The NHS crisis is a crisis of neoliberalism writes Laurie Laybourn-Langton

This year, the National Health Service turns seventy, finding itself in a world radically different to that which welcomed it. Compulsory health insurance had only arrived in 1911, part of a reformist welfare agenda seeking to out-compete Bismarckian Germany in more than just battleships. As in all ages, the nature and causes of ill health were a function of the social and economic conditions of the day, as summarised by William Beveridge’s timeless evocation of “five giant evils” of squalor, ignorance, want, idleness, and disease. Emerging from the Second World War, the founding principles of the NHS – free to all at the point of use, beyond the insurance principle – provided the foundation upon which the peace could be won. In turn, it gave succour to a sick and dispirited nation, ensuring the conditions in which Fordist capitalism could mature, ushering in the post-war Keynesian boom. For a nation bowed but unbroken, dismantling its great power status in a new age of human rights, it may have seemed reasonable for Aneurin Bevan to proclaim that Britain, with its NHS, now had “the moral leadership of the world”.

The NHS was an archetypal child of its time. The concept of public healthcare under the NHS model sat atop the wave of change in political and economic ideas that came, contrary to some contemporary opinion, with broad support from the British state. Centralised state bureaucracies and Keynesian demand management washed away the failed political economy of the Wall Street Crash and the Great Depression.

When change came again, in the late seventies and early eighties, the vanguard of the new order identified themselves almost in direct opposition to what the NHS stood for, the ideas that justified it, and the objective reality it delivered.

The NHS has always been the target of opprobrium from intellectual evangelists of market liberalism.

The NHS has always been the target of opprobrium from intellectual evangelists of market liberalism, whether they are set to gain or are merely captured by the shadows on the collective cave of our economic discourse. From its inception, health insurance giants watched the NHS and pumped money into proto-neoliberal think tanks who criticised every facet of Britain’s public healthcare model with gleeful abandon.

It was in reaction to an attack on the principles of non-fee-paying blood donation that the sociologist Richard Titmuss wrote the Gift Relationship, his seminal exploration of the impacts of pecuniary incentives in social policy. Titmuss warned that the unabashed introduction of markets into previously untouched areas of economic policy, and beyond, would result in a destructive, pervasive “ideology to end all ideologies”. Into what future would we now head if it was this book that British prime ministers pulled from their bags, slammed onto tables, and over which they declared “this is what we believe”?

As the post-war consensus fell, practical men, finding themselves quite exempt from intellectual influence, slaved away to deliver the assertions of defunct economists. The theoretical basis of neoliberal economics considers markets as the superior means of allocating resources under conditions of scarcity. This is fine for, say, food, where, armed with the knowledge of which apple you want, you can benefit from having several apple vendors, each optimising their products and prices to meet market demand. However, market dynamics are profoundly inappropriate to healthcare. For serious heart problems, even if you were a world-renowned cardiologist, you would suffer from incomplete understanding of your condition and treatment, opening up information asymmetries with the consultant sitting opposite.

The NHS, as with all areas of public provision, was now going to compete, come hell, high water or penalties imposed from central government.

It took until the Nineties for the neoliberal revolution to strike the NHS. Market structures were the order of the day as the state sailed heroically into the End of History. The NHS, as with all areas of public provision, was now going to compete, come hell, high water or penalties imposed from central government. That it has taken until now for the contradictions, inefficiencies and failures of marketisation to be recognised by elements of the political mainstream stands testament to the dangerous paucity of our policy discourse.

One cannot look upon the collapse of Carillion and the eye-watering cost of the Private Finance Initiative – £310 billion for assets worth £55 billion – without concluding that something is profoundly wrong with those economic ideas that justify such cruel, inefficient policies.[1]Where does duty of care sit in a contract that allows a private company to charge an NHS hospital £333 for a lightbulb?

The NHS under neoliberalism has failed on its own terms, as demonstrated by the record of three areas of policy: marketisation, privatisation and underfunding.

Inappropriate and unnecessary marketisation has delivered waste and moral hazard, and, ultimately, exposed the system to structural risks while imposing large costs on the taxpayer through the socialisation of failure. The Centre for Health and the Public Interest estimates that the annual cost of marketisation in the NHS is more than £4.5 billion a year, with additional start-up costs of over £3 billion for each major market reform.[2]The benefits of these reforms are hotly contested, with opposition from academics and health practitioners, who stress a high opportunity cost in forgone patient care and clinical innovation.

Privatisation – as distinct from the wasteful outsourcing of provision – has seen the loss of assets built up over decades and paid for by generations of taxpayers – a particularly vindictive, socially and economically irrational policy. For example, the coalition government famously sold 80% of the UK’s blood plasma resource company to Bain Capital for £90 million, putting the security of blood supplies at risk. And Bain soon enjoyed profits in excess of £700 million when the company was subsequently sold to Chinese investors.[3]Into the future, the government is seeking to sell large quantities of NHS land, thereby imposing the opportunity cost of missed public investment in productive economic and health assets.[4]

Inappropriate and unnecessary marketisation has delivered waste and moral hazard, and, ultimately, exposed the system to structural risks while imposing large costs on the taxpayer through the socialisation of failure.

