Public Services – Page 8 – thinking liberal

The friendless NHS reforms

The savages are circling around Andrew Lansley and his NHS reforms. Or translated into something more politically correct, the indigenous tribes have cornered the contemptuous invader, and are closing in for the kill.

Stories have been floating in the press that David Cameron is about to sack Mr Lansley and give way on most of his reforms, and particularly those that need legislative approval. Mr Cameron’s expressions of “full confidence” cuts little ice in this football-mad country, where club chairman habitually express full confidence in managers the day before sacking them. Mr Lansley and the reforms appear friendless. The various medical lobbies are building up against them; every few days another comes out against. The Tory press is hostile to indifferent. Lib Dem colleagues are urging me to sign a petition against the Health & Social Care Bill which is at their centre.

I can’t quite bring myself to sign, as somebody that basically supports reform. But I now think that they were a political mistake not really worth fighting for. And that may well be Mr Cameron’s view too. The risks of persisting with it are rising. There seems little chance of things settling down in time for the 2015 election, by which time chaos in the NHS could well be a top political issue. When the Coalition took over, the NHS had recovered its previously poor political standing. So far as the public was concerned, it wasn’t broke so didn’t need fixing. On the other hand if the government U-turns now, there is quite a good chance that the matter will blow over. Financial crises and hospital closures are bound to continue, but the whole thing will be rendered less toxic without these reforms to blame for everything. The political calculation seems quite clear, which is why a growing number of Tories are pushing for Lansley to go.

What would happen if Lansley went and the Bill was dropped? The new health secretary would be left with an enormous amount of executive power to continue a reform process – after all that is why the administrative reforms have made so much progress without the Bill becoming law. Ironically a lot of the Bill was about curbing this executive power and making it more accountable. But the focus of reform would be explicitly to make the service more efficient as demographic changes place it under ever more pressure. This would be a lot more difficult for Labour to attack, since that was what they were saying when in power.

It hasn’t happened yet, of course. I feel a bit disappointed that things have come to this. I dislike much of the criticism that the reforms have attracted, and especially to the resistance to the use of private sector providers, and the sharing of facilities with fee paying patients. The current NHS comprises a lot of good services swimming in a sea of mediocrity, and it has reached the limit of what can be provided if funded only from taxation. The GP side in particular is inefficient and lacks accountability. Beneficial changes require extraordinary amounts of effort to implement. There was a lot of nonsense and gobbledegook in the PCT-led commissioning introduced by the last government, largely designed by management consultants.

Still the reform process was too broad and too fast, and became ever more muddled as the process encountered resistance. I won’t mourn its passing.

Time to wake up to the de-industrialisation of advanced economies

Trying to understand the global economic crisis? This article from Joe Stiglitz is required reading.

I have flagged it already on Facebook and Twitter, but without much in the way of reflection. In fact it has produced an epiphany moment for me. I have maligned Professor Stiglitz in a past blog as producing only superficial commentary on the crisis, alongside his fellow Nobel laureate Paul Krugman. This was based on one or two shorter articles in the FT and some snatches on the radio; I wasn’t reading or listening carefully enough. Professor Stiglitz is one of the foremost economists on the current scene. He used to be part of the Clinton administration, and worked at the World Bank in the 1990s, but his views proved politically unacceptable. He also wrote the standard text book on public economics, which I used in my not so recent degree course.

The article is wonderful on many levels, but the epiphany moment for me came with his observation that, underlying the current crisis, is a long-term decline of manufacturing employment in the US, and by implication, other advanced economies too. He draws an interesting parallel with the Great Depression, which was caused, he claims, by a comparable shift from agricultural employment – again in the US; I think that such a shift was less marked in Britain, but the depression was also less severe. This decline in employment brought about a doom-loop of declining demand across the economy as a whole – which was only reversed by World War 2. The war effort caused a boom in manufacturing industry which was readily redeployed into the postwar economy. This view of the Great Depression rises above the fierce controversies over fiscal and monetary policy, and places them in a proper context.

We have been witnessing the decline in manufacturing employment for some years, and grappling with its social consequences. The important point is that it is mainly irreversible. It has been brought about by technological change, which has improved productivity. There is a limit to the number of manufacturing products that we can consume – just as there is a limit to the food we can consume, and we are at that limit. So the number of jobs declines.

Of course the picture is complicated by the rise of manufacturing in the developing world, and especially China, and their exports to the developed world. In the US I am sure, and certainly in the UK, more manufacturing output is now imported than exported, causing a further loss of jobs. This is reversible, though, and in due course will reverse, as the developing world advances and loses its temporary competitive edge. But this won’t be enough to reverse the overall trend of rising productivity.

But advancing productivity should be good news in the long run. It releases the workforce to do other things, or, if people prefer, to increase leisure time. So what replaces the manufacturing jobs, in the way that manufacturing took over from agriculture? Services, of course. What is, or should be, the product of these services? Improved wellbeing.

