Tag: NHS

The NHS: how the accountants are hiding dubious policies

The NHS is quite high up the news agenda these days. From the media there seem to be two big issues: culture and privatisation. The mainly right-wing press say that much of the NHS lacks a caring culture and this often leads to a breakdown of service. Left-wingers, and NHS insiders, worry about the new commissioning rules, and whether unscrupulous private companies will bid their way into contracts that destroy what is good about the service. These are both valid concerns, but a third issue should be causing more controversy than it does: funding. Not so much the NHS’s overall budget, though that too is worthy of debate, but how it allocates what it has. Recently the Health Service Journal has highlighted no less than three quite distinct issues on the topic. Politicians should be paying attention.

The first was an opinion article on 14th February by Robert Royce, a visiting fellow at the King’s Fund, the health think tank. His subject was the Mid Staffordshire Foundation Trust: but not the Francis report, but the preceding report by Monitor, its regulator. This report questioned the trust’s financial viability, suggesting that the hospital lacked scale. Hospitals like Mid Staffs are funded mainly through something referred to as “the tariff”, and which used to be called by Orwellian name “Payment by Results”, which was put in place by the New Labour government. This puts a price on every service episode the hospital performs: payment by activity, rather than by results. This system is often portrayed as being a commercial, market type discipline, but the tariff looks like no market tariff that I have ever seen. It is massively complicated, requiring big information systems resources to work.

What the tariff does remind me of is a transfer pricing system to allocate costs internally between two fractious units of the same organisation, who hope that by referring the problem to management accountants they can find an objective resolution. As the accountants grapple with the complexity of the problem they add layer upon layer of detail, in a hopeless quest to replicate the infinite complexities of real life, resulting in something which is nearly useless for management purposes. The system is designed for a political rather than a commercial environment, with the aim of pretending that strategic value judgements are mere technical problems. In the NHS almost all commentators go along with this pretence.

Mr Royce points to one pernicious value judgement in the tariff. It is that emergency services are bad, and elective services are good. Mid Staffs is perfectly viable financially on its elective services, but is being dragged down by losses on its emergency services. What if the tariff were raised for emergency services and lowered for elective, to genuinely reflect the underlying costs? The the hospital’s viability might look altogether different.

The second article was in the magazine’s “Resource Centre” section on 14th March, and is entitled The real reason for “failing” hospitals. It is by Sheena Asthana and Alex Gibson from Plymouth University. This is dressed up a piece of academic data analysis, but it is politically pointed. The authors look at the funding formula for Primary Care Trusts (PCTs: the bodies that fund the hospitals, at least until 31 March), and tries to correlate troubled hospitals and underlying population characteristics. They find that there is a strong correlation between hospital stress and a high proportion of older people in their catchment area. Their claim is that the funding formula is diverting financial resources away from these areas of greater need towards areas that are less wealthy – and this is the fundamental reason why so many hospitals are failing.

The last government was obsessed with addressing “health inequalities”, an expression that I hate because it implies that the solution is making things worse for the better off, rather then improving the lot of the worse off. And if Ms Asthana’s and Mr Gibson’s study is to be taken at face value, that is exactly what is happening. The present government show no sign that they want to address this awkward issue, and, according to the authors, much the same allocation is being ported into the new system.

The third article was another opinion article, this time by accountant (sorry, independent consultant and former NHS finance director) Noel Plumridge on 21st March. This looks at something that has been bothering me. If the NHS budget is protected, and increasing at a rate faster than most people’s pay is rising (2.6% as against 1%), how come so many NHS organisations are under such financial pressure? He finds the figures for next year’s budget less than transparent but concludes that there are no plans to spend a large chunk of the money at all: they are destined for unspent surpluses or contingency funds to “mitigate risk”. These surpluses are a point of difficulty: the individual trusts that make a surplus are supposedly allowed to reinvest them in future years. But under Treasury rules the NHS as a whole must hand the funds back to the Treasury for good. Is this just a backhand way of breaching the promise to ringfence NHS funding?

