The coalition's NHS U-turn

Andrew Lansley abandons plans to introduce price competition.

Two weeks ago, when I listed the coalition's ten biggest U-turns, I suggested that the NHS was next in line. "The smart money is on the government watering down its reforms," I wrote.

Sure enough, Andrew Lansley has announced a major U-turn over NHS price competition. The Health Secretary is planning to amend his own bill to prevent providers from charging a maximum, as opposed to a fixed, price for treatment. In other words, the private sector will not be handed free rein to offer temporary loss leaders and undercut the NHS.

The NHS Operating Framework, published in December, stated that hospitals would be free to offer services to commissioners "at less than the published mandatory tariff price". But Lansley now tells the Financial Times: "We want the tariff to be a nationally regulated price, not a starting point for price competition. These amendments will put our intentions beyond doubt."

It takes some chutzpah for him to claim that he never wanted to introduce price competition in the first place, but the U-turn should be welcomed all the same. As studies by the LSE and Imperial have shown, the limited experiment with price competition during the Major government led to a decline in standards of care.

One doubts that this will be the last concession. The "mad" decision (in the words of the British Medical Journal) to introduce the biggest upheaval in the service's history, just when the NHS is required to make unprecedented savings of £15-20bn, will return to haunt the coalition.

Here's the key passage from the BMJ's must-read editorial on the subject:

Sir David Nicholson, the NHS chief executive, has described the proposals as the biggest change management programme in the world -- the only one so large "that you can actually see it from space." (More ominously, he added that one of the lessons of change management is that "most big change management systems fail.")

Of the annual 4% efficiency savings expected of the NHS over the next four years, the Commons health select committee said, "The scale of this is without precedent in NHS history; and there is no known example of such a feat being achieved by any other healthcare system in the world." To pull off either of these challenges would therefore be breathtaking; to believe that you could manage both of them at once is deluded.

How long will the coalition remain in denial?

George Eaton is political editor of the New Statesman.

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The big problem for the NHS? Local government cuts

Even a U-Turn on planned cuts to the service itself will still leave the NHS under heavy pressure. 

38Degrees has uncovered a series of grisly plans for the NHS over the coming years. Among the highlights: severe cuts to frontline services at the Midland Metropolitan Hospital, including but limited to the closure of its Accident and Emergency department. Elsewhere, one of three hospitals in Leicester, Leicestershire and Rutland are to be shuttered, while there will be cuts to acute services in Suffolk and North East Essex.

These cuts come despite an additional £8bn annual cash injection into the NHS, characterised as the bare minimum needed by Simon Stevens, the head of NHS England.

The cuts are outlined in draft sustainability and transformation plans (STP) that will be approved in October before kicking off a period of wider consultation.

The problem for the NHS is twofold: although its funding remains ringfenced, healthcare inflation means that in reality, the health service requires above-inflation increases to stand still. But the second, bigger problem aren’t cuts to the NHS but to the rest of government spending, particularly local government cuts.

That has seen more pressure on hospital beds as outpatients who require further non-emergency care have nowhere to go, increasing lifestyle problems as cash-strapped councils either close or increase prices at subsidised local authority gyms, build on green space to make the best out of Britain’s booming property market, and cut other corners to manage the growing backlog of devolved cuts.

All of which means even a bigger supply of cash for the NHS than the £8bn promised at the last election – even the bonanza pledged by Vote Leave in the referendum, in fact – will still find itself disappearing down the cracks left by cuts elsewhere. 

Stephen Bush is special correspondent at the New Statesman. He usually writes about politics.