Services have rather a poor reputation in our society. Traditionalists see them as ephemeral, compared to the real business of making things – a bit like Soviet planners were obsessed with producing steel rather than consumer goods. More thoughtful people associate them with poor quality jobs in fast food restaurants or call centres. But it doesn’t have to be this way.

We need to develop clearer ideas of what tomorrow’s service-based economy will look like. That’s important because the way out of the current crisis is through investments that will take us closer to this goal, just as war led to investment in manufacturing in the 1940s (and earlier in Europe).

And the key to this is thinking about wellbeing. This is important because one of the answers could be an increase in leisure, hobbies and voluntary activities – which is not normally regarded as economic activity at all. Reflecting on this, I think are two areas whose significance will grow and where investment should be made, both of which raise awkward political problems – health and housing.

It is easy to understand that health and social care will take up a higher proportion of a future economy than they do now, and not just because of demographic changes. These services are vital to wellbeing. But we are repeatedly told that we can’t afford to expand them. And that is because we are reaching the limits of what state-supplied, taxpayer funded services can deliver in the UK. (In the US it’s another story for another day). The health economy of tomorrow will have a larger private sector component, whether integrated with the NHS or parallel to it. But what should our priorities now be, while this private sector is on the back foot? It seems sensible to make the NHS more efficient and effective, but foolish to cut jobs. We should be building the skill base alongside the reform programme. The chief critics of the government’s NHS plans (including the Labour front bench) are that NHS reforms should be stopped so that they can focus on the critical business of raising efficiency. But maybe it should be the other way round – we should be pushing ahead with reform, but relaxing the efficiency targets and letting the costs rise a bit until the economy starts showing greater signs of life. then, as any cuts are made the private health sector can take up the slack.

Perhaps housing is pushing at the boundaries of what “services” are. We traditionally view this as a capital investment. But what I mean is providing more and better places for people to live in, whether they own them or not. Most of the country is quite well off here, but poor housing is probably what divides rich from poor more than anything else – and more investment in the right places (decently sized social housing) could rebalance things nicely and dramatically improve wellbeing.

But beyond this we badly need to get out of a manufacturing mindset, both in the private and public sectors. We should not view division of labour and specialisation as the ideal form of organisation (massive call centres, and so on), and we should value listening skills much more – I nearly wrote “communication skills” but most people understand this about getting over what you want to say, not understanding what your customer or service user actually needs. This is happening only very slowly.

So I would add a third priority: education. We need to greatly expand the teaching of life skills at school and elsewhere. This would not only help build the skills that tomorrow’s economy needs. It would help people make better choices in a changing world.

Is the Ebacc such a bad idea?

Michael Gove, the Education Secretary for England (his remit not extending elsewhere in the UK, so far as I know), is one of the more controversial figures in the government. I haven’t met anybody that works in or with the education sector that approves of him. But amongst politicos and journalists, especially right-wing ones, he is considered one of the government’s best performers. He is widely reviled by Liberal Democrats. But not everything he says is nonsense. And indeed the controversy he stirs up reveals some uncomfortable things about our educational establishment. Today I am looking at one of his many controversial ideas: the English Baccalaureate, commonly referred to as the “Ebacc”.

What is it? In principle the Ebacc is a certificate awarded to pupils who get C or better grades in five or more GCSE subjects, which must include maths, English, a foreign language (including Latin or ancient Greek), science, and history or geography (for more details see the link above). Actually I’m not sure that it is a certificate yet; it was introduced last year as a performance target to show how well schools were doing in teaching these “core” academic subjects.

Why is it so controversial? In the first place because it was dropped on schools out of nowhere last year, before they had a chance to plan for it. Critics say that it should have been “tested” and phased in. There may be some pupils who suffer because employers will be looking for their Ebacc when the school had put them in for some other subjects before they knew about it. There is a lot of upset from schools who had looked good in earlier league tables that don’t look so good under this one. This is mainly whinging by professionals who spend too much energy gaming the system to look good in league tables rather than considering what is best for their pupils. To be fair, of course, many of the people I am dismissing as whingers actually have a more fundamental disagreement with the idea. I am coming to that.

Also there are some more practical issues about how schools will respond. One blogger (Anastasia de Waal of Civitas, quite sympathetic to the idea of a more academic curriculum) worries that schools won’t bother with pupils that they don’t think are going to reach C grades in one or more of these subjects. This goes to the heart of another question: that of the use of league tables and performance measures. A big topic for another day.

But the real controversy is about the subjects that aren’t included. There are some subjects, such as religious studies and philosophy, that are (or should be) quite academic. Why not include these if they test the same skills? But the real issue is a whole swathe of “applied” or “vocational” subjects which have found their way into the GCSE. These include applied sciences, applied languages (don’t ask), and things such as ICT (information and communications technology) and media studies. These subjects were designed for pupils characterised as less academic, and were popular in schools because it was easier for students to get better grades. By focusing on the more academic topics, the critics say, you are letting down all these less academic pupils from typically poorer backgrounds.