I only subscribe to the HSJ because I forgot to cancel it after my attempt to find a job in the NHS ended in failure – now I find interesting articles nearly every week. What these three articles show is that there aren’t enough accountants in politics. NHS leaders are being allowed to get away with some highly contentious political policies by dressing them up in complicated accountancy.

My heart attack

Last Monday, three days ago now, I lay, conscious, on an operating table at St George’s hospital, Tooting.  A tube had been inserted into my artery in the right arm at the wrist, through which dyes and then wires were inserted.  On my left wrist a drip had been inserted into vein so that drugs could be injected rapidly.  Two surgeons were doing their stuff around the area of my legs, looking up at two monitor screens.  A large cylindrical  device was being pointed at my chest at various angles.  I lay as still as possible, as the surgeons exchanged comments and gave occasional orders to technicians outside the room, who would respond over the intercom.  Some music was playing quietly in the background.

The surgeons were doing an angiogram.  They were pumping dye into my bloodstream to make the blood flows visible through an X-ray camera and spot any problems with the blood flow to my heart.  And they did find a problem.  “One of your arteries is completely blocked.  This almost certainly caused your heart attack,” one of the surgeons said to me, “We want to insert a piece of wire to clear it.”  I consented.  The surgeons then completed a procedure known as an angioplasty.  This involved using a piece of wire pushed through my arteries to insert an stent, a small length of tube, into the blocked bit to open it up, after first inflating a small balloon to create the space.

It was really only then that I fully realised what had happened – that I had indeed suffered a heart attack, and that as a result my life was in the hands of these two surgeons and their team.  Until then I had thought the problems might be some sort of viral attack (as my elder brother had suffered a few years before) with few longer-term implications.  The previous evening, my family visitors remarked on how well I was looking – though the medically literate among them could spot the abnormal trace on the heart monitor that I was wired into.  This is a shock.  I had no indication until then that I was at risk.  I take regular exercise; I’m not overweight; I have never smoked; I eat my five a day; I even make sure I have a couple or more portions of oily fish a week; my blood pressure has always been normal; no tests that had been run on me had shown me with anything other than a very healthy heart.  It really can happen to anybody.

The problem seems to have started over two weeks beforehand, while we were on an organised tour of Sicily.  One night, after dinner, and a day when I had felt slight constrictions to the chest area, I started to suffer acute chest pains.  I couldn’t sleep.  Eventually, at about 3 or 4 a.m I took some aspirin, and the pain subsided and I got some sleep.  I was puzzled at what had caused this episode.  The chest pains pointed to a heart attack, but none of the other symptoms did.  I wasn’t breathless, I could carry out normal physical activity.  As the pain subsided, the idea that it was severe indigestion took hold.  Gavascon seemed to help with the contuining mild episodes of pain.  The local diet can be pretty acid.  The day after the attack I had no trouble in climbing to the top of a stone tower to get a wonderful view of the western Sicilian coast.  The next day, though, I  felt lethargic and a bit feverish, collapsing into my hotel bed for an afternoon; but a couple of days after that things seemed to return to normal.  We continued with the tour, returning home at the end of the week.

The episode has was scary enough for me to go to my GP in the week after we returned.  I probably wouldn’t have done this had my wife not insisted on it, though I had noted that my fitness at the cardio-vacular exercises in the gym had fallen rather sharply.  My GP tended to agree with my diagnosis of acute indigestion, as he would have expected that a real heart attack would have had more of an impact.  But he did recommend that I did some blood tests.  This I did last Friday morning, at 8.30 a.m.  By midday my GP had rung me to say that one of these tests had revealed a high troponin level, indicative of heart problems.  He recommended that I go to St George’s A & E to get an ECG (electro cardiogram – where they put a dozen electrodes on your skin and get traces of your pulse).  This I did straight after lunch, expecting to be home for tea.  But the ECG showed an abnormal trace.  I was admitted to hospital, hanging around in A & E while a bed was cleared.  The next step was the angiogram – but that couldn’t be run until Monday.  Meanwhile I was kept under observation, with a cocktail of drugs administered by tablet and injection.

