NHS for Sale: Myths, Lies & Deception (5 page)

There is also a growing threat to the future of services in and around some of the country’s newest hospitals. The Private Finance Initiative’s (PFI) expensive long-term contracts have often resulted in rising costs, and in inflated and unaffordable financial burdens. The Royal Assent to the Health and Social Care Act in April 2012 shifted attention to other aspects of the growing crisis in the NHS. One of these was the lingering bitter legacy of the hospital developments financed at inflated costs through PFI in deals signed by the Labour government from 1997.

The PFI originated as a Tory policy in the early 1990s. According to
Guardian
financial columnist Larry Elliott, the PFI was ‘a scam’:

Of all the scams pulled by the Conservatives in 18 years of power – and there were plenty – the Private Finance
Initiative was perhaps the most blatant…. If ever a piece of ideological baggage cried out to be dumped on day one of a Labour government it was PFI.
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Labour had originally opposed it. Margaret Beckett, shadow health secretary in 1995, summed up what had become a common line from Labour when she told the
Health Service Journal:
‘As far as I am concerned PFI is totally unacceptable. It is the thin end of the wedge of privatisation.’
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But in the final months of John Major’s Tory government, Tony Blair’s team abruptly ditched the party’s stance of opposition and in the summer of 1996 Shadow Treasury minister Mike O’Brien announced the new policy: ‘This idea must not be allowed to fail. Labour has a clear programme to rescue PFI.’
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By the spring of 1998, PFI had become: ‘A key part of the (Labour) Government’s 10 year modernisation programme for the health service.’
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Thus after years of rejecting PFI as a step towards privatisation, it was inserted into Labour’s 1997 manifesto, with the pledge to ‘sort out’ the idea of PFI and make it work.
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For the NHS this was done by pushing through a short Bill in 1997 making a far-reaching commitment that the Secretary of State would act as guarantor for PFI schemes, undertaking to pick up any outstanding costs if an NHS Trust went broke and was no longer able to pay.
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This undertaking removed any real risk from private investors, and the first wave of schemes began to be signed off in the first few years of the Blair government, while Tory cash limits still prevailed.

The first PFI hospital opened in 2000. It was seen as a magical way of securing new capital investment while deferring the costs and spreading them over thirty years or more. Almost all of the earliest schemes combined capital investment in the building with long-term contracts for the
provision of non-clinical support services (cleaning, catering, porters, maintenance, and security). The right to franchise retail outlets and car parking revenues were also generally all rolled up into complex contracts, with a single ‘unitary charge’ to be paid by the NHS trust, rising each year by 2.5 per cent or inflation, whichever was the higher. The NHS Trust was left in charge only of budgets for clinical services and staff – everything else was in effect handed over to the PFI ‘partner’.

Although in hindsight many of the first-wave schemes appear to be small in value (many new hospitals costing around £100m or even less), a number of them have turned out to be extremely costly over the lifetime of the contract. Many trusts found that the legally-binding charges consumed an unaffordable share of their overall income, with increasingly serious consequences. The problem has been exacerbated in the last few years by the freeze on NHS funding, by additional inflation, and by subsequent schemes for building a number of far more expensive new PFI hospitals, with really hefty annual charges which have caused major problems for some trusts.

The latest overall figures published on the Treasury website show £11.6bn worth of NHS schemes in England are set to cost almost £80bn over the lifetime of their contracts, averaging seven times the capital cost (although some first wave trusts are costing far more). And while the unitary charge payments per year are now just 2 per cent of NHS spending (around £2bn), some trusts are having to fork out a far higher share of their budget for extortionate schemes.

In 2012 the impact of PFI came dramatically to the fore with the combined crises of two South East London first wave PFIs, the Queen Elizabeth Hospital in Woolwich, and the Princess Royal Hospital in Orpington. These had been merged into the giant, debt-ridden South London Healthcare Trust, bringing their cumulative debts and soaring costs with them. The two hospitals had cost a total of £214m to build, but are set to cost the NHS and taxpayer £2.6bn to repay over thirty years. By the time Secretary of State Andrew Lansley invoked the ‘unsustainable provider regime’ in July 2012 the South London Healthcare Trust had a cumulative deficit of £207m.
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Interestingly, the draconian powers wielded by the Trust Special Administrator (TSA) who was brought in to propose a way forward were not deployed to challenge or force any renegotiation of the disastrous PFI contracts, which even the TSA admitted saddled the Trust with capital costs far above the NHS average. In fact all the concessions were made on behalf of the NHS; the plans drawn up included not only writing off the back debts, but a hefty annual subsidy to underwrite some of the excess cost of each scheme until the contracts are paid off – bringing the bail-out cost to more than £600m.

Of course, little attention centred on this aspect of the crisis, because the TSA, desperate to find some assets to plunder in order to minimise the cost of the bail-out, seized on the idea of closing down and selling off two thirds of the neighbouring, but unrelated, Lewisham Hospital.

This triggered local outrage and a succession of very large protest meetings, lobbies and demonstrations These culminated in a legal challenge mounted jointly by the campaigners and Lewisham council, which early in 2013 overturned this aspect of the TSA proposals, on the grounds
that the Administrator, by taking action in an adjacent trust, had exceeded even the sweeping powers he had been given.
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Once the initial ruling had been upheld on appeal, the petulant response from Jeremy Hunt, Lansley’s successor as Secretary of State, was to take steps to prevent any such setback in future by adding two hugely controversial ‘hospital closure’ clauses to the otherwise unrelated Care Bill then going through Parliament. This means that in future situations, a TSA can make far-reaching cuts in any trust in the vicinity of the ‘failing’ trust, leaving nobody’s services safe.

