Labour's silence as NHS reform is dying of neglect

A suspicious silence is blasting out of Whitehall. We hear about the National Health Service (NHS) in deepening financial crisis; we know its chief executive has quit; we read the hospital wards are closing to save money – but no minister is explaining why. Scanning the headlines, it is reasonable to conclude that Tony Bliar’s NHS “reform” programme is sinking – and that, soon, someone will have to bring this sorry adventure to an end if financial crisis is to be averted.

We are seeing every excuse Gordon Brown needs to pull the plug from NHS reform and liberalisation – and be thanked for it. The sheer ineptitude of the Bliar spin machine is sowing the seeds for the destruction of all it has sought to accomplish.

The NHS reform attempted in Britain bears close comparison to Russia’s transition from communism. Blair is seeking to introduce market disciplines to state enterprises without using the work “market”: exactly the agenda Gorbachev started in 1988.

When cost controls are introduced for the first time, the results are always painful. Both NHS and Soviet managers were used to having customers designated by a plan. The notion of choice and consumerisation is alien and a market culture is absent.

And today, the NHS old guard is as disgruntled as a Soviet general in 1990. They had a comfortable life in the old system: it wasn’t very efficient, but there was no talk of losses, profits or markets. There was nothing as crass as competition.

Today, a family doctor, or GP, is paid more than £100,000 (e145,000, $173,000) – higher than any other strata of the British economy save for directors of large corporations who are just higher, at £107,000.

When we hear about extra health “investment”, this is its typical destination. But their old world is being threatened by Blair’s NHS perestroika, which will bring in foreign doctors to run independent clinics which treat NHS patients for less money than the unwieldy NHS charges.

The old guard is in revolt. Trades unions feign concern for the Filipino economy, saying the UK is exploiting the country by granting visas to its nurses. Doctors’ unions seek to smear their new rivals, accusing them of shoddy operations. The Department of Health is too inept to hit back.

This week’s British Medical Journal, for example, carries a report claiming that NHS hospitals have to correct bungled hip and knee operations by independent clinics. It claims, with no evidence, that failure rates are 1% in the NHS and 20% in private clinics.

So anyone who dislikes the new system has an interest in hyping up the health deficits – seizing on it to argue that Blair’s reforms are driving the system to bank-ruptcy. It is an incredibly powerful case for those who want to end liberalisation.

In this information war, one would expect the Secretary of State for Health, Patricia Hewitt, to defend the reform agenda: producing the true data on hip replacements, brutally laying out the inefficiencies and letting no lie go unchallenged. If this means being rude to the old guard, so be it.

John Reid, easily the most eloquent member of the Cabinet outside Bliar, excelled in this task. The rich have choice, he told Labour MPs: why shouldn’t everyone enjoy it? Hewitt, by contrast, is content to let someone else’s head roll.

So why do the deficits exist? The surge in NHS budget started before price controls were running, thus triggering rampant inflation of 4.5%, eating up the lion’s share of new money. Research from Reform, the think tank, shows how.

Of the extra £3.6bn invested in family hospitals in England & Wales in 2005-06, £1.8bn will go straight into pay rises agreed by Whitehall, £400m on new drugs, £320m on PFI deals, £300m on computers, £150m on pensions indexation. The change? Zero.

Health authorities have no fiscal margin for error, which is why two thirds now predict deficits. Their budget has been spent for them by Hewitt’s officials. So, when this is considered, health authorities are bearing up remarkably well.

But instead of explaining the situation, the government – from Downing Street downwards – is sitting back and allowing enemies of health reform to portray it as a financial disaster. The silence is stunning: and ominous.

Under Hewitt, the fight seems to have left the Department of Health – and it seems to be swinging back to its institutional conservatism. It does not defend the health reform agenda too rigorously because so many of its officials don’t really believe in it.

In accepting the premature resignation of Sir Nigel Crisp, chief executive of the NHS, Hewitt accepted the premise that something was going badly wrong. She strikes a pitiful contrast with John Reid, her predecessor, a passionate and forceful advocate of reform.

But ministers and the Whitehall machine expect Brown to either decelerate, redefine or halt the reform agenda when he succeeds Bliar. Whether true or not, this is in itself a huge brake on the process. Why push forward a system that’s about to be dropped?

Brown opposed health reform because he doesn’t trust hospitals to deal with their own finances. The health deficits give him all the ammunition he needs to declare Blair’s NHS perestroika to be a failed experiment, and one which must be drawn to a close.

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