Now I am at home in rehab, recovering from the damage to my heart from the blocked artery, and the operation itself – but the prospects for a full recovery are good.  But I’ll be on pills for a long time, probably for the rest of my days.  At the moment there are six different sorts of pill, but it should come down to less than that after a year.  My fitness regime will have to be adjusted downwards so as not to place too much strain on the heart.  I am quite lucky though, first that the original attack did not do more damage, and second that the problem was picked up before the blockage to my artery caused more damage to the heart and maybe a more serious attack.

Why me?  I don’t hit any of the main risk factors – except that I was not avoiding cholesterol in my diet.  In fact I was a heavy cheese eater, and relished meat fat and chicken skin.  That will now change.  But some peple are just more at risk than others.  My physical fitness may have helped reduce the effect – though a bit too well if it had meant that I had avoided having it checked out.

It is customary at this point to praise Britain’s NHS and scorn its critics.  I will try and be a bit more objective, after my close observation of the service at work.  But it doesn’t come out badly.

Firstly I am immensely grateful to all those many professionals that helped me through the episode.  I always felt that they had my interests at heart and they did their best to help me.  Nurses, doctors, technicians, pharmacists and surgeons – I can’t fault any of them.  I now have very benign feelings towards St George’s hospital, which happens to be my local one – from being a rather anonymous presence beforehand.

Second I cannot fault the overall effectiveness of what the NHS acheived.  From the point of that blood test a system was quickly kicked into action that was appropriate at every step, acheived the right outcome, while managing the risks properly.  And at points the service was better than good.  The surgery was world class; the briefing from the cardiac rehab nurse afterwards was also deeply impressive.  The speed with which my blood sample was analysed and acted on was very impressive too.

Effective, yes, but how efficient?  Here I was left with a few question marks.  I ran into an awful lot of different professionals in my journey, having to repeat my story to up to ten different doctors.  This is a warning sign from a process management standpoint – though the need for specialists, 24 hour cover and risk management does not make the matter easy.  And there was an awful lot of paper records and documents.  It isn’t surprising that there were communication breakdowns; I’m still waiting for my discharge papers.  And the whole thing about the service going on hold for the weekend does not feel right either.  At least one, and probably two nights of my four night stay were clinically unnecessary.  Room for improvement, I would say – and that matters in a tax funded system where overall resources are subject to arbitrary limits.

It is clear though that I was much better off under the NHS system than I would have been under the US one, especially before Obamacre kicks in.  I would not have qualified under any of the government funded schemes, and neither would I have been covered by an employer plan.  I would either have to to have bought my own insurance plan, which would suddenly have become a lot more expensive.  Or I would have to have winged it without insurance, which would have landed me in serious trouble.

But then very few people outside the US think that their system is in any way sensible.  A universal insurance scheme, like most advanced countries run, would have caused a little more bureaucracy at the start of my hospital visit, but nothing very burdensome.  And I don’t believe that health professionals would be any less caring or professional if they were not working for a state provider.  Neither do I beleive that the vagaries of private sector management are any worse than the arbitrary resource management of a nationalised, tax-funded system.

But the NHS did do the job it was supposed to do.  And for that I am thoroughly thankful.

Why healthcare may grow to 50% of GDP and still be affordable

I can’t over-emphasise how important the concepts in this article in last week’s Economist are: An incurable disease, and I would urge my readers to try and get to grips with it.  If you want to understand how our economy is changing, and the implications for public services, the idea it describes is critical.  It ranks alongside Ricardo’s law of comparative advantage (gains from trade) and Keynes’s multiplier (fiscal policy) as a counter-inituitive idea that explains so much.

