Will the new Health and Care Bill privatise the NHS?

MPs this week have been debating the new Health and Care Bill, with some expressing concerns that it could lead to ‘privatising’ the NHS. Mark Dayan and Helen Buckingham take a closer look at this contentious issue, and argue that a major piece of legislation might avoid much-needed scrutiny due to parliamentarians and commentators spending their time on issues that do not exist.

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Published: 15/07/2021

Yesterday, MPs held their first debate on the Health and Care Bill, a sweeping legislative overhaul of the English NHS that will change how it works locally and nationally. Many expressed worry and alarm that it would “dismantle and privatise” the NHS, leading to a widespread “corporate takeover” of England’s largest public service.

But we do not see this as a likely effect of the Bill – although we have several other concerns listed in our briefing. In order to understand why, we need to start by understanding the role private provision plays in the NHS.

Public money, private care

There is nothing in the Bill that would change the NHS from being a publicly funded service, free at the point of use except for existing charges for services like dentistry. This is largely not what the MPs who spoke out in Parliament meant.

The definition of privatisation in their speeches involved the NHS paying private firms instead of publicly owned trusts to provide services – and perhaps shifting health service assets onto the balance sheets of those companies.

In reality the NHS has paid private providers to deliver free care ever since it was founded in 1948, with GPs, dentists, optometrists and pharmacists always being for-profit contractors. Since the early noughties, health service money also started to go to private “secondary care” services: hospitals, mental health providers, and other services that were previously delivered by NHS trusts. The NHS also commissions some services from charities.

The graph below shows private spending since 2009/10, based on the DHSC accounts published since that year. It shows that an increase in private provision for these services (the lowest two blue bars) happened mostly between 2012 and 2015, associated with the market-oriented Health and Social Care Act in 2012 and with the transfer of some community services in some parts of England to charities and private firms.

An earlier wave occurred in the late noughties as New Labour intentionally brought in “independent sector treatment providers” for planned operations.

For the last six years, private provision has remained at a stable level. Many of the changes in the NHS over this period were accused of increasing privatisation at the time, but this did not happen.

How much the English NHS paid for private health care: 2009 to 2020 15/07/2021

Chart

Source:  

DHSC annual report and accounts.

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Paying the bills

MPs and other critics are highlighting two areas of changes they think might increase private provision: procurement and the presence of companies on boards.

The Bill would completely change the procurement rules used in the NHS – which govern how the health service locally buys care for people. At the moment, these are governed by the 2015 Public Contracts Regulations, a remnant of EU law, and by regulations under Section 75 of the Health and Social Care Act. This means local NHS funders must publicly announce all contracts over £615,000 to allow both private and NHS operators to bid, unless there is only one available provider, and that they treat them all equally.

The Bill would get rid of these requirements. This is at the request of NHS England, who said that they “lead to wasted procurement costs and fragmented provision”. It would replace them with a new set of rules allowing contracts to be rolled over where the existing provider is doing a good job, and allowing the local NHS to decide whether it wants to use competition as long as it acts transparently in the interests of patients.

This change seems unlikely to sharply increase private provision. An increase in private provision would require lots of contracts to be taken away from existing NHS providers and given to someone else, but this is probably less likely under the new system.

Historically, increased private sector provision came alongside greater competition. And consistent with this, many who dislike private provision also dislike the marketisation of the health service. But both the procurement changes in the Bill and the new system where local health bodies sit together on Integrated Care Boards actually herald a less competitive, less marketised NHS.

Some MPs expressed concern that the new rules giving greater ministerial powers to direct the NHS would allow funds to be steered to political favourites. We would agree that there is a risk of a more politically run NHS – but this is one of the many problems caused by the Bill’s excessive powers for the Secretary of State, rather than anything specific to private provision. These powers could be removed or limited.

All aboard

Other concerns focus on the new Integrated Care Boards. These committees are given a range of powers and duties under the Bill, and will oversee the local NHS across large areas with populations of 1 to 2 million people. 

Several MPs noted that private providers of services could sit on some of these boards. This is possible: local NHS leaders will be able to propose their own constitutions for choosing members, and where a major service locally is run by a private company, they may qualify to sit at the table.

However, NHS leaders, GPs, council leaders and independent non-executives will also be at the table. Unlike private firms, the Bill says all boards must include them. Meetings will be held in public and decisions must be transparent. Any conflicts of interest will have to be declared and managed. Why is it any more likely that a representative of a private provider will succeed in getting more money, rather than the representatives of NHS trusts or GPs?

Some have even suggested that Integrated Care Boards represent a move towards the USA’s system of competing private firms funded by private insurance, some branded as “managed care organisations”. But this is completely wrong – ICBs will be statutory bodies controlled by NHS England, tax funded, and covering everyone in a given area rather than competing for customers. They more closely resemble the Area Health Authorities which ran the NHS in the 1970s, or Scottish or Welsh Health Boards today.

Missing the point

There are several parts of the Health and Care Bill which MPs need to take a very close look at indeed. The local changes are positive in heralding a more cooperative health service, but this is a very difficult time to introduce complicated changes. The new powers for Secretaries of State risk creating a health service where decisions are taken to suit party politics rather than patients. The provisions on social care and the workforce are inadequate.

The real risk we face is that a major piece of legislation reshaping the NHS avoids proper scrutiny because parliamentarians and commentators spend all their time on issues that do not exist.

Suggested citation

Dayan M and Buckingham H (2021) “Will the new Health and Care Bill privatise the NHS?”, Nuffield Trust comment.

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