7   Our Health Service: a new approach

ALAN SPENCE argues for an "ethical insurrection" within the NHS, based on social and co-operative principles, to usher in a fresh approach, to the Health Service.

"What ideas individuals may attach to the term "Millennium" I know not; but I know that society may be formed so as to exist without crime, without poverty, with health greatly improved, with little if any misery, and with intelligence and happiness improved a hundredfold; and no obstacle whatsoever intervenes at this moment except ignorance to prevent such a state of society from becoming universal."

Robert Owen: 'Address to the inhabitants of New Lanark', New Year's Day, 1816.

The New Labour Government stands accused of:

Abandoning the customary and sound method of financing the NHS,

Abusing its power and, through the PFI system of paying for hospital construction, of opening the Treasury's doors to give financial interests money set aside for the welfare of the population as a whole,

Abusing the integrated health service established in 1948 (together with an attempt to improve it in 1976 with a Regional Areas Working Party set up to get rid of imbalances throughout the Service);

Allowing private moneyed interests to fragment the Service with the intention of enriching profit-seeking companies;

And of abrogating a social contract to bring NHS provision and care up to EC standards.

If this is the case, don't NHS employees have the duty and the right to protect a public institution from such desecration by voting out Government lackeys from managerial posts?

To ensure that the NHS continues to function normally and to safeguard generations of public funding investment, employees could be part of an alternative system of administration where they all had an equal voice and an equal vote. Through such a democratic administration they could repair the breaches and restore the NHS solely to its use of providing benefits for the general population.

If funds collected through taxation for health provision are being siphoned off to financiers and carpet baggers, haven't the electorate of this country the right and duty to give whatever assistance is needed to enable NHS employees to implement safeguards against financial attrition and to allow the NHS to provide care when needed by all people living within the UK?

If so, should not each NHS workplace seek support from the local community to ask their MP to press for a vote in Parliament to end the Treasury's retrograde activities, in particular the Public Dividend Capital system which demands an annual deduction of three and a half per cent from the previous year's grant? In effect this is a self-destruct financial mechanism which is now forcing hospitals into bankruptcy.

NHS hospitals return to the Treasury three and a half per cent of the budget .received at the beginning of April by .the end of March the following year. This is known as Public Dividend Capital and is "analogous to the return on capital employed for a limited company". It is so levied because it is a diversion from "potential private sector investment" (Prowle & Jones, Health Service Finance, 1997).

So shouldn't the Treasury be instructed to return the NHS to traditional means of funding, including annual grants to hospitals., etc., with provision for upgrading so that all areas are provided with a level playing field of health, medial and care services?


If this case is valid, then MPs, newly motivated and empowered by NHS employees and their supporters, should provide legislation to convert NHS workplaces into employee-managed co-operatives. This legislation should be based on democratic structures with links between neighbourhood health forums and various levels of administration - from parish council to town, borough and city - to connect all horizontally and vertically to co-ordinate a democracy of elected and professional people bound by the ethics of providing a service enthused with the spirit of "doing no harm but improving the perpetual good".


The Public Dividend Capital system is based on a financial myth. Thatcherites and New Labour spun a fiction to confuse hospital staff and the public into accepting a mechanism eating the heart out of the public health sector.

Parliament and all its building work, repairs, wages (including MPs' salaries), and its new offices for MPs, Portcullis House which cost 233 million to build, come from an annual grant from the Treasury - in the same way as the NHS was once funded. Parliament is still funded this way, and so should the NHS.


"Off balance sheet" accounting practices were described in the Guardian as the "creative accounting trick" when used by private companies. It's much the same when used by Gordon Brown in the form of the Private Finance Initiative (PFI).

Thrifty families put money from their earnings to one side to pay for future welfare and other needs. Writ large this is what the Chancellor of the Exchequer does with the nation's savings in the form of taxation. But more frivolous families: go out on a credit spree, building up debts for future payment - and the agony that .arises there from. This is precisely the future that the Chancellor has in store for the people of this country.

Previously when the NHS received cash to build, it came out of that year's won and was free to the hospital except for depreciation and repair costs. Under PH it must pay ground rent to the landowner, interest on the money that PFI constructors borrow, an annual. rent to the new owners of the hospital, and then a profit to the service company running the hospital's catering, cleaning, etc: In other. words, Rent, Interest and Profit, which didn't exist in any meaningful sense in previous NHS funding, is now a crushing charge on every part of every NHS provision.