What it describes is something usually referred to as “Baumol’s cost disease”, and reviews a book by the eponymous William Baumol, “The Cost Disease: Why Computers Get Cheaper and Health Care Doesn’t”.  It stems from the observation that productivity grows in some parts of the economy faster than in others.  The paradox is that the more productivity in a sector advances, the smaller its share in the the economy at large.  Thus agriculture used to dominate the economies of the current developed world – but as agriculture became more productive, it needed less people and so shrank to a negligible propertion of GDP – while generating ever larger larger quantities of agricultural produce.  The same effect is clearly visible in manufacturing industry – producing more goods than ever, but from a shrinking workforce.  The more these areas advance, the bigger less productive sectors bulk in the economy as a whole.  It is, misleadingly, referred to as a “disease” because these less productive sectors, within the service economy, then act as a drag on economic growth as a whole.  It is not in fact a disease, but a symptom of success.  The failure of economists to understand the difference between creating wealth and realising it (i.e. turning that wealth into something that actually benefits humankind) is one the biggest failures of the dismal science, and it is a shame that Mr Baumol perpetuates it in the title of his book.

The most important of these unproductive services are healthcare and education.  Personal contact go the very heart of what these services are: to succeed these services must accept that people are individuals, and that a solution which works for one person may well not work for her superficially similar neighbour.  But, while productivity grows only slowly, if at all, costs, i.e. rates of pay, must reflect the increased productivity of the economy as a whole.  So costs advance faster than productivity.  Sound familiar?  But this only happens because we can afford it.

The eye-catching claim in the book is that on current treads healthcare will take up 60% of the US economy in 100 years, and 50% of the UK one.  But this is all paid for by the fact that other parts of the economy have become more efficient – and in fact it only takes up such a large part of the economy because these parts of the economy have become more efficient.  Actually this projection is a bit silly.  I think the advance of conventionally measured productivity will slow, as technological change now affects quality rather than quantity.  Also other sectors of the economy will reverse productivity as people value personal content more (think of the return to craft food production).  But it is rather a good way to make the point.

Which means that the challenge with healthcare and education is not that growing costs are unaffordable, as various right-wing types claim, but something much more subtle.  There are three issues in particular:

  1. A lot of healthcare is indeed inefficient, both in the UK and the US, and political pressure must be brought ot bear to address this.  But don’t expect it to halt or reverse the share of health costs in the economy in the long run.  The NHS “Nicholson challenge” in the UK may therefore be a valid policy goal, but it will not solve the long-term funding needs of the health service.
  2. The larger the share of the economy healthcare takes up, the more difficult it will be to fund it entirely from tax.  In the UK this either means that a parallel private sector will flourish and undermine the NHS (as has already happened in dentistry), or that the NHS will need to be a lot less squeamish about co-payments.
  3. There is a temptation for the owners and workers in the highly productive parts of the economy to keep the rewards to themselves, creating inequality and undermining public the public sector.  And yet we still want productivity to advance so that we can all afford a higher standard of service.  Higher taxes are part of the solution, but only part.  Again this points to the fact that a higher proportion of healthcare (and education) services will have to be delivered and paid for privately – allowing the remainder of the public services to pay decent wage rates.

I hope that provides food for thought!

Let’s learn the right lessons from the Winterbourne View scandal

On Monday the government published its serious case review into the Winterbourne View abuse scandal.  Winterbourne View was a specialist private sector hospital for learning disabled and autistic people – people who were sectioned and could not fend for themselves – “vulnerable” in the jargon.  The BBC Panorama programme filmed some spectacular cases of staff abusing patients.  A closer look didn’t make things look any better – abuse had being going on for years, and the hospital was not remotely doing the job it was being paid to do.  This is laid bare in the report.  All sorts of people fell down on the job – the hospital’s owners, police and other services, and the Care Quality Commission.  This should not distract us from the central lesson which the report makes clear – the commissioning of these services was seriously deficient.

The report was published on a day when the news was dominated by the Olympics and by the Coalition spat over Lords reform.  Perhaps it is a pity that this meant it did not get the public attention it deserved.  But it may be just as well.  In the hands of the usual top news journalists and editors, the wrong lessons would have been drawn.  Instead the coverage has been a bit more balanced and considered – I have even been able to pick up mature and balanced coverage from BBC’s Radio 4.  Even so, I’m not sure if the right messages are getting through to the people that matter.    There are some big red herrings.