This brings us to the third point. Underfunding the NHS has been a deliberate political choice over a period that now approaches a decade – and is set to continue. Over the 2015/16 financial year, NHS trusts and foundation trusts fell into a combined deficit of nearly £2.5 billion, only three years after reporting a surplus of over £500 million.[5]While the nature of ill health and demand for services plays a part, this gap has opened up due to a deliberate policy of underfunding –  real terms increases in NHS funding were 0.9% a year between 2010-2015, in contrast to an average of 3.7% over its lifetime. There is now near consensus that the NHS is underfunded and that the lack of resource is the greatest contributor to successive crises.[6]Across the public sector, health and social care spending cuts have been linked to 120,000 excess deaths.[7]

At best, the justifications for George Osborne’s Age of Austerity were the spurious frenzies of a politician appealing to the polluted ideas of a discredited yesteryear. At worst, they have cost lives and halted the inexorable, centuries-long tradition of improvement in public health, driven by the noble efforts of British academics and clinicians. Life expectancy has risen for a century, a trend that has likely faltered because of the political choice to cut public expenditure, with the rate of increase in life expectancy having dropped by almost 50% since 2010.[8]If medical science has been of the greatest benefit to mankind, uncritical adherence to outworn economic dogma has been of the greatest detriment.

For the neoliberal experiment has imposed a wicked cost on our health, not just in damaging systems that seemed to be working moderately well in the past, but in eroding the institutional basis upon which we can effectively respond to the challenges of the age. The future of the digital revolution, which alters social and economic relations at a pace and scale not seen since the Industrial Revolution, is and will always be a political choice. Smart phones, ubiquitous data collection and machine learning could be harnessed by a public healthcare system to better realise its founding principles, conferring upon future generations possibilities beyond the wildest imaginings of Bevan, Beveridge et al. Instead, the digital frontier is dominated by multinational monopolists and speculators pumping money into consumerist startups, flooding markets springing up in anticipation of continued underfunding and privatisation. We can do better.

Moreover, the very basis of our healthcare model is being shaken by demographic change and a shift in the nature of ill health. Underfunding is simply unsustainable in the face of these trends, as the NHS itself warns. Add to that environmental change – already seen as the greatest threat (and opportunity) to public health – which will increasingly determine the parameters of our healthcare imaginations. There is no room for systemic waste and the inefficient adoption of innovative technologies in a world that has warmed by 1.5C and in which the majority of soil fertility has been lost.

What is to be done? Much of a post-neoliberal approach to the NHS will have to assuage the damage done over the last few decades. Firstly, the NHS must be adequately funded as part of a wider move away from the discredited policy of austerity. Ill health over the period of fiscal retrenchment has resulted from damage to the systems of the state, encompassing everything from transport to social care, that provide the foundations upon which good health can spring.

We need to be wise to what neoliberalism has done and will continue to do to the NHS.

It will be a tragedy if the number of lives lost during the application of these failed, pre-Keynesian ideas should not banish them forever. Marketisation can no longer be the first port of call for policymakers in healthcare and across the entire public sector. This includes the growing burden of PFI debts, which could be addressed through the centralisation and renegotiation of contracts.

The social, environmental and economic power of the NHS should be brought to bear, with hospitals acting as “anchor institutions” that provide a local basis for everything from the rollout of clean energy – by building energy assets on NHS land –  to improving employment prospects by targeting local recruitment and procurement. These developments are already occurring, with, for example, hospitals in London recycling their heat into local social housing. Maximising the local socioeconomic role of the NHS could also present a more meaningfully democratised approach to decision-making.

Until then, we need to be wise to what neoliberalism has done and will continue to do to the NHS. Born of war and strife, Britain’s health service enters its 70th year in a bad way, held together by the goodwill of staff, bowed, nearly broken, and ill-prepared to suffer the burden of continued underfunding. All the while, foreign insurance giants watch with patient eyes for opportunities arising from Brexit trade deals.

In the final analysis, the crisis of neoliberalism is inherently a political crisis founded on the inadequacy of a certain set of economic ideas. In the same way that the NHS has always proven there is an alternative, the orthodox approach to healthcare policy proves that we need, now more than ever, an alternative to neoliberalism.

Laurie Laybourn-Langton is a think tank researcher and campaigner. He writes in a personal capacity and tweets @Laurie_L_L.

[1]Booth L, Starodubtseva V [2015] PFI: costs and benefits, Briefing Paper, House of Commons Library.

[2]Paton C [2014] At what cost? Paying the price for the market in the English NHS, Centre for Health and the Public Interest, London.

[3]BPL [2017] ‘Creat Group Corporation Completes Acquisition of Bio Products Laboratory Ltd’, Bio Products Laboratory Ltd, press release.

[4]Naylor R and Chand K [2017] ‘Should we welcome plans to sell off NHS land?’, BMJ: British Medical Journal (Online), 358.

[5]The King’s Fund [2018] ‘Trusts in deficit’, webpage.

[6]Mason R and Walker P [2017] ‘NHS England chief hits back at Theresa May on health service funding’, the Guardian, 11 January 2017.

[7]Watkins J, Wulaningsih W, Da Zhou C, et al [2017] ‘Effects of health and social care spending constraints on mortality in England: a time trend analysis’, BMJ Open 2017;7:e017722. doi: 10.1136/bmjopen-2017-017722

[8]Marmot M [2017] ‘NCDS, health equity and social determinants of health’, Remarks in opening expert plenary session at NCD conference in Montevideo, 18 October 2017.

Laurie Laybourn-Langton

Laurie is a trustee of Rethinking Economics, an international network of students, academics and professionals building a better economics in society and the classroom. He is also a Senior Research …

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