regrettable and completely unacceptable mistakes made by my department in the way it managed the process”. Philip Rutnam, the Permanent Secretary at DfT, has also joined in telling staff that they must accept that the reversal was the fault of officials. Meanwhile, Kate Mingay, one of the three officials suspended by DfT (an ex-Goldman Sachs employee parachuted into the civil service because of her private sector expertise) has hit out at the way her role in the procurement has been portrayed by the Department.

Blaming officials is an easy way to distract from the substantive story: whether the current approach to franchising used by the DfT is fundamentally flawed. The Department argues that mistakes were made from the way the level of risk in the bids was evaluated due to human error – in particular the way in which inflation and passenger numbers were taken into account, and how much money bidders were then asked to guarantee as a result. But the assumptions about inflation and passenger numbers are dependent on the state of the UK and global economy and the ability of the future franchisee to bring in new customers. Colin Cram, writing for the Public Leaders Network, argues that: “…this enters the realms of guesswork and slight changes in assumptions can lead to different outcomes for contracts that may be for only three or four years, let alone 13.” If the Government’s own Office for Budget Responsibility continues to get its predictions on economic growth significantly wrong, how can we expect the assumptions made in the rail franchising process to be watertight?

This is not the first time that assumptions about economic growth and customer numbers has gone wrong, for example the previous experiences with the East Coast mainline or in the commissioning of welfare to work services. The Work Programme was designed for a far more positive economic climate than we now find ourselves in. DWP’s estimates of the number of customers in receipt of Employment Support Allowance have proven to be wholly unrealistic, with serious consequences for the business models of prime contractors and charities.

The risks associated with complex procurement processes such as the rail franchise are compounded by the secretive nature by which they are often conducted, behind a veil of ‘commercial in confidence’. As we’ve argued before, this ‘closed shop’ approach leads to poor decisions and a profound lack of public engagement – until something goes horribly wrong. The complexity involved also means a significant diversion of resources into the process of franchising rather than actual delivery of services. Franchising might work however if the process was more transparent and the assumptions about passenger numbers (and any other projections) were open to rigorous scrutiny by others outside of the process – so why isn’t it?

The West Coast fiasco has much wider implications that the policy establishment probably doesn’t want the public to consider. Cheryl Gillan, the former Conservative Welsh Secretary, has argued that a root and branch re-examination of the High Speed 2 rail project is needed if the public is to have trust in such a significant investment of public resources. Instead, plans for competition and outsourcing are being accelerated in prisons, probation services and health. In this context, the secretive, complex and bureaucratic nature of outsourcing needs to be addressed as a matter of urgency. If the public is going to be on board, then a public debate is needed on the merits and risks of delivering services in this way – which surely is what the Government’s open policy should be all about.

Fundamentally, the political establishment doesn’t engage the public in a debate about the merits of rail franchising because the public doesn’t support the idea. This ‘outsourcing by stealth’ approach wins neither hearts nor minds. Various surveys continue to show a strong majority of public opinion in favour of re-nationalising the railways – one recent survey found that 70% of respondents supported such a move. Impossible? New Zealand provides an example of such a policy put into action. Its rail and ferry network was privatised in the 1990s and asset-stripped and run down by an Australian outfit. It re-nationalised both in 2009. Michael Cullen, the then Finance Minister said privatization had “been a painful lesson for New Zealand”. Kiwi Rail in public hands has been able to invest in its long-term future whilst also generating significant financial and economic benefits for taxpayers in New Zealand.

Here, despite the strong public preference for a nationalised rail network, none of the three main political parties are committed to such a policy. At last week’s Labour Party conference, Ed Miliband and Maria Eagle made positive noises in this direction but no firm commitments. So we are left with an unpopular, risk-laden, fragmented rail network – and the policy establishment searching around for scapegoats when they should be looking somewhat closer to home.