The first red herring is the use of private sector providers to deliver care.  The report and headlines made much of the hospital owner’s pursuit of profit as being the reason they failed to provide a proper service, in spite of being paid quite well.  But this is nothing new – and there are plenty of shining examaples of good practice in the private sector.  The problem was that they were not being held to account.  Terrible things happen in public sector organisations too, if nobody is asking what they are getting for their money.

Which leads to a second red herring.  An early “lesson” was that the Care Quality Commisssion’s inspection regime was too light touch, and that inspections by this national body should be more frequent and more thorough.  But we mustn’t rely on these big inspectorates, who often fail to understand local nuances and issues, and can end up being excessively confrontational.  At best they can guarantee a certain level of mediocrity.

And thirdly there is the role of family.  The patients at Winterbourne were often from a long way away, which meant that it was much more difficult for the family to stay in touch.  This was condemned as being part of the problem.  This is right up to a point.  Public service commissioners are far too casual about sending people a long way from where they have their roots.  I am uncomfortable with the NHS reformers’ constant refrain of creating fewer but bigger specialist facilties for everything – though they always point to statistical evidence.  But while family can and (usually) should be an important part of somebody’s care, the system should not depend on them.

No, the real issue is with the commissioners of public services, within the NHS and local authorities.  They should take more responsibility for the services they commission and devote more time to holding them to account.  At this point it is very easy to be swept away by a debate over structures, procedures and responsibilities, seeing this as simply an exercise in public procurement, as one might outsource street cleaning, for example.  But again, that is not the important point.

At the heart of the commissioning of social and health services should be the client or patient.  Their individual requirements should be assessed, treatment individually tailored and their progress followed with human interest.  The patients of Winterbourne were sent there by commissioners who thought their job was done by just placing them there.  What was supposed to assessment, treatment and rehabilitation, a process implying progress towards a goal, turned into warehousing.  That should be almost as outrageous to us as the abuse itself.  If the commissioners had been following their patients, they would have picked up their lack of progress, and either worked with the hospital to improve it, or simply taken their patients elsewhere.

This isn’t rocket science.  My wife is a care manager at a local authority, dealing with drug rehabs.  Her authority takes an interest in their clients as individuals, and this invovles meeting clients at the rehab facility from time to time to check on progress…and cutting out facilities that aren’t up to standard.  The problem is that some public sector managers take a more industrial view of things, trying to drive efficiencies by doing things in bulk and treating problems and performance indicators rather than people.  This can give rise to some short term cost savings, but it quickly becomes self-defeating, as processes that fail to take account of people as individuals fail to solve their problems, and you end up with warehousing on a minimum cost basis.  But it is not value for money you keep adding to the workload.

Unfortunately in this aspect of public services, not much much can be learnt from the private sector.  Private sector techniques (lean management, business process engineering) can lead to a more people-centred approach if applied properly – but ultimately the private sector answer to difficult clients is either to pass them on to somebody else, or turn them into dependents and warehouse them for a fee.  Warehousing problems rather than solving them can be a lucrative business, as the owners of Winterbourne, Castlebeck Ltd, clearly saw.

I hope that the government’s ideas for GP-led health commissioning, and integration between local authority and NHS care, will lead the commissioning process to the right place, as they should in theory.  But the bureaucratic obstacles are huge.  It would help to have a clearer vision from on high.

 

The G4S fiasco poisons attitudes to the private sector

The British contractor G4S has specacularly failed to find anything like enough staff to support its contract to provide security staff for the London Olympics…which start in less than two weeks.  The details aren’t clear yet, but this one has all the makings of a fiasco that will be examined in deph in MBA courses for a long time.  A bigger question is the effect it will have on public attitudes to the private sector here in Britain.