But the problem is that these “less academic” subjects are a major failure. They are based on a misconception of what secondary school education at that age should be about. They are, or so I understand, largely based on knowledge transfer, and not deeper understanding. Pupils learn answers by rote and splurge them out as required. But even supposing retention is good for this type of study, this knowledge is soon out of date. What higher education recruiters and employers want, even for practical jobs, is understanding. The “academic” subjects are much better at teaching this. A college running a technology course would much rather its pupils were taught mathematics to a decent standard than any amount of ICT teaching (though schools have long been required to focus on maths and English).

This criticism makes a lot of sense to me, though I have only been involved in secondary education as a pupil, and that a long time ago. For accountancy it has long been said that good basics (especially maths) is all that you really need from school – the rest can be picked up pretty quickly later. When recruiting staff, I must admit that I didn’t take all that much interest in school qualifications if there was anything else (such as work experience) to go on. And I find the idea of doing an applied subject without doing the theory alongside it to be equally flawed.

What am I saying? At GCSE level a broad choice of subjects does not make for good education. You need to focus on a range of basics and do them well. Some regard the choice of subjects in the Ebacc as perverse, when other topics are equally as good. I’m really not sure about that. I don’t see that either religious studies or philosophy are good candidates to push out history or geography, or still less a foreign language. Philosophy surely best after GCSE; I just don’t believe that religious studies is as stretching or socially inclusive as history or geography. In my day I did a standard set of O levels, all in the Ebacc range (except English Literature); I never found that limiting.

What of the pupils who don’t make the Ebacc standard? A very real problem – but the “applied” and “vocational” GCSEs were never the answer. Better teaching and higher expectations are. The more I see of the educational establishment, the more I am convinced that too many are content with the mediocre.

There is a final irony. Mr Gove and his supporters often criticise modern education for lacking a focus on facts. Actually the more academic subjects they advocate are mainly about skills, not facts. They teach you how to think. The less academic subjects fail because they are too focused on facts. Of course you might argue that history and geography are, or should be, fact-based – but don’t get me started on that!

Affording the NHS

The British government has been talking darkly about the exploding demands on the National Health Service, which will rapidly make it unaffordable if it is not reformed. This has recently been challenged by Professor John Appleby, at the health think tank King’s Fund. This was in a recent article in the British Medical Journal, behind a paywall, but summarised by the BBC here. This question goes to the heart of health policy in the UK, but politicians dare not discuss it – because it puts the very principles of the sacred NHS in question. But the problem will not go away.

According to some figures on Wikipedia Britian spent an unremarkable 8% of its national income on health, compared to over 16% in the US, before the financial crisis struck. Those figures will be higher now, since our income has shrunk, but the relativities will be much the same. The comparison between the two countries is usually held up to show how ineffective US health spending is, since health outcomes look generally pretty poor there. But the comparison can be looked at the other way. The US can afford to spend more than 16% of its national income on health and still remain one of the most prosperous countries on the planet. There is nothing mysterious about this. Developed countries are long past the level where basic human needs of food and shelter are met; how we choose to spend the surplus is up to us, and there is no reason why we can’t choose health care over cars, designer clothes or big holidays. It’s not as if it requires massive imports to sustain it.

You can take this line of reasoning further. The basic proposition of health care is to reduce pain and prolong life; these are consumer propositions to, well, die for. Suppose we lived in the economist’s free market utopia, where health spending was a matter of individual choice in a perfectly competitive free market with no information asymmetries. There is no reason to think that health expenditure would not be higher than the 8% or so we currently spend in Britain, or indeed as high the US figure. We can perfectly easily afford it.

That’s not the problem. The problem is paying for it almost entirely through unspecific taxes, the core design principle of the NHS. And here the government is on much stronger ground. There is an upper limit to how much tax we can raise for health care. Up to a certain point, of course, the NHS model works perfectly well. Look on the taxes as an insurance premium and it helps spread risk in a way that people like. But the more you spend, the more the weaknesses of the model are exposed.

There is no direct line of sight between what you pay and what you get. How on earth are you supposed to decide whether you are getting value for money?
You have no choice in the level of service you get. One size fits all.
People who are better off may feel that they are paying too much relative to what they get. This may not be quite as strong an argument as it first appears, since the less well off pay a lot of tax through cigarettes, alcohol, petrol and VAT – but the perception is still a problem.
Taxes create a drag on the rest of the economy, reducing incentives to work and therefore shrinking the resources available.

America is able to get away with much higher levels of health expenditure because so much of it comes from private insurance premiums and direct private payments for treatment. But even there a battle royal is developing over how to balance taxes and government support.

