Market to blame for NHS crisis

Submitted by Anon on 12 April, 2006 - 6:30

UNISON health workers hold their annual conference later this month. As Nick Holden explains, they have a lot to discuss.

New reports each day of hospitals slashing jobs, and cutting back on services seem to indicate an NHS falling apart at the seams, despite the claimed investment of millions of pounds of new money. Propaganda about the “NHS crisis” serves various agendas

On the one hand, NHS unions and activists use the financial crisis to bolster their argument for more money — although the unions are struggling to respond adequately to the suggestion that the cash crisis is at least partly caused by increases in the wage bill. Those who advocate increased use of private providers and private funding also seize on the current crisis to claim that it’s the public nature of the NHS which leads to the squandering of resources. (Although private health care bears a large share of the blame for creating the crisis!)

Nationally the NHS overspent in 2005/06 by around ÂŁ1 billion. A lot of money, but less than 2% of the total NHS budget of ÂŁ87.5 billion.

A large chunk of the overspend can be seen in the massive costs of privatisation.

PFI mortgages cost many times the value of the new hospitals, and NHS trusts are tied into the PFI repayment deals for 25 or 30 years.

Contracts with private treatment centres have cost large sums of money, but have failed to deliver care — often because patients would rather go to their local NHS hospital, and because the standard of treatment has proved less then satisfactory, with operations having to be redone or repaired in NHS facilities. Even where these private services have not been taken up, the contracts still need to be honoured. The NHS effectively pays twice — once to the private contractor to do nothing, and then for their own facilities to do the work.

Money has also gone into paying extra payments on top of contracted services. Primary Care Trusts put contracts for services into hospitals based on providing new and innovative preventative care programmes that would keep many patients out of hospital altogether. Where those preventative programmes have not been implemented, or have failed to deliver the promised reductions in referrals to hospital, Primary Care Trusts are paying exorbitant bills from hospitals to cover extra work.

The recreation of the internal market inside the NHS has created much of this change. Individual hospitals vying for contracts, and costly duplication of financial negotiations with each PCT are draining NHS resources.

An NHS without the internal market might still have ended up “overspending” this year, but it would probably not have resulted in job losses. It’s not a utopian vision that NHS services which save money could subsidise those which overspend, but in the internal market every hospital or service has to balance its own books. Drastic measures take place in one hospital while a few miles down the road another hospital is making a saving. The creation of more Foundation Hospitals will make this situation far worse in the long run.

As ever, the workers in the system are blamed and punished for the crisis. Patricia Hewitt, health secretary has repeatedly suggested that “larger than expected” pay rewards have come to staff as a result of the new NHS pay system, Agenda for Change. But for the vast majority of staff Agenda for Change has been a lengthy and complicated process that has ultimately changed hardly anything in their pay packets. Thousands of staff are now facing a pay freeze for up to five years on the protection scheme for those health workers deemed to be earning “too much”.

It is true that the recent GPs’ and consultants’ pay deals saw big increases in expenditure, and the increase in the numbers of junior doctors has added to the pay bill. But that has just served to widen the pay gap in the NHS between the doctors and everyone else.

The blame put onto staff has now extended into punishment as the Pay Review Body agreed with the employers’ proposal of a pay rise of only 2.5% for nurses and other professionals in the NHS, and a below-inflation rise for doctors. According to the Labour Research Department this is below the current rate of wage rises and fails completely to take into account the increases in housing costs, Council Tax, the increases in registration fees for professional staff, as well as the impending introduction of professional registration for health care assistants.

To make matters worse, UNISON has recently admitted that the new unsocial hours package, covering work in the NHS at night and weekends, has been delayed for a further six months, which the government claims will make the 2.5% pay offer “affordable”. Once again NHS staff being made to pay for their own pay rise.

Staff in the NHS not covered by the Pay Review Body haven’t even heard what pay deal management want to offer them yet, because the unions were unable or unwilling to force negotiations to proceed until the Review Body made its announcement. Now that the nurses have been given 2.5% the chances are that other NHS staff will be told that is the best they can hope for.

Health workers must not accept blame or responsibility for the financial mess of the NHS, but neither should we accept that the crisis is irreversible. A large scale campaign linking fights against cuts with the fight against privatisation is necessary. And alongside that, we need a concerted effort on the part of the health unions to win for the workers in the health service a significant pay rise.

Some of the lessons at the UNISON health conference. Clear decisions to fight for the union’s pay demand, coupled with a commitment to a national campaign against both cuts and privatisation, could begin to turn the tide. Meanwhile UNISON members are also currently voting in elections to decide who will lead the health service group over the next two years — a victory for activist and left candidates will help to turn the union towards a new strategy.

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