And there exists a series. of financial loadings on to hospital budgets which are an abomination to all sincere supporters of the NHS. These consist of:

Instructing Inland Revenue valuers to add a further six per cent to the annual rates of a hospital;

Charging rates at highest market valuations on property considered surplus (even without planning permission from the local authority);

Issuing an instruction in 2003 for every annual hospital employer's pension allocation to increase from 7 per cent to 14 per cent p.a. For the Royal Free Hospital, for example, it paid 7 million in 2003 and 16 million in 2004. Put into the Government's accumulator, these make huge nest eggs for future buy-outs.


It was Barbara Castle, Minister for Health in 1976, who introduced the Regional Areas Working .Party with the task of working towards the eradication of health imbalances within the country.

Aneurin Bevan had taken into nationalisation a ramshackle collection of hospitals, built at various dates and scattered by religion, philanthropic whim and previous local prosperity. The new working party now had the task, started in 1948, of bringing this jumble into a balanced and cohesive system to provide a level pitch of treatment for every person in the UK.

It was much needed in the NHS. The working party had to take into account a real run-down in provision alongside a distortion created by wrongly-sited, huge, monolithic hospitals, out-dated in best practice, and introduce a balanced network of provision radiating from the neighbourhood.


Surgeries could have been spaced to cover designated neighbourhoods of, say, 3,000 people, with all living within that area being patients of that one surgery. This was to be part of designated Health Centres, as planned for by Aneurin Bevan, until they were sufficient in number to become fully-fledged members of properly structured entities, forming part of a network based on the prevention of illness. But forces of reaction were mobilising.


"At no time since its inception had it been BUPA's wish to be in any way involved in the political scene. But with the defeat of the Conservatives in March 1974, and the election of a Labour Government under Harold Wilson, politics were thrust upon us." (BUPA, a Continuing History, Robb & Brown, 1984). With this sally, BUPA organised the ranks of medical consultants, furious at plans to eliminate private beds from the NHS and the very lucrative income received from the use of this publicly funded provision.

However, outrage was also intense amongst other medical staff, as beds were kept empty so that consultants could offer immediate treatment to paying patients. Charing Cross hospital staff refused to handle such beds and in the ensuing crisis, Barbara Castle outraged the private sector by her support for this action and her determination to have private beds moved out to the private sector.

When James Callaghan replaced Wilson, it gave BUPA and the cohorts of the "great and the good" their opportunity to lobby and persuade him to sack Barbara Castle.

Victorious consultants in private practice rallied to support Thatches aims to monetarize the NHS, and have responded with even greater enthusiasm to New Labour's privatisation programme - as shown in the formation of Doctors For Reform.

Aneurin Bevan had little option, given the conditions in which he had to operate, but to accept private beds in the NHS. Time has shown that they corrupt the very principles of the NHS, and therefore they must go - with, if necessary, the sort of action displayed by Charing Cross Hospital workers, in order to safeguard the NHS.


A "Peckham" in every neighbourhood was the third element in Barbara Castle's initiative to introduce some of the unfulfilled aims of the 1948 Health Act. Aneurin Bevan had attached great importance to Health Centres as a major component of his aim to bring preventative medicine to the fore in NHS activity. But only two of these were built - one at Woodberry Down, Stoke Newington, and the other at Harlow (one of the new towns) in Essex.

The Peckham Pioneer Health Centre was initiated by a husband and wife medical partnership, Innes H. Pearse and G. Scott Williamson. The wealthy philanthropic Donaldson family provided money to build a centre at Peckham, South London, in 1934. It was located in a community of some 1,200 families and had a swimming pool, athletic facilities, creche and clubs for the young, adults and for women. It also had a cafe with food provided from its own farm.

Members were seen as family units, and were given regular checks on their health. They received no medical treatment but, having identified a problem, the centre referred them to their own doctor.

So successful did Peckham become that local doctors (who then depended on paying customers) began to complain as their trade fell off. But the Castle initiative had some success, and by the 1980s an embryonic form of health centres, but without the athletics or focus on the family as a unit, were at work in thirty per cent of GP practices. But not meeting the individualist philosophy of the then Tory Government, this trend was halted.