For now the politicians and journalists are having some fun.  “Is this a humiliating shambles for G4S?  Yes or No?” (or similar words) one MP asked Nick Buckles, the hapless G4S Managing Director, this morning, showing the sort of skills of forensic questioning that make people wonder how useful parliamentary select committees really are. Mr Buckles had to agree.  It wasn’t just the size of the recrutiment gap, it is that nobody at the top seemed to have any idea that there was trouble until a couple of weeks ago.

Another revealing encounter was on Radio 4’s Today programme this morning.  John Humphreys was interviewing the senior police officer coordinating Olympics security.  The latter referred to G4S as a “partner”.  They’re not a partner, retoted Mr Humphreys, they just a private company only interested in profit.  And that seems to summarise a widespread attitude here.  Private companies are greedy and heedless of ethical standards.  Meanwhile the good old public services, like the police, the armed services or the NHS are selfless public servants working for the good of us all.

What a difference 30 years makes!  Back in the 1980s public services were supposed to be crassly managed, unable to control their unions and unable to deliver anything on time or efficiently.  The private sector on the other hand, the odd (state supported) car manufacturer apart, was all enterprise, innovation and efficiency.  It says a lot for the process of public sector reform that has happened since that public services command such respect now.  The private sector, on the other hand, has not come out of the banking crisis well, as the parallel case of Barclays seems to demonstrate.

This matters because further public sector reform, especially in the NHS, implies greater use of private businesses.  This was already a hard sell politically.  It’s not getting any easier.  Should it?

Well, management screwups are by no means the unique preserve of the private sector.  Last week a coroner reported on a case of a patient dying at our local hospital, St George’s.  This looks like a case too many people being involved, not aware of the complete picture, and nobody taking the initiative to sort problems out.  The hospital said that it had changed its procedures to prevent future incidents like it.  You can almost guarantee that this means an extra check or process spatulaed on top the ones already there – theoretically dealing with the problem, but actually making the process more complex and difficult to manage.  Reengineering of operations to deal with risks like this seems to infinitely more difficult in public sector organisations than in private sector ones, perhaps because it means trampling over well established demarkation lines.  Cases of bad management abound.  The quality of police management was shown in very bad light by last year’s riots, especially in London, where they were caught flat footed by youngsters with Blackberrys.  And as for the armed forces, whose public stock is currently very high, the amount of money they have wasted in equipment procurement programmes is absolutely eyewatering.

And as for the G4S scandal, the wider story is not necessarily against the private sector.  The company is clearly accountable, and is picking up the extra costs instead of the taxpayer.  And surely the procurement process is a much to blame as the contractor?  G4S may have been suffering from “winner’s curse” – required to cut costs to win the contract, and then finding that it had been unrealistic, or taking too many risks.  Realistic or cautious bidders simply get eliminated.  But this is a well known procurement problem – and surely the commissioners should have seen fit to take precautions?  Some rather obvious questions are being asked about how such a large and important contract was being supervised.

And it’s interesting to reflect a little further on the currently popular subject of “culture” in organisations, that, for example, was supposed to be so bad in Barclays.  Well senior managers not knowing about problems building up within their organisation is often a sign of bad culture.  Mr Buckles said he was a “no excuses” manager; so were staff afraid to pass up bad news?  The twist on this is that this sort, tough, no excuses style of management is beloved of politicians and the public (provided they aren’t actually working in the organisations concerned).  I’m not sure that most politicians would recognise healthy corporate culture if they saw it.  And that is bad news for the public sector.

So it would be a pity if this episode slowed down the process of involving private companies in public service reform.  But it would be as well to learn the lessons for public sector procurement and contract management.

The death of a snack bar.

Last Monday evening as I was walking to the Tube I saw a bit of a commotion on nearby Clapham Common.  There was smoke and there was a fire engine.  A closer look revealed that the smoke was coming from the mobile snack bar on Windmill Drive.  As I cycled past it on the following morning, it was just a tangled mess.  By yesterday it had gone completely.

This snack bar was something of a local institution.  There would usually be a knot of people chatting nearby, with an assortment of vans, lorries, police cars and the occasional ambulance parked nearby.  The people were almost all white and working class (by which I mean the real thing, and not simple “white and poor” as some rather annoying bureaucrats have taken to using the expression) and male, the occasional police woman excepted.  It was a favourite spot when such workers had a few minutes to kill.

