The Government Must Be Held Responsible
for the Plight of NHS Trusts

Queen Mary's Hospital Sidcup

Health Secretary Andrew Lansley on June 25 began the process of placing an NHS trust in administration for the first time, setting in motion a legal process of applying the “failure regime” to the South London Healthcare Trust. This would see all board directors suspended and a “trust special administrator” sent in. When the administrator has made their report, the Health Secretary can consult on dissolving the organisation and transferring staff to other bodies or in fact closing wards and services. The decision as to what the outcome should be would then be presented to Parliament.

It is mooted that the Department of Health’s director of provider delivery, Matthew Kershaw, is among those being considered for the trust special administrator role. At the same time, it was also reported that “hit squads” could take over at 20 more NHS trusts which the Department of Health has identified as “clinically and financially unsustainable”.

Health Secretary Andrew Lansley is utilising, for the first time, a process of using the “failure regime” powers in the 2009 Health Act passed under the Labour government. It is said that the South London Healthcare NHS Trust has gone £150million in the red over the past three years. One of the main drains on finances is the PFI deals negotiated under New Labour that are said to be costing £2.5billion in the long term.

The Health Service Journal reported that the “three-site acute trust recorded a £65m deficit in 2011-12 on a turnover of £438m”, and it said that it had discovered that “the trust’s initial plan for 2012-13 was for a deficit at least as big again”. Andrew Lansley has sent a letter to Dr Chris Streather, chief executive of the trust since it was formed from three separate organisations in 2009, who announced two weeks ago that he was leaving for another post. The Health Secretary said that he recognised that not all of the trust‘s problems were of its own making. But he added, “Nonetheless, there must be a point when these problems, however they have arisen, are tackled. I believe we are almost at this point.

“I have sought to provide NHS organisations with the help and support they need to provide high-quality, sustainable services to their patients, which South London Healthcare Trust stands to benefit from.

“However, even after this support has been provided, your organisation still expects to be in need of significant financial resources from other parts of the NHS and I cannot permit this to continue. That is why I am considering using these powers.

“I appreciate that any decision to use these powers will be unsettling for staff, but I want to stress that the powers are being considered now so that patients in south east London have hospital services that have a sustainable future.”

In a tone reminiscent of Angela Merkel referring to Eurozone debts, a Department of Health source said that the measures should signal to other trusts “that they cannot continue to provide poor services or rely on bailouts from other parts of the NHS”. The chief executive of NHS London, Ruth Carnall, told the Health Service Journal that she regretted the “compromise” that created South London Healthcare Trust in its current form, and had wanted a more radical solution to the problems in south-east London when the trust was formed in 2009. She said that managers could be placed under “very, very intensive political pressure” around reconfigurations.

The “failure regime” process

After consulting the trust, strategic health authority and commissioners – which Andrew Lansley has done – the Health Secretary can make an order appointing the trust special administrator. This has to be laid before Parliament before it breaks up for the summer. The administrator will take up their post within five days of the order. Within 45 working days, the administrator must produce and publish a report for the minister to lay before Parliament. There is then a month-long consultation before the final report is presented to the minister and Parliament. Within 20 days of that, the minister must make a decision and publish it.

What is meant by “bankruptcy”?

Questions are being raised about why the Department of Health has to go through this so-called “bankruptcy” procedure. It smacks of a calculated drama as a warning to other trusts to cut-back on health spending. One commentator wrote, “Will this lead to a marauding pack of private interests circling the doomed body of this large trust?”

Like capitalist concerns merging in order to counter a falling rate of profit, the merging of NHS trusts is becoming more frequent. Despite or perhaps because of these mergers, the trusts are becoming very difficult to manage according to the politically motivated criteria laid down by the government. Many of these mergers are already being called disasters.

The government’s criteria revolve around the “productivity” and “efficiency” of the provision of health care. NHS trusts furthermore are in a position of having to “compete” with the private healthcare market. The government is washing its hands of responsibility for the right to provide society with the health care it needs.

It is a strange definition of “bankruptcy” and “failure regime” that the Health Secretary is using. It could be said that the Health Secretary’s logic is bankrupt, and the regime of privatisation and business models for the NHS is failing. Why should an army of accountants and administrators be parachuted into such NHS trusts as the South London on the orders of the Health Secretary? The goals set by the Department of Health are proving impossible to achieve given the constraints on Trust budgets and financial structure that the government dictates.

The Hitchingbrooke Trust in Cambridgeshire has already been taken over by a private capitalist concern on the grounds that it had run up “debts” of over £40 million. But what is the problem? The government is refusing to invest in health care, and more and more NHS Trusts are therefore in these financial difficulties. The language of the government is that other parts of the NHS should not have to “bail out” them out to ease their “debts”. This logic is being applied to the detriment of health care across England. Among those trusts under the spotlight in this way are the Surrey and Sussex Healthcare Trust, the St Helier University Hospitals Trust, Newham University Hospital Trust, Barking, Havering and Redbridge University Hospitals Trust, Whipps Cross University Hospital Trust, North Middlesex University Hospital Trust, North West London Hospitals Trust, Scarborough and North East Yorkshire Trust, and Dartford and Gravesham Trust. Many of these trusts have been shouldering crippling PFI interest payments and inherited large debts from PFI capital spending.

