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The NHS and social care – the agenda for change

While there are strong local issues, the fundamental issues about the NHS and social care are national.

They relate both to funding and the creeping privatisation of the NHS, and the privatised nature of social care, which was forced on local councils by legislation in the early 1990s.

Funding the NHS. Costs in health services, the world over, have risen beyond the rate of inflation. Unlike many economic sectors, investing in new developments does not usually lead to staff reductions. The NHS is, and always will be, a hands on service – and that costs money.

One of the results of greater spending on health is that people live longer, having been cured of the diseases that carried off earlier generations. More people are now living into very old age, and we get more expensive to support as we become more frail.

The proportion of national resources we spend on our NHS bears a very close correlation to whether it is a Conservative, or Conservative-led, government or a Labour one. By the mid-1990s, spending on health in the economy as a whole was as low as 7% of GDP; by 2009 it had gone up to 11%, but by last year it was down again, to below 9%. Remember that 1% of GDP amounts to £20bn. We are currently spending about £120bn a year on the NHS and increases of less than 1% of the budget are planned in the next two years. This is the longest and deepest squeeze on NHS finance that has been seen since it was founded.

Social care funding

Since 2010, central government has cut £4.5bn from local authority funding to commission this service, while the numbers of frail elderly people have grown. In most local authorities only those people with the most serious needs get domiciliary support. Furthercuts are planned over the next few years. Most people were astonished when the government gave no indication in the Autumn Statement that there would be an increase in funding, although the government subsequently agreed to a 3% increase in the precept for social care. This dire state of affairs is illustrated by the fact that Conservative-led Surrey County Council is going out to referendum for agreement to get consent for a further 15% increase for social care.

While much residential social care is self-funded – it is means-tested unless the recipient has less than £20k of assets, including the value of their home – it is clear that not enough has been done to increase the funding base. The last Labour Government tried to create common ground on a tax on the estates of the deceased, but the proposal was defeated by the opposition, which won public-opinion “brownie points” by calling it a “death tax”. Something like this is, however, part of the answer. We need a national social care service that is paid for out of progressive taxation, and where the risks of need are spread among us all, just as it is in the NHS.

The 2012 Health and Social Care Act was intended to change a planned system of health care provision (with market elements introduced by the-then Labour Government) to a full-blown market, in which public commissioners – Clinical Commissioning Groups (CCGs) – would be forced to put almost all services, including clinical services, out to tender. Public and private sectors would compete for contracts.

Although it is true that Virgin Care has contracts to run 30% of the country’s community health services (outside London), it has not worked. In many instances the private sector has either been caught cutting corners, or has withdrawn because, as currently organised, it is not profitable enough. Since the NHS usually comes out top in international comparisons of value for money, that is not surprising, but contracting out is costly.

In addition to the up-front cost, usually reckoned to be about £5bn, of making the changes in 2013, experts calculate the cost of running this market to be at least £5bn a year – money which cannot then be spent on services. This is particularly scandalous in that there is de facto acceptance of the uselessness of the market: the NHS has now gone back to centralised planning and collaborative, rather than competitive, working. The Sustainability and Transformation Plans (STPs), which in our area have put the five boroughs of North Central London together for health planning purposes, totally ignore the provisions of the 2012 Act and have no basis in public accountability or law.

Although the market clearly is not working, there is a plan B for privatisation: cut back funding and allow the consequent increases in waiting lists to drive anyone who can possibly pay for their elective care into the arms of the private sector.

Privatisation and social care

Local authorities were required to sell off most of their social care provision in the early 1990s, and almost all residential and domiciliary care is now provided by the private sector. There has been a big investment in new buildings, but a reduction in the diversity of provision: many of the homes that were run by small businesses, the directors of which actually delivered the care, have gone out of business. Big firms dominate the market. Some of them are in a fragile state, although the assets are usually protected by various financial devices that enable significant profits to be extracted while keeping operating budgets very tight.

On the whole, local authorities are paying less than cost-recovery rates for publicly funded people, homes charge high fees to private individuals whose assets put them above the £20k threshold for State payment. This policy is an unsustainable mess.

CCGs and local government no longer co-located

This is a significant development for Islington. While there has been no legal change in the way CCGs are legally constituted, the STP has paved the way for them to work together as one unit in North Central London. All five CCGs now have one chief officer team. The appointment of the new chief executive was made recently. Strong relationships at borough level have been valuable, and are less easily driven by NHS England for its own purpose. Now NHS England has created a de facto five-borough CCG that will weaken those local links.

The likely consequence of this change is a shift in the pattern of resources between inner London and outer London boroughs, with Camden and Islington likely to suffer most. Enfield has serious health-finance deficit problems. It seems likely that NHS England (London) will use the new footprint to meet Enfield’s deficit out of Camden’s and Islington’s budget.

In the medium-term, services will be rationalised on a five-borough basis, which should give those of us who support the Whittington pause for thought. Islington residents need the Whittington, but in the future our voice will be one of five under this arrangement.


Professor Sue Richards,

St Peter’s ward

Former Professor of Public Management at the University of Birmingham and co-chair of the Centre for Health and the Public Interest.

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