Of course, to some putting up taxes is the right way to go. France and Sweden get away with higher tax burdens than the UK after all. But this is very fraught. Some think you can go after big companies and very rich people and leave everybody else. This is not as easy as it sounds though, since this wealth is very mobile. Property is not mobile, of course, but raising taxes on property is probably as politically toxic in Britain as taxing fuel is in the US. There is also a problem if too much tax revenue comes from the very rich or corporations – these start to acquire more political weight. Which leaves the not-so-rich. But these people are under pressure and feel over-taxed – Ed Miliband’s “squeezed middle”.

So I think the government is right. We have hit the limit of what the country can afford for tax-funded free-at-the-point-of-use health system. But we have not hit the limit of what people are prepared to spend if it’s their own money and for their own benefit. The risk to the NHS is that the more affluent middle classes start to opt out of NHS services, depriving them of critical mass and undermining the principle of social solidarity. This has already happened to NHS dentistry.

Nasty. In the last years of the previous government the issue of co-payments was quite high up the political agenda: the possibility of NHS patients topping up their treatments with their own money to get things not on the basic menu. This had become politically charged because of the costs of some rather questionable cancer treatments which the NHS were denying but which people were prepared to pay for. The Conservatives clearly considered the topic politically toxic, since they have fudged the issue of cancer treatments with a bit of extra funding. Labour and the Lib Dems were inching towards accepting co-payments, though I expect both parties are now bouncing back.

But in my view co-payments is the best way to relieve the pressure. The NHS should define a basic menu of treatments that everybody is entitled to, but accept payments for anything outside this. This undermines one of the sacred founding ideas of the NHS, that everybody gets the same, no matter how wealthy. But it is better than the alternatives. It’s the debate we should be having.

Why are NHS managers so unpopular?

Health Service Journal (HSJ) was on its high horse last week. Its front cover says “The Big Lie exposed: the truth about NHS management”. The proximate cause is a report by the King’s Fund called The Future of Leadership and Management in the NHS. This report suggests that the NHS doesn’t have too many managers, and that, if anything the service is under-managed. The HSJ is directed at NHS managers, and it is easy to see why they are so fed up. But the HSJ coverage has a blind spot. It doesn’t ask how the NHS got itself into this situation, and why NHS managers have become politically toxic. It’s no use waving around King’s Fund reports; if NHS managers don’t understand of this, they will struggle to reverse it.

But let’s clear the decks first. The idea that the NHS has too many managers as opposed to those “front line” staff is silly, and the political target to reduce their number is at best unhelpful and at worst positively damaging. In order to deploy those front-line resources most effectively, they need to be properly managed. Huge strides have been made by the NHS through more and better management over the last couple of decades. Furthermore, my impression of the quality of NHS management is that it is easily up to the same quality as the private sector. That, of course, is not as much comfort as it might be, given that crass management is pretty rampant in the private sector. So a lot of the political comments made about NHS management are unjust, unfair and often just plain untrue.

So what’s gone wrong? Well a clue comes in the frequent use of the word “bureaucrat” by politicians. This is a word thick with negative connotations, of insensitivity to people’s real needs and of the arbitrary exercise of power. Many of the public’s interactions with NHS management have left just this sort of impression.

The NHS is a hierarchical organisation, with pretty much all accountability through a single man at the top, the Secretary of State. To most people this is no accountability at all. One man can’t possibly grasp the intricacies of any particular local situation. So local NHS officials have huge amounts of effectively arbitrary power. And they rub our noses in it.

When the local NHS where I live executed a 180 degree turn and decided to close a local hospital rather than develop it, they rode roughshod over local feeling. A local official just told us the area was too posh to have a hospital. After a kerfuffle involving the local Labour (at the time) MP, more facilities were promised nearby in an appropriately less posh place – but of course these were soon cut, even before last year’s election.

The problem for most NHS managers is, I think, that they don’t remotely get what the problem here is. Tough decisions have to be made. If we followed local opinion all the time the NHS would go bust in days; if we kept consulting nothing would get done. We have clear mission and we execute it. NHS managers seem to bristle at the idea of genuine local accountability. HSJ itself opposed the Lib Dem proposal of directly elected health boards. Chaos. Postcode lotteries. Working for people that don’t understand. And so on. NHS managers are all too happy with their hierarchies, allowing them to pass the blame upwards the whole time.

But the local NHS is taking political decisions all the time. For example, reducing health inequalities, a key local NHS objective, is loaded with political judgements. A key political objective is to maintain middle class consent for the service; without middle class users the NHS would collapse (and we already have the example of NHS dentistry to show that). So treating them like muck because they are on the wrong side of the equality equation should be a no-no. Politicians can see that easily; bureaucrats can’t – it’s just not their problem.

And once you are perceived as an insensitive bureaucrat, the rest follows pretty quickly. An organisation as large as the NHS will always throw up examples of crass management, which will be gleefully reported by patients and clinical staff alike. And if managers are overstretched, they are bound to drop some balls too. Episodes such as the Mid-Staffs fiasco add grist to the mill (and incidentally I did not sense much outrage from other NHS managers in the HSJ coverage of that sorry affair). Throw in the management consultant blather dropped on the NHS (World Class Commissioning and such), and you have a massive stock of ammunition.