Meanwhile Stephen Powell, chairman of the Commons Health Select Committee, told Radio 4's Today programme that there was an “over-dependence on hospitals” and that one focus of the restructuring may be improving “care in the community”. Thus the right of society for a decent level of health care is being portrayed as an “over-dependence on hospitals”. Figures are blithely banded around of the South London Healthcare Trust “losing over £1 million a week”, as though the provision of healthcare were a cost of production. Chris Ham, chief executive of health think tank the Kings Fund, also warned on the Today programme that not only other NHS Trusts, but potentially even Foundation Trusts at the very top, could go through the same process.

Who decides on the healthcare budgets?

What is mystified is just how the NHS Trust budgets are decided. All the talk is of debts, losses and inefficiency. What is covered over is the reality that the level of healthcare spending is being cut by executive decision of the government. Health care is made into a commodity to be bought and sold, with purchasers and providers. Now it is “rationalisation” and “administration” which is on the cards.

Under the Health and Social Care Act, the NHS Executive is to be abolished, as are the Regional Health Authorities. It is being suggested now that as the Coalition had not planned to keep any non-Foundation Trusts, since the Act suggested that as all Trusts would become Foundation Trusts and manage their own finances, it made no provision for them in terms of how they are managed, and so now it seems it is convenient to get rid of them by declaring them all bankrupt! If further a Trust is saddled with the legacy of a PFI deal, like the South London, they would never get Foundation Trust status because Monitor would not deem them sufficiently “solvent” to go independent. So Lansley has had to concede with some measly words that it was not all their fault. But the fact remains that they have been set up to "fail".

The NHS Trusts, like the South London Healthcare NHS Trust, were more directly managed by the NHS through the NHS Executive and the regional health authorities. This was the legislation brought in by the previous Conservative government but then added to by New Labour which spawned the Foundation Trusts and Primary Care Trusts, and then PCT commissioners as well.

In this new health market, whilst Foundation Trusts are deemed to be more independent, all NHS trusts are funded by a system of “payment by results” income based on a national tariff for listed procedures and types of patient admissions. This is often summarised as “money follows patients”. This funding comes through the commissioners (PCTs and larger PCT commissioning groupings) who negotiate contracts with the trusts for the year of a certain number of hip replacement operations, a certain number of emergency admissions, and so on. If the trust treats fewer patients then they get less funding. If they do more they might get more money, but it is sometimes disputed. There are various ways the government has introduced to avoid paying the full tariff. For example, if more patients are admitted as emergencies than a baseline number chosen from a couple of years ago, only a third of their tariff is paid. If a patient is re-admitted to hospital within 28 days of discharge, they do not get paid for. There may be some discretion on this, but hard up commissioners looking to save money will want to avoid paying.

Some specialisms, like elderly rehabilitation, are not payment by results with a national tariff, and they are paid for as a service. Then all Trusts also have to make the 4% efficiency savings year on year. Accountancy rule changes from the Department of Health have often meant that small annual overspends can suddenly become tens of millions of pounds. With Foundation Trusts, their “independence” means these debts cannot be wiped out and a number of the Foundation Trusts have had private consultative companies like McKinsey imposed on them by Monitor who have forced cut-backs, closures and job losses. Whilst some NHS trusts have had historical debt wiped out by the NHS chiefs, nationally or regionally, because they are directly managed, others such as Whipps Cross have been made to keep the debt to act as stick to force a merger with other trusts, since it was agreed to wipe it out with the merger.

The whole system of “payment by results” and budgetary constraints is ludicrous and incoherent. If there were issues of improving efficiency in the way the health service or hospitals are run, then they could be addressed and dispassionately dealt with. In fact, society can and should address the requirement for a constantly rising level of healthcare for all as of right. But the hysteria about “bankruptcy” and “failure” is completely fraudulent. It covers over the fact that the government is both slashing its investment in health care for society, and turning over the health service to become a sphere of rich profits for the healthcare monopolies. The issue of who sets the budget is never mentioned.

The announcement of the setting in train of the “failure regime” by Andrew Lansley serves to underline that the changes being brought about by the Health and Social Care Act must be fiercely resisted, and the whole direction of the running of the NHS must be changed. The government must be held responsible for the plight of the NHS Trusts. It cannot be accepted that the government is just doing its duty and everyone else is to blame. “Hit squads” are not the answer, neither is privatisation. In fact, they are part of and symptomatic of the problem. The future of the NHS must be fought for by affirming that health care is a right, and that the people have a right to decide on the future of the NHS. The government has absolutely no mandate for its wrecking of the health service. Fight to safeguard the future of the NHS!