In February 2013 the headlines were dominated by the publication of the Francis Report
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which summed up the evidence on the long-running inquiry into events at the Mid Staffordshire Hospitals Foundation Trust in 2005-8. The massive 1100-page Report focused on the catastrophic failure of health care which had been triggered by cutbacks in staffing to save money, and a brutally insensitive management regime at the Trust. The report itself contained some very important points, but ducked many key issues.

• It avoided pinning direct responsibility on any of the senior managers whose indifference, negligence and bullying of staff ensured such appalling lapses from acceptable standards and went on for so long without intervention or investigation.
  
• It proposed legal obligations on NHS front-line staff to report failures in care, but offered them no protection against managers who respond with bullying and victimisation.
  
• It failed to address the flawed ‘reforms’ and the unrealistic
  financial targets that had led Mid Staffs management into such desperate actions – and are still forcing similar decisions from NHS managers all over England.
  
• It argued correctly in the body of the report that ‘it was or should have been the directors’ primary responsibility to ensure either that they did deliver an acceptable standard of service or, if this was not possible, to say so loudly and clearly, and take whatever steps were necessary to protect their patients’. However the Report’s conclusions included no specific recommendation that might ensure this could happen.
  

Many of the 290 recommendations which the Report did make were ignored or immediately dismissed by the coalition government. However, more recent signs of panic over falling staffing levels suggest a continued uncertainty among ministers over the long-term fallout from the report as they force the pace of cash savings.

Soon after the Francis Report appeared the Unsustainable Provider Regime was again invoked, and a triumvirate comprised of a clinician and two Ernst & Young accountants were appointed as joint Trust Special Administrators tasked with the rundown and closure of Stafford hospital. However, despite all the colossal barrage of negative publicity about the Trust (which by then had a completely new management regime, and was performing far better than most equivalent trusts), the proposed closure drew massive local protests with around 50,000 marching through the town demanding to keep the hospital open, a fight that has continued into the final months of 2014.

As 2013 progressed there were increasing tell-tale signs of the chaos, waste and bureaucracy that would be unleashed by the Health and Social Care Act. In March a detailed
British Medical Journal
study based on Freedom of Information inquiries to the 211 new Clinical Commissioning Groups found that more than a third of the GPs taking seats on the boards had conflicts of interest, in the form of a financial interest in a for-profit private provider from which their CCG could potentially commission services. This proportion was higher among GPs than among the other members of the CCG Boards.
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A
Yorkshire Post
investigation exposed the fact that Monitor, about to take on an expanded role in regulating the whole of the NHS, had spent a third of its £19.5m budget in the previous year on consultancy fees for advice from PriceWaterhouseCooper, Deloitte, McKinsey and KPMG.
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The summer of 2013 saw the Health and Social Care Act take effect as Cambridgeshire and Peterborough CCGs announced plans to invite tenders to deliver a complex new ‘pathway’ for Older People’s services, with the first shortlist of ten featuring a majority of private-sector-led bids. Neighbouring Bedfordshire CCG soon followed, putting the county’s Musculoskeletal (MSK) services up for tender – in which the front-running and eventually successful tender was led by Circle and included Horizon Health Choices, a company owned by almost half the GP practices in Bedfordshire.
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While elective and community health services were clearly the focus of the private sector, other parts of the NHS and social care were facing a tightening squeeze. From 2012 onwards it became clear that spending on mental health
services, always a poor relation of the wider NHS, but which had been allocated slightly more generous resources in the 2000s, was actually declining for the first time in over a decade.
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This decline was accelerated in the first year of the CCGs, reinforcing the concerns of mental health staff that GPs and their commissioning support groups did not properly understand or value mental health care but tended to focus only on the provision of ‘talking therapies’ for those with relatively less severe problems such as depression, while more specialist services and hospital care for those in greatest need was cut back in CCG contracts. During 2013-14 the spotlight fell on the national shortage of specialist Child and Adolescent Mental Health Service beds, with vulnerable young people having to be transported often hundreds of miles for inpatient care.
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Ministers, mostly LibDems, have pushed through policies on paper which seem to press for ‘parity of esteem’ between mental health and other health services,
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although this is hard to achieve in the context of continued cutbacks in resources, not least in the commissioning decisions of NHS England, which controls specialist budgets.

Cutbacks in acute hospital services remained firmly in the limelight in several areas of London in particular, notably north-west London. Here commissioners had drawn up plans for the biggest ever wave of closures in a single area, with four A&E units due to close, along with virtually all acute services at Ealing and Charing Cross Hospitals. A long and bitter campaign to challenge the plans, which were blithely entitled ‘Shaping a Healthier Future’ resulted in Ealing council’s oversight and scrutiny committee invoking its right to force a decision on the closures from Secretary of State Jeremy Hunt. He in turn brought in the Independent
Reconfiguration Panel, which after some investigation and deliberation gave its stamp of approval to the closures of A&E units at Hammersmith and Central Middlesex Hospitals, but pronounced itself unconvinced by the proposals for alternative services to pick up displaced caseload from Ealing and Charing Cross. The trusts were told to maintain services until more convincing plans had been drawn up and alternative services put in place.
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