So NHS managers need a lot more political sensitivity, and should welcome more genuine political accountability instead of resisting it. The NHS reforms are meant to help this, though whether do, of course, is another matter.

NHS reform – the politics is a smokescreen

Ever since the NHS was formed over 60 years ago, politicians have struggled to manage it. Assorted ministers and policy wonks have dreamed up elegant reform plans, while the NHS’s insiders have undermined them in a bid to carry on much as before. The NHS does change, but never quite along the path that the politicians have in mind. That is as true now as ever. The difference is that NHS management is promoting reform rather than resisting it; but they are going about it in their own way. The fire and fury of the current political debate is mostly irrelevant.

I have already posted some thoughts on the NHS. I considered the question of the timing of the reforms, alongside the £20bn cost-saving challenge posed by NHS Chief Executive Sir David Nicholson (referred to alternatively as “the Nicholson challenge” or “the QIPP*programme”). My conclusion was that the main organisational damage has already been done, so we do not have much choice but to follow through. I left aside the question of whether the reforms are wrong-headed. I would like to consider this, before coming to an equally pragmatic conclusion.

What is being proposed? A continuation of the big idea of the last 20 years or so: to create a purchaser/provider split, and to use this to introduce market mechanisms, under the banner of improving choice, to help ensure that the NHS is effective and efficient. The problem that these reforms are supposed to solve is that the NHS is too dominated by hospitals, and the doctors who run them, who do not have enough incentive to change to meet new needs or to become more efficient.

In this latest incarnation, the purchaser element (now usually referred to as commissioners) of this set-up will be a combination of consortia of general practitioners (GPs), and an arms-length NHS Commissioning Board operating at national level (i.e. for England – the reforms don’t cover the other parts of the UK). The intermediate commissioners under the current system, regional Strategic Health Authorities (SHAs) and district Primary Care Trusts (PCTs), are to be phased out. On the provider side (i.e. the hospitals and other facilities), the idea is that all NHS facilities should be run by more or less independent Foundation Trusts, but that the commissioners will be allowed to secure services from “any qualified provider”, which will not be restricted to these trusts.

These reforms are a natural, if rather accelerated, continuation of the previous government’s NHS reforms. Commissioning by GPs was already being piloted, and the idea of moving all hospitals to Foundation Trusts was the previous government’s idea too. What is newer, and perhaps more radical, is the proposed regime of accountability that is being imposed on this. Previously the NHS was run by the Secretary of State for Health, with very little restraint or accountability. Now a complex framework of powers and accountabilities is being imposed, giving both parliament and local authorities a greater role.

The government argues that this is just evolutionary change. But there has been vehement opposition from people who think that the new regime will end the NHS as we know it. One problem is the commendable desire by the government to establish much of the framework in parliamentary law, rather than simply letting the minister rearrange things by fiat. People now have the opportunity to project all their worst fears into the legislation on the basis that it does not specifically ban them. In fact we are still being asked to trust ministers to do the right thing, only with more accountability.

Two lines of criticism that I can see have some kind of traction. First is that the framework will open up the health market to competition law (and specifically European law) in the same way as for gas and electricity. This means that the NHS trusts and the private sector would have to compete on a level playing field – and this might literally drive some NHS trusts out of business. A lot of what NHS hospitals do is a natural monopoly (accident and emergency work, complex surgery, etc) , like the railways. The fixed costs are so high that the market cannot sustain competition in most localities. However, so the argument goes, these fixed costs also support activities where private sector competitors could undercut the NHS; if these are competed away then many hospitals would cease to be viable, and so the service on core activities would deteriorate.

Frankly I’m not stressed by this. If a train wreck is on the way, it will be in very slow motion, giving time to take corrective action if need be. More to the point, NHS professionals are masters at keeping the private sector at bay (except for NHS doctors doing private work on the side…), and they will only be seriously vulnerable in places were the service offered is ludicrously bad. And as for European competition law, judging by its impact (not) on the French and German energy markets, there shouldn’t be anything that the politicians can’t handle.

The second criticism is more cogent. It is that the rules for setting up GP commissioning consortia are a bit vague. They could be set up in such a way that makes them very difficult to hold to account, or to act in partnership with other agencies. For example, they may not be geographically coherent, cross local authority boundaries, and so on. This does need some more thought – though again the worry is the direction reforms could take, rather than what is actually likely.