As Bevan saw, the NHS is not so much a "health" service as a "sick" one. People only see their doctors when they are ill. The aim should be to put prevention foremost in assessing every person's health. And for this, a "Peckham" should be the model to work towards.

Camden Borough Council, London, has recently completed its Winchester project in the Swiss Cottage neighbourhood. It contains swimming pool, athletics, library, theatre, cafe, and within its building format is a medical centre. So far it remains distant from the 'Peckham" philosophy but it has all the ingredients for transformation to meet the criterion set by Doctors Pearse and Williamson.


Following the mini-'flu epidemic of 1999, the Blair Government produced a new NHS plan. It proposed to rectify the gross imbalances in health provision between the UK and the EU by harmonising the uneven links of the NHS into a seamless system through a regional restructuring. John Ashton, Regional Director of Public Health in Liverpool, summed it up this:

"...By 2002 there will be new single integrated public health groups across the. NHS. Accountable through the regional director of public health jointly with the director of the Government office for the region... they will embrace health as well as environment, transport and inward investment. And the five per cent gap of GDP between Germany, France, etc, would be provided by the Treasury to bridge the gap."

Six years later, however, Andrew Way, Chief Executive Officer of the Royal Free Hospital in Camden, London, had to announce that the hospital had an overspend of 16 million. It was therefore closing wards with 100 beds and also making 500 staff redundant.

He attempted to smooth over the shock of this announcement to staff, patients and an alarmed public with: "The truth is the best place to recover isn't a hospital bed, where you are often kept awake and don't sleep properly and feel uncomfortable - and overall have a risk of getting other infections, not just MRSA".

In a similar vein, Robert Naylor, Chief Executive Officer of University College London Hospital, announcing a deficit of 30 million, said "My board was debating whether we're going to stop treating some patients.." This, a consequence of the Pay by Results system.

The Camden hospital group, back in 1993, had to sell a hospital to pay its then debt of 43 million. Today it has put on the market another hospital, the Middlesex, hoping to raise 100 million for the same purpose. As a result of these sell-offs, that hospital group has 1,000 hospital beds less than fifteen years ago. And, if ever a 'flu virus does mutate....?

University College and Royal Free are amongst dozens of hospitals moving into debt, and this is inherent in new Treasury demands for the NHS to move into capitalist. markets.


To counter all this requires a sea-change in thinking about the purpose, the administrative structure and financing of the NHS. Concentrating on "illness" is no longer appropriate, nor is the undemocratic rule of the NHS from Richmond House.

Making the NHS fit for today's purpose means a change in title, and in functions attached to that title. It should be a National Health, Medical and Care Service (NHMCS). These functions should be integrated at all levels into a single stream of provision. And this integration, as noted by Professor Ashton, should embrace environment, transport, housing and inward investment.

"Peckhams" should be the point from which a hierarchy of services radiate: neighbourhood assessment for surgery, treatment, care and respite; infirmary as the secondary tier of hospitals, with district general for the acute; then specialist hospitals, convalescent and hospice etc.

The era of dictatorial chairmen and CEOs must become history, to be replaced by direct democracy in which each employee has an equal say and vote - a co-operative form of employee management.

New Labour cannot rescue the NHS. It is the problem. Success will require a level of mutual support unseen in the UK for many a year. NHS staff trade unions, neighbourhood groups and the generality of concerned people, in combination, must present a programme to their MPs - particularly Labour MPs: Parliament already has 29 Co-operative/Labour MPs. These, joined by the rest of Labour in Parliament, could lobby for support, which should surely be there from other MPs. Enough, that is, to overcome any "Berlusconi" type villainy that the Government might mount to sabotage change.

A national process of collective activity is necessary to produce the legislation to bring about radical transformation. But its translation into a Co-operative Commonwealth with co-operative principles as the fabric and culture of our economic, political and social life is a task of greater resolve and endeavour.

However, what better launch pad can we ask for than an NHS described as:

"... the most unsordid act of British social policy in the Twentieth Century which has allowed and encouraged sentiments of altruism, reciprocity and social duty to express themselves; to be made explicit and identifiable in measure-able patterns of behaviour by all social groups and classes."

Richard Titmuss.

ALAN SPENCE, the writer of this discussion paper is a former member of the now disbanded Local Lay Panel, South Camden, Camden & Islington Primary Care Group, and is active in the Robert Owen Association.