The Children and Families Bill will change the law on parental leave, allowing it to be transferable from the mother to the father. It will also change access arrangements for divorced fathers. The GMB union were sceptical as to “what will really materialise, given the cuts which have resulted in so many job losses”, a view also expressed by Child Poverty Action Group, who said that the Bill would be “cold comfort to families targeted by the coalition’s austerity politics”.

Explained as removing “unnecessary” processes, the Bill will speed up process of adoption and, concerning school students with special needs, will replace Special Educational Needs (SEN) and Learning Difficulty Assessments with a single assessment process. The National Union of Teachers responded that the SEN Code of Practice is “not ‘red tape’ but a carefully constructed assessment system ensuring that resources are allocated equitably to meet need”.

The Bill also widens the role of and gives extra powers to the Children’s Commissioner.

The Draft House of Lords Reform Bill made it into the Queen’s Speech after much speculation. Its proposal for an 80%-elected, salaried, Lords, cut in size from a 789 to 300 members, does not change the essential character or function of the second chamber. Rather, it will further entrench the party-dominated system with the aim of restructuring the Lords in such a way that the power of the executive is further unchecked.

The Draft Bill is a pragmatic attempt to give a semblance of democratic legitimacy of the Lords, while limiting that legitimacy to keep the Lords in check. See the May 26 edition of Workers’ Weekly Internet Edition for a full report on this Bill.

The Croatian Accession Bill will allow Britain to ratify the treaty of accession of Croatia into the European Union, to take place in 2013. All EU member states must ratify such treaties.

Rolled in with this, the Bill also covers changes to the constitutional Lisbon Treaty put forward by Ireland and the Czech Republic. A condition of these states to sign up to the Lisbon Treaty was the agreement to include these changes in the next accession treaty. Also included is the proposal to maintain the number of EU Commissioners at one per member state.

The Small Donations Bill concerns the claims of charities, coming in the wake of the controversial announcement of plans to cap tax relief on donations. For donations less than £20 collected in Britain, charities will be able to claim top-up payments from the state up to a maximum of £5000. Unlike the existing Gift Aid system, this is not tax relief, but will be funded through public spending.

An additional allowance would be available for organisations carrying out “meetings in a local community building”, for collections carried out in that building. This change is expected to particularly benefit centralised religious organisations, according to charity website Third Sector.

The Draft Energy Billis purported to encourage more investment in low-carbon generation of electricity, placing more restrictions on coal-fired power station emissions.

However, it seems clear that the Bill is aimed at supporting new nuclear power. Via the Electricity Market Reform, the government will introduce long-term price contracts to encourage investment, particularly in nuclear power, as a way round illegality of state subsidy of nuclear power in EU law.

Furthermore, the Bill will create a new Office for Nuclear Regulation.

The Draft Water Bill is aimed at increasing competition in the water industry, by allowing every business and public body to switch water and sewerage supplier.

Similarly, the Draft Local Audit Bill, under the signboard of “saving money” and “increasing accountability”, will allow public bodies such as councils to appoint their own independent auditors from a competitive market. It will abolish the Audit Commission, to be replaced by a framework based on the private sector model.

This concludes the review of the legislative programme which was outlined in the Queen’s Speech of May 9. There are pressing problems of society requiring urgent attention. There are problems of the capital-centred economy, of the political system which excludes the people from decision-making, of the rapidly growing divide between rich and poor, of privatisation of essential public services which should be the claims of society as of right, of the vicious attacks on the youth and vulnerable sections of society, of state-organised racism, of the lowering of the level of culture, especially political culture, of increased exploitation and the intensity of work, of the disequilibrium between the claims of the workers and the owners of capital, of attacks on the rights of all. The Coalition’s legislative programme either does not address these crucial issues or blocks their solution and heads in an opposite direction.

The outlook of addressing the interests of the owners of capital runs through all of the legislation announced in the Queen’s Speech. The Bills further an overall agenda of restructuring state institutions and arrangements, from the practical level down to the fundamentally constitutional, with the aim of strengthening the power of the monopolies while casting aside responsibility for meeting the claims of the people on society; of backing monopoly right and trampling over public right. This is an agenda further exposed, for example, by Cameron’s recent draconian pronouncements over removing housing benefit for people aged under 25. All is justified as improving efficiency or cutting costs, and presented with high-sounding phrases such and “freedom, fairness and responsibility” or the “big society”. Based on this outlook and agenda, the Queen’s Speech represents irrelevance and irrationality from the perspective of the working people, and does not address any of the general interests of society.

It is clear from this that what is urgently required is to build the Workers’ Opposition and its contingents to the dictate of the Coalition’s agenda for society, in order to resist and effectively block this agenda, and to fight for the alternative agenda of the working class.

We encourage all our concerned readers to play their part in this challenge and to keep abreast of the political developments at Westminster, which exhibit contempt for the general interests of society, are full of incoherence, and aim of impose the interests of the owners of capital on the whole of society. Through resisting and through developing the outlook and thinking of the alternative, of a human-centred society, discussing amongst one’s peers, a way forward can be found.