Personally, I don’t place a huge amount of faith in the purchaser/provider split and the marvels of choice anyway in this context. There are two big problems: that the buyers (you and me) don’t know enough about what they are buying, and have to rely on intermediaries, whose incentives distort the picture. The second is that so many providers are natural monopolies. After decades of reform, the NHS does not remotely resemble a market economy. It reminds me of a large company trying to introduce market-style rules for internal transactions; these systems never achieve as much as their proposers hope, since everything is trumped by politics in the end. There have been two big achievements of the NHS reform process. First is that hospitals are gradually being forced to be more efficient and accountable; this has mainly been achieved by good old-fashioned management, of which the “Nicholson Challenge” is but the latest example. The second is that commissioning processes have forced NHS managers to address the question of what society actually needs, and then try to reorganise the service to meet these needs. This last development is the more recent, and the the reorganisation of PCTs has interrupted it – but the new arrangements will probably be more effective in the long run.

The big prize to be won from the current reforms is hardly spoken of at all. It is that GPs will start to come under the same sort scrutiny as hospitals have. The consortia themselves will do some of this; the NHS Commissioning Board, which must authorise the consortia, will also be on the case. The PCTs were supposed to be doing this, but were mostly pretty ineffectual. The important point is that we should be in no hurry to authorise the consortia, to allow this scrutiny process to have real bite. This seems to be exactly what Sir David Nicholson (who will chair the NHS Commissioning Board) has in mind.

Meanwhile the over-large number of PCTs has been reorganised into a more manageable number of “clusters”; these and the SHAs will no doubt live on as embodiments of the Commissioning Board. The NHS will become much more centralised in the short term. With some very sharp minds at the centre, including Sir David, this doesn’t have to end badly. But the politcal arguments are mostly a smokescreen.

*QIPP stands for Quality, Innovation, Productivity, Prevention

NHS: the net is tighteneing around hospitals

September 11, 2001 was a good day to bury bad news, a government spin doctor famously emailed on the day. What about a royal wedding day? Sure enough, via the Department of Health (DH) there was this announcement, saying that hospitals are expected to make an even higher rate of “efficiency” savings than before: from 4% per annum up to 6-7%. This press release seems to have come out so late yesterday that neither the DH website nor that of Monitor (the regulatory body that made the announcement) have published it. So I have been unable to access the details. But make no mistake, this is a highly significant development.

What on earth is going on? So far almost all the heat has been around the Coalition’s health reforms, and the dramatic changes to the commissioning side of the NHS, which are already in rapid progress, regardless of what is happening in Parliament. This is the side beloved of politicians and policy wonks. The idea is that the NHS will be shaped by more or less local organisations assessing their needs and then “commissioning” it from the supply side – mainly hospitals. Hospitals, formerly in the driving seat of the NHS, would be put in their place. It is a chaotic, market driven vision of change. Under Labour commissioning was being led by the primary care trusts (PCTs); the coalition is moving this towards consortia of general practitioners (GPs). This is all very well, but there is something else going on, and this is much more Stalinist, and which pre-dates the Coalition.

Or rather the model might be the Chinese leader Deng Xiaoping, who masterminded China’s recent astonishing growth. Deng ensured the process was centrally directed, with no challenge to the Party’s authority; he worked by manipulating the incentives open to his underlings. The centrepiece of this dynamic in the NHS is the £20bn of savings that I described in my last post. This money isn’t being cut from the NHS budget; it is being “redeployed”, spent somewhere else, although it is very unclear where. What today’s story suggests is that most of this pressure will be felt by hospitals. The drive is to take 25% out of their budget over a mere four years. Wow.

Regardless of where the chaotic process of commissioning takes us, the central leadership of the NHS (and it is not difficult to identify Sir David Nicholson as the driving force) has decided that hospitals are going to play a smaller role. This is pretty conventional thinking in the medical field. Hospitals are old-fashioned places where people are as likely to catch an illness as be cured. The idea is to reduce them to a smaller number of centres of excellence, with the very best professionals supported by the very best technology. Meanwhile more illnesses will be treated “in the community”. I can’t express an opinion on how valid this view is, though I instinctively feel that it is missing something.

Never mind. What it means is that many of the country’s hospitals will be closed. Regardless of the chaos that has hit the commissioning side, the NHS bosses are turning up the heat. I don’t know how ready our politicians are for it. It has Labour’s fingerprints all over it, but it is the Coalition that will be in the firing line. The only upside is that it should release money that can be spent on other things. That and the knowledge that the government is doing the right thing. Probably.

NHS reform: we’ve started so we’ll finish

The NHS, probably rightly, is one of the main controversies in current British, or rather English, politics. The Coalition government has put it there after Labour, by dint of a massive increase in spending, had managed to take most of the heat out of the debate, bar a few controversial hospital closures. Personally I am a bit perplexed. From one side I am being constantly lobbied by the Social Liberal Forum, a Lib Dem pressure group, to express disapproval of what looks like almost the entire reform process. On the other side is 18 years experience as a business services manager, reinforced by my regular reading of the Health Service Journal (HSJ), the weekly magazine aimed at NHS managers. This takes the need for reform pretty much as read, almost on a continuous basis – and gives me an inbuilt suspicion of people who resist change. Partly because I have been trying to get a management job there, I am better informed than most on the NHS; but I have found it very difficult to make up my mind. Will writing a blog post help me?

