A third of NHS contracts are going to private providers. Photo: Getty
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Since the government's reforms, a third of NHS contracts have gone to the private sector

"Fragmenting and privatising".

In terrible news for David Cameron, and a gift to Labour, a third of NHS contracts awarded since the government's health reforms have gone to the private sector.

The British Medical Journal analysed nearly 3,500 contracts awarded between April 2013 and August 2014, since the government's Health and Social Care Act kicked in last year, and found that 33 per cent of contracts had been handed to private sector providers.

These contracts are awarded by the controversial Clinical Commissioning Groups established by the new health reforms, led by GPs, which have the power to influence commissioning decisions for patients and organise the delivery of services.

Dr Mark Porter of the BMJ called the findings a demonstration of "creeping privatisation in the NHS since the Health and Social Care Act was introduced", and criticised the government, which he claims "flatly denied" that the reforms would amount to increasing privatisation.

This is a bad look for the Conservatives, for whom the NHS is already a toxic issue because of their unpopular restructuring. It also gives Labour the opportunity to continue its attack line that the Tories cannot be trusted on the NHS. The shadow health secretary Andy Burnham has jumped on this story and done just that:

These figures blow apart Jeremy Hunt’s claim that ‘NHS privatisation isn’t happening’. It is happening and it is happening on his watch.

This is because contracts are being forced out onto the open market by David Cameron’s Health Act. Labour believes in protecting the public NHS and will repeal the rules that are fragmenting and privatising it.

The NHS of the future demands more integration. The problem with this Government’s policy is that it’s taking it in the opposite direction, towards more fragmentation.

These figures show what is at stake at the coming election. David Cameron’s Government is stealthily hiving off NHS services without the permission of the public.

This is a strong point for Labour, because it has a tangible answer to Cameron's tampering with the NHS: repealing the Health and Social Care Act if it wins the election. And such a policy will chime with an electorate that faces further, more painful, cuts to its public services in the near future.

Anoosh Chakelian is deputy web editor at the New Statesman.

Photo: Getty Images
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There are risks as well as opportunities ahead for George Osborne

The Chancellor is in a tight spot, but expect his political wiles to be on full display, says Spencer Thompson.

The most significant fiscal event of this parliament will take place in late November, when the Chancellor presents the spending review setting out his plans for funding government departments over the next four years. This week, across Whitehall and up and down the country, ministers, lobbyists, advocacy groups and town halls are busily finalising their pitches ahead of Friday’s deadline for submissions to the review

It is difficult to overstate the challenge faced by the Chancellor. Under his current spending forecast and planned protections for the NHS, schools, defence and international aid spending, other areas of government will need to be cut by 16.4 per cent in real terms between 2015/16 and 2019/20. Focusing on services spending outside of protected areas, the cumulative cut will reach 26.5 per cent. Despite this, the Chancellor nonetheless has significant room for manoeuvre.

Firstly, under plans unveiled at the budget, the government intends to expand capital investment significantly in both 2018-19 and 2019-20. Over the last parliament capital spending was cut by around a quarter, but between now and 2019-20 it will grow by almost 20 per cent. How this growth in spending should be distributed across departments and between investment projects should be at the heart of the spending review.

In a paper published on Monday, we highlighted three urgent priorities for any additional capital spending: re-balancing transport investment away from London and the greater South East towards the North of England, a £2bn per year boost in public spending on housebuilding, and £1bn of extra investment per year in energy efficiency improvements for fuel-poor households.

Secondly, despite the tough fiscal environment, the Chancellor has the scope to fund a range of areas of policy in dire need of extra resources. These include social care, where rising costs at a time of falling resources are set to generate a severe funding squeeze for local government, 16-19 education, where many 6th-form and FE colleges are at risk of great financial difficulty, and funding a guaranteed paid job for young people in long-term unemployment. Our paper suggests a range of options for how to put these and other areas of policy on a sustainable funding footing.

There is a political angle to this as well. The Conservatives are keen to be seen as a party representing all working people, as shown by the "blue-collar Conservatism" agenda. In addition, the spending review offers the Conservative party the opportunity to return to ‘Compassionate Conservatism’ as a going concern.  If they are truly serious about being seen in this light, this should be reflected in a social investment agenda pursued through the spending review that promotes employment and secures a future for public services outside the NHS and schools.

This will come at a cost, however. In our paper, we show how the Chancellor could fund our package of proposed policies without increasing the pain on other areas of government, while remaining consistent with the government’s fiscal rules that require him to reach a surplus on overall government borrowing by 2019-20. We do not agree that the Government needs to reach a surplus in that year. But given this target wont be scrapped ahead of the spending review, we suggest that he should target a slightly lower surplus in 2019/20 of £7bn, with the deficit the year before being £2bn higher. In addition, we propose several revenue-raising measures in line with recent government tax policy that together would unlock an additional £5bn of resource for government departments.

Make no mistake, this will be a tough settlement for government departments and for public services. But the Chancellor does have a range of options open as he plans the upcoming spending review. Expect his reputation as a highly political Chancellor to be on full display.

Spencer Thompson is economic analyst at IPPR