And it did nothing to challenge prejudices about white working class people.  Its fare was greasy.  I don’t know what its coffee was like, but I saw no espresso machine as I walked by.  It all looked pretty disgusting.  Which makes it very easy for nice middle class people like me to sneer at it.  But working class people are a beleaguered bunch, looked down on by so many – I don’t begrudge them their moment of relaxation.  Besides my relationship with disgusting food is not entirely innocent – though I find it hard to forgive disgusting coffee.

But the fare clearly wasn’t healthy, and unhealthy eating is one of the things that causes policy types angst – as demonstrated by a series of seminars Food can be the best medicine held by the Reform think tank – trying to emphasize the positive potential of diet, as well as decrying the effect of poor choices.  This, along with harangues on the subject of smoking and drinking, is one of the forces which is laying siege to the working classes.  In doing so, it raises some challenges to modern liberal thinking.

On the one hand liberals like to emphasise choice, freedom and empowerment – traditionally as values in their own right, more recently based on evidence that these things are key to overall wellbeing.  On the other hand there is a focus on outcomes and the use of evidence based policy formulations, which tend to prescribe the same solution for everybody.  If we make people free, they will choose different things.  A lot of these choices will be for things we consider to be inadvisable.  And it will often be that different groups of people will tend to make different choices some being less to our taste than others.  But we have to accept that people are by and large responsible for the consequences of their bad choices – and not governments or wicked multinationals or anybody else.  It’s an awkward fact that most people who make unhealthy choices are perfectly well informed about the consequences – studies have shown this for smoking.

The NHS gives some a particularly pernicious line of reasoning.  It’s that since the NHS is funded by taxpayers in general, it gives the public the right to force people to make better choices (or at least to bully people) so as to reduce NHS costs.  But the unhealthy pay their taxes too – and if they drink and smoke, they pay a pretty decent whack too (tobacco tax revenues easily pay for the additional NHS costs associated with smoking, for example).  Perhaps hot pasties and sausage rolls should not be exempt from VAT, but when all’s said and done I think we tax unhealthy lifestyles enough.

We (by which I mean the policymaking middle class elite) should just lighten up.  Who knows, if we respected the choices people make with better grace, it might just help people to gain that extra confidence to take control of their lives and make better choices.

So I hope that unhealthy snack bar on Windmill Drive returns, as it has after a previous fire.

 

What can Lib Dems learn from the NHS debacle?

The NHS is proving a political nightmare for the Lib Dems.  This reflects a failure to develop a clear vision for the service before the election.

The NHS is now a toxic issue for the Lib Dems.  This is not because the voters are turning against the party on the issue, as they did for student loans.  In the overheated rhetoric surrounding the issue there have been many claims that the public will abandon the party over this latest betrayal.  But the public judges parties on what actually happens to the NHS, not on the speculations of excited activists and commentators.  And so far as front line services are concerned, nothing much has changed, and probably not a huge amount will as a result of the reforms… a major difference with the student fees issue.

No, the damage is being wrought within the party’s activists and members, as this summary of blogs after the Gateshead Conference shows.  Many feel an acute sense of betrayal by the leadership, and a number have left the party; more may follow.  This weakness is being cleverly exploited by Labour; but they didn’t start it.  Lib Dem activists themselves have not required outside assistance.

The party is all over the place.  The outcome of the Gateshead conference last weekend (which I was unable to attend) merely added to the confusion.  The emergency motion to abandon the Bill was not called, the representatives voting for a compromise motion supported by Shirley Williams – but a key paragraph was taken out of this motion by a narrow vote, leaving it saying not much at all.  This has given rebels in parliament cover to break the whip, but not placed serious pressure on the leadership and those not inclined to rebel, who do not see it as a worthwhile expenditure of political capital in the coalition, compared to tax policy, say.

