Training | 2009.10.27
Beware the zealots selling miracle cures of privatisation | Polly Toynbee
The latest CBI salvo against the public sector is blinkered. Those who dash for dazzling quick fixes will come a cropper
Harsher, deeper and faster, comes the call from the CBI, licking its lips as it eyes up public services cuts. Yesterday\'s report from the business lobby group urges an eye-watering extra £120bn to be cut two years earlier than the government proposes. Whatever remains of the public sector after all these cuts should, they say, be subject to outsourcing and privatisation with "wider use of co-funding" – the polite word for making people pay for services that are at present free. To justify this, the CBI again misuses Office for National Statistics figures to "prove" that public sector productivity is falling far behind the private sector.
Doing More with Less is the report\'s title – and who wouldn\'t support that? Unfortunately, sometimes when the private sector takes over, it does the opposite. Less for more is what happened when Tony Blair rushed out independent sector treatment centres (ISTCs) to inject private sector values into NHS surgery. In 2003, Blair and Alan Milburn commissioned 36 centres with a few mobile and diagnostic units to add extra surgery beds for rapid-throughput, simple routine surgery, mostly on hips, knees and cataracts. Some more capacity was needed to speed up waiting times: old people were waiting up to eight months for cataract operations. Some consultants who kept long lists to promote their private practice needed a sharp prod.
But ISTCs were ideologically designed to part-privatise the NHS, with no level playing field for fair competition with existing hospitals. All were centrally commissioned by diktat without local consultation. The priority was "to increase private capacity" so even the most flourishing foundation hospitals were banned from bidding for the contracts. Some companies that won contracts, such as United Health, later employed key Blair health advisers. To prevent competition with the NHS, only foreign doctors were employed, many of them unfamiliar with British practice.
The contracts were disastrous from the start. They guaranteed higher prices per patient than the NHS tariff, though it should be cheaper to treat routine surgery patients in brand new units with no untidy emergency cases or old people with complex broken pelvises.
Ignoring local need meant many beds stayed empty – but the ISTCs were paid anyway. By the time many units opened, the NHS had already cut waiting lists to target levels, and there was no work to be done. When Gordon Brown came in he took one look and cancelled most of the second wave: Alan Johnson found one centre with bed occupancy under 10% and closed it at once, though cancelled contracts cost the NHS £37m. The Tories, egged on by private health companies, unfairly accused Brown of being the roadblock to Blairite "reforms" for ideological reasons. The truth is that the Department of Health finds ISTCs still cost 11% more per operation, and government sources say bed occupancy falls as low as 78%, far below the NHS which is well over 90%.
How is the quality? Officially, it\'s good, but a two-year study published last month in the Journal of Bone and Joint Surgery casts doubts: examining patients sent from Cardiff to the Weston-super-Mare ISTC, two-thirds of hip replacements showed evidence of poor technique, with 18% needing repair surgery. That is 20 times the normal NHS rate for revisions and each costs about £15,000. Leading orthopaedic surgeons report similar evidence, pointing out that ISTCs should perform better, since they are never sent complex cases.
But the CBI\'s Doing More for Less describes things rather differently: "It is estimated that ISTCs will have reduced costs of procedures such as cataract removals, hip replacements and knee operations to 85% of the NHS tariff by the end of their five-year contracts." Whose estimates can these be? The contracts soon come up for renewal: time to hand them back to their local hospitals.
What conclusions should we draw? Only blinkered dogma would insist that every element of public service must always be provided by public sector staff. Good examples abound where local authorities combine to hire private companies to run their back-office operations, payroll and human resources services more cheaply than each doing it alone. The CBI report has good examples of creative private services adding to public provision. The health service could make better use of pharmacies for walk-in treatments to take pressure off GPs: pharmacists are a highly skilled and underused high street resource – and GPs are anyway private businesses. The private sector could run walk-in NHS clinics, as they do in Manchester and Canary Wharf, at less cost than an accident and emergency visit. The CBI claims private contractors can process arrested people through custody suites more cheaply by freeing up police from paperwork, and that private civilian companies can provide basic logistics for the forces more efficiently than using trained soldiers, which sounds convincing.
Or at least it sounds convincing until you consider the forces\' abysmal record for striking good contracts with commerce. That\'s just the problem. Weak public managers are often even worse at drawing up private finance initiative, public-private partnership or even bog-standard procurement deals with the private sector. The danger is that canny companies will run rings round civil servants with neither the knowledge not the greedy motivation to squeeze out every penny\'s worth.
I have a small example: researching my book Hard Work , I took an agency job as a hospital night cleaner and it was plain that far too many hours had been assigned to a simple routine. The hospital manager who drew up the contract had long lost touch with cleaning and was clueless as to how long a job should take. There are worse examples, where hospital cleaning companies undercut each other and skimp on the job, with disastrous consequences. Either way, ward sisters have lost the power to manage cleaners to their own standards, as they used to in cleaner pre-contracting days.
There is no one-size-fits-all. The lesson of the ISTC debacle is that politicians who dash for eye-catching quick fixes, "modernising" and "reforming" with an ideological zeal for the private sector will come a cropper. Blair did it often with his "scars on my back" political distaste for the public sector; Brown\'s worst case was his botched PPP for the London tube, done to spite Ken Livingstone. Beware politicians of all complexions who defy complexity to opt for political, not pragmatic solutions.
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