First, let’s understand that there is something of a crisis in the NHS. The figure of £20 billion of savings required by 2015 is widely accepted as a fact. This is quite interesting. The figure first emerged a couple of years ago from a leaked McKinsey report, which the government tried to deny. But it is a now central theme of NHS Chief Executive Sir David Nicholson’s management. But the NHS’s budget isn’t being cut: the Coalition is protecting it in real terms. In response we get some rather airy stuff about the increased demands on the NHS from an ageing population, medical inflation and suchlike. But if we are cutting £20bn, we must be adding the same sum back somewhere – but we aren’t being told where. I have a dark suspicion that a lot of it is about large PFI rents coming back to haunt us from all the capital investment of the last decade, though I’m not sure if that quite adds up either. I find it strange that so little is being said about this. It has the signs of a manufactured crisis to inject a sense of urgency across the organisation.

If so, then I don’t particularly disapprove. There is a massive inertia about the organisation, with almost any change proposal meeting outraged resistance. When I reflect on my career as a manager in the private sector, we were in an almost continuous state of crisis. As a result we pushed through change after change, so that after 18 years the business had been transformed out of recognition both in efficiency and business model. This was the result of simple competitive pressure. Such competitive pressure is largely absent from the NHS, so Sir David’s success in stoking up a comparable level of crisis is to be commended. It is clearly helping him deal with the resisters and rally supporters of change.

There seem to be two main challenges to the government’s reform strategy. First is along the lines of “we don’t need this” – it will disrupt the process of making the £20bn worth of savings. The second is that the reforms themselves are wrong, because they will “privatise” the NHS. The answer to the first depends to a great extent on how convinced you are that the previous government’s infrastructure was up to the job. This rested on three levels of organisation to commission services from a series of notionally independent providers, in turn answerable to various parts of the bureaucracy. It is easy to think that this was over-complicated, but the three levels (national, regional and district) have a resilience about them; the NHS seems to revert back to such a structure every time people try to cut a layer out. A more valid criticism is that the system is accountable only upwards, to the Secretary of State, meaning that managers spend too much time managing their chain of command, and not enough on the patients. Another criticism, which may follow from this, is the sheer volume of management blather that the system generated. Heaps of guidance, toolkits, methodologies, procedures, silly names, acronyms, and such. The commissioning framework was called “World Class Commissioning” and involved developing eleven competences, progress on which had to be reported up the system. This sort of thing is a charter for mediocre management. People who manufacture millions of words that somehow don’t get to the point. A particular worry is the lack of management with any clinical experience, and a failure to integrate clinicians into management generally.

To many this management structure was incapable of driving through the change needed, except in a few lucky pockets. The blather merchants would succeed in populating scorecards with green spots and burying their peers and seniors in verbiage, but be unable to deal effectively with entrenched resistance from clinicians, and politicians nervous about reactions to reconfigurations. To these critics it was essential to tear this structure up, while trying to salvage some of the best bits. I wasn’t so sure. I would have opted for keeping most of the infrastructure intact but bringing local political accountability into the picture, while trying to cut back on some of the thickets of blather.

But it’s too late now. Many managers have lost their jobs; many more face the prospect of their job disappearing an uncertain future. The damage has been done. Far reaching reform may not have been the best idea, but we must capitalise on the current fluid situation to create something that works better than the previous version. This may well slow down the march towards the £20bn savings in the short term – but maybe these savings aren’t quite as urgent as it suits many to claim.

But are the reforms going in the right direction? I’m nearly up to 1,000 words already. this is a topic for another day.

The anti academy movement is its own worst enemy

Yesterday, as a school governor, I attended a seminar on converting schools to academy status, organised by the London Borough of Lambeth. The paradox of the education profession was clearly evident; however good they may be at teaching the nation’s young to be clear and rational, the profession’s members seem unable to promote a rational debate about the future of education.

Lambeth tried to put forward a balanced debate with four speakers broadly supportive of conversion in the right circumstances, four vehemently opposed and one complete fence-sitter. Of the supportive speakers, one, Bill Watkin of the Specialist Schools & Academies Trust (SSAT) was a model of clarity, addressed his arguments to the audience (headteachers and chairs of governors), and was easily the most impressive speaker of the day. The others included a head and deputy head who had taken their schools into academy status and somebody from the Cooperative School Society promoting a particular model of academy operation; their focus was quite narrow and presentation tended to be a bit plodding with too much PowerPoint. All four managed to be pretty dispassionate, and none was evangelical for the academy model or government policy. Each had different light to shed on the issue.