This confusion has deep roots.  What on earth do the Lib Dems want with the NHS?  There is no clarity whatsoever.  I can count four distinct factions.  Currently most the most vocal strand are social democrats (like Shirley Williams, a living saint to many members) – who want a strong, nationally controlled monopoly service, which is able to provide a uniform standard right through the country (England in this case – Scotland, Wales and Northern Ireland have been allowed to get away).  They are relaxed about centralisation, and indeed all the amendments made to the bill over the last year at their behest point to a highly centralised provision.  Next come the economic liberals, with whom the party leadership tend to sympathise.  While this group has not developed any clear vision, they like the idea of what economist John Kay calls “disciplined pluralism” – in other words preserving a choice of providers wherever possible, so long as they are properly accountable.  These people are very relaxed about whether the NHS uses direct employees, third sector organisations, or, indeed, private companies to deliver its service.  A third group consists of NHS insiders – who basically resist any change in practice if not in theory, and who mainly argue for allocating more taxpayer funding through existing structures, whatever they happen to be at the time.  This group was led by Dr Graham Winyard of Winchester (and a former NHS high-up), who has now left the party.  And lastly (because this group is now largely drowned out), we have community politicians.  These want to see much more devolution to local politicians, and a bigger role for local authorities in particular; this group is relaxed about the  “postcode lottery”, so long as it is balanced by postcode accountability.  This group is close to the heart of traditional post-War Liberalism, and closest to my personal views (in spite of my Social Democrat provenance).

The original Bill was essentially a product of the economic liberals and community politicians (amongst whom we should count Paul Burstow, the Lib Dem health minister) within the party, working with Tory Health Secretary Andrew Lansley, whose attitude is quite close to Lib Dem economic liberals.  The resistance was started up by NHS insiders like Graham Winyard, and quickly swept in social democrats.  This alliance overwhelmed the party leadership at last March’s Sheffield conference.  There followed the “pause” in the reforms, and a raft of amendments that took the reforms in a highly social democratic direction, leaving economic liberals and community politicians disenchanted but hoping something could be retrieved from the wreckage.  But then the NHS insiders dug their heels in, as one professional body after another advised killing the whole reform.  This fractured the whole process and left the party with a set of reforms that nobody is very keen on, and to which many are vehemently opposed.

The wider membership, and most activists, are pragmatists, who can’t be pigeon-holed into any of the four groups that have shaped the debate.  Their confusion and general scepticism is understandable .  But this reflects a vacuum at the party’s idealogical heart.  We can agree on liberal social values, internationalism and inclusiveness – but the party seems to have no settled views on how to run the state.

The party should not get too worked up about this of itself.  It shares this confusion with the other main political parties (just try to make sense of the Labour position), and I’m sure the minor parties too if they could ever be forced into making a stand.  All successful political parties are coalitions of one kind or another.  But the party failed to hammer out its own internal compromise before the election, in the way that Vince Cable managed to for tax policy.  Formation of policy at conference was too much a matter of seeking consensus.  There were some quite radical elements of official, conference approved policy (like abolishing Strategic Health Authorities), but little awareness amongst members of the implications of official policy.  The original Bill was probably quite a well crafted compromise between our official policy and Andrew Lansley’s ideas (Paul Burstow certainly thought so).  But as soon as the heat was applied, official Lib Dem policy counted for nothing – it had not been engrained on members’ and activists’ consciences.

So where next?  The first point is that Liberal Democrats must realise that they either hang together with the Tories, or else the two parties will be hung separately on the NHS.  The Tories will curb their privatising zeal; the Lib Dems need to stop being so destructive.  There is no future in the parties scoring points off each other on this issue -they both need to show that all the apocalyptic talk is hot air.  I expect this means that we’ll have to find some extra funding before 2015.

And Liberal Democrats need to forge their own vision for the NHS, hopefully in time for 2015.  In doing so each of the various interest groups will have to compromise.  The best way of doing this is to have some controversial debates and votes at conference – like we did with tax policy.  Much better to have the arguments before the policy is agreed than after we try to implement it.

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.