The “anti” speakers were awful; they seemed to be addressing the public or feeding the paranoia of staff, rather than trying to influence senior school management. Two stood out, though neither stayed for the panel session. One, Phil Beadle, makes regular appearances on TV and writes for the Guardian. His arguments were as chaotic as his hair, and amounted to a rant about the way the academies he had worked in were run, mixed in with tribal anti-Tory paranoia. The other was Alasdair Smith of the Anti Academies Alliance; his grey suit, purple lanyard, grey/white hair, general bonhomie and habit of laughing at other speakers,during their presentations, all put me in mind of an archetypal UKIP candidate. His arguments were no more coherent than UKIP ones either: a general rabble rouse about how damaging academies would be to the overall education system, how all academies were run like grasping businesses, that it was a lonely world out there for academies, and nothing about how senior managers should weigh up the pros and cons. The other two speakers, one a headteacher and one from the Campaign for State Education basically said the same thing, but were a little duller. The arguments were polemical rather a serious review of the evidence, scattering numerous horror stories to support their arguments. What Lambeth thought it was doing by inviting all four to speak is a bit mysterious.

A few important and interesting points did manage to emerge. There isn’t much money in converting to academy status; for that you need an outside sponsor. Since education departments are being cut back drastically (Lambeth is no exception, with the key decisions all being taken before last year’s election, not as a consequence of the Coalition’s cuts) the amount of support they can offer to LA schools is pretty minimal. Most of the things that schools might want to do (including forming relationships with their neighbouring schools and local authorities) can be done under either model, which cuts both ways. The best part of the process, one of the academy heads said, was that it forced the school to think about its vision and strategy, and how to carry it through.

But the standard of debate was pretty awful. Most speakers complained that the government wasn’t offering a clear vision, but they had little or no vision to offer themselves. The antis seem to want the outside world to go away, so that schools can bumble in their own comfortable little worlds as before. There was no horror at the awfulness of so many schools, unless they happen to academies, of course. And then there is the hate and anger. Mr Beadle quoted extensively from former Conservative education secretary Ken Baker to prove that this was all an evil Tory conspiracy to destroy public services. I am not so much horrified that he says this sort of thing, but that so many people seem to be listening. I have seen something similar on local forums about our proposed new “free” school in Wandsworth: a complete inability of the leading anti-campaigners to listen, or to weigh up arguments and evidence – even if they are at least more polite and better tempered than some on the other side of the argument.

But leaders of schools need to do the best for their children and communities schools by working with government policy as they find it. The academies decision is a delicate process of weighing up pros and cons, often with no killer argument on either side. What is coming out of the anti academy movement is no help. It is so tempting to think that if that is the best their opponents can do, academies must be a good idea. The movement is its own worst enemy.

Manufactured outrage won’t help elderly patients

John Humphreys was apoplectic when interviewing Ann Abraham on the Today programme. She has produced a report detailing several cases of appalling treatment of elderly patients in the NHS. How on earth can these wonderful dedicated NHS staff we keep hearing about allow such abuse? Ms Abraham did not try to give us any insight into how such things happened, merely echoing Mr Humphreys’s anger.

Not long after the interview there was a rather interesting counterpoint in the sports report. Garry Richardson was interviewing the trainer of one of the horses killed at Newbury over the weekend, asking him about how he and his staff felt about the whole thing. This was clearly designed to bring on the normal outpourings of emotion that are now the expected face of public grief. Such a a beautiful horse; a real character; we’re all devastated; we need answers….and so on. Instead all he got was, more or less, just a bad day at the office and life goes on.

That would be a more helpful attitude in the NHS case. Whatever Mr Humphreys and Ms Abraham are suggesting, it really isn’t hard to reconcile the dedication of NHS staff to systematic abuse of patients. It’s what Richard Adams in Hitchhiker’s Guide to the Galaxy called the “SEP field”, which guarantees a cloak of invisibility. SEP stands for Somebody Else’s Problem. Anybody who has worked in a large organisation is familar with the idea of bad things happening while everybody involved is convinced they are doing a highly professional job.

The SEP field arises from the way we organise work, splitting it up into separate bits for which individuals can take responsibility. We only look at our bit. Bad things happen between the bits. The first reaction is to blame management, who are supposed to be making sure the whole thing adds up. And the quickest and easiest response for management is to make the process yet more complicated by adding in more bits, with checks and controls. That’s how they tend to behave when people get outraged. But it doesn’t really help, because the main problem is complexity; nobody wants to take wider responsibility because they don’t understand what’s going on.

This is an old problem, and solutions should be familiar. You simplify processes, empower staff to act outside their normal remits, and engender team-working attitudes. Simple but hard. It means telling people comfortable with their narrow jobs, who think they are doing wonderfully well, that actually they are part of the problem.

But for NHS managers that should be another day at the office. We, the public, should be encouraging them to be braver. Instead we stoke up the outrage, and even start suggesting the NHS doesn’t need managers at all.

The NHS needs better leadership at ground level. We should be demanding it. Perhaps we should even ask ourselves, as Jeremy Laurance does in the Independent, whether our beloved NHS is capable of ever managing itself properly ever.