The birth of the new, deregulated NHS came only days before the death of the politician whose career made it possible. Pf looks back on the legacy of the Thatcher era for healthcare in the UK.
When Margaret Thatcher died on the 8th April, they were still removing the last shreds of bubble wrap from the new NHS structure. The blueprint of the Health and Social Care Act (2012) is a monument to Thatcherism. It transforms the NHS from a nationally owned, publicly funded healthcare system to one driven by competition and governed by business law – a system designed for rapid, continuous change under the influence of market forces.
The architect of these reforms, Andrew Lansley, is a politician very much in the Thatcher mould: autocratic, forceful, not worried about consensus. His statement that the Government’s ‘listening exercise’ was only necessary because the doctors had to have the reforms explained to them was straight out of the Iron Lady handbook.
In order to assess the impact of Thatcher’s legacy on healthcare, it’s essential to appreciate that NHS market reforms began on her watch. Even the relatively minor step of outsourcing hospital cleaning was casting a shadow over hospital care decades later.
And the fundamental reforms outlined in 1989 – the NHS internal market and the purchaser/provider split – laid the foundations of the market reforms that followed under the governments of Major, Blair, Brown and Cameron. As historian Charles Webster has observed, the 1980s and 1990s saw “continuous revolution” for the NHS.
It’s become a cliché of retrospectives on Thatcher to say that the Iron Lady ‘left the NHS alone’. It’s true that her government had other fish to fry, notably the onslaught on the manufacturing industries and their trade unions that culminated in the miners’ strike.
Thatcher noted in her memoirs that in most respects, the NHS provided “high quality care at reasonably modest unit cost” and commanded public “affection”. She was in no hurry to privatise it – but that did not mean she left it alone.
However, the Thatcher government’s first health policy initiative was one of deliberate inaction. The Black Report into health inequalities, published in 1980 after a failed Conservative attempt to block its publication, noted that health inequalities in the UK were linked to socio-economic factors such as income, housing and conditions of work. The Government rejected the report’s findings and recommendations.
The 1980s were not an easy decade for the NHS. Major developments in drug therapies and surgery increased healthcare expectations and costs, while a massive increase in unemployment accentuated public health needs. The main theme of Thatcher’s health policy was cost control, building on the public spending restraints of the Callaghan government. The phrase ‘death by a thousand cuts’ became endemic in health journalism.
Diabetes patient Richard Grimes recalls the austerity climate of the NHS at that time: “My memories of that clinic were peeling paint on the outside and a filled waiting room on the inside. The most bitter memory was the battle the British Diabetic Association had with the government over disposable needles. I was expected to inject twice a day with re-usable needles. These got blunt quickly, but I was expected to use them for months. As a result I developed scar tissue in my injection sites. Finally the Thatcher government relented and I got sharp needles.”
Two significant policies of the early Thatcher years increased the role of the private sector in healthcare. In 1980, NHS consultants’ contracts were changed to allow all to do private work with no detriment to their NHS income (previously those also doing private work were paid about 18% less). As a result, it became the norm for consultants to divide their time between the public and private sectors.
In 1983, the government legislated to make hospitals put their cleaning services out to competitive tender. This meant that the job of cleaning wards went to the lowest bidder – often to companies that used casual, untrained sta. supplied by job centres. The contrast between the high quality of surgical treatment and the dirtiness of wards became notorious. The level of hospital-acquired infections grew steadily, until in 2005 the Lancet noted that the UK had “one of the highest rates of MRSA in the world”.
Thatcher wanted to introduce more radical changes – such as a shift to an insurance based healthcare model, with ‘health stamps’ for the poor – but in a busy decade, her battles with trade unions and left-wing Labour councils took priority.
The great divide
The third Thatcher term saw a crisis of hospital capacity, provoking a review of the NHS that aimed to address its financial problems through competition. The 1989 White Paper Working for Patients gave rise to the NHS and Community Care Act (1990), engineered by the ambitious Health Secretary Kenneth Clarke within the Major government. It introduced two important reform policies.
The NHS internal market separated the functions of purchasers (health authorities) and providers (hospitals and other organisations). The latter competed for service contracts within a business framework. Hospitals became trusts: independent, self-managed bodies. By 1997 almost all NHS hospitals were trusts. One effect of this change was that administration costs doubled from 6% to 12% of the NHS budget.
GP fundholding was an attempt to develop a similar framework for primary care. Family doctors were encouraged to join a scheme whereby they received budgets to buy non-emergency care services from NHS providers, instead of relying on those purchased in bulk by their health authority.
Fundholding doctors were often able to obtain services more quickly than those outside the scheme. By 1997 about 50% of GPs were fundholders. The scheme cooled the professional relationship between primary and secondary care, and many patients saw it as a ‘two-tier’ healthcare model.
The internal market and GP fundholding can be seen as a dry run for the current NHS reforms, which embody the same principles but strengthen them by reshaping the health system around them.
‘Save the NHS’ was a key slogan for Labour in the 1997 election: its campaign played on the unpopularity of the internal market and GP fundholding. Blair’s first Health Secretary, Frank Dobson, proudly announced the abolition of both policies. But as Peter Mandelson has said, New Labour’s programme was continuous with . atcherism – and soon, Dobson and his beard were forgotten and Alan Milburn was turning the NHS into a Dragon’s Den for private providers. Webster notes that Blair did far more than Thatcher to bring the private sector into the NHS.
Facing the challenges of growing demand and innovative therapies, especially in cancer and mental health care, Milburn’s NHS Plan (2000) ushered in a new world of NHS ‘modernisation’: Private Finance Initiatives, Practice Based Commissioning, Payment by Results, Foundation Trusts (which were self-funding), and the new mantra of NHS reform: ‘patient choice’.
Under Brown’s leadership, however, the Mid Staffordshire tragedy knocked the wheels off the reform agenda. Alan Johnson, the Health Secretary left to clear up after the worst ever failure in NHS care, slowed down the transition of acute trusts to Foundation Trust status. His successor, Andy Burnham, reacted to problems with Independent Sector Treatment Centres – who withheld their performance data as ‘commercially confidential’ – by stating the NHS to be the ‘preferred provider’ of elective surgery. With language like that, you’d think he was in the Labour Party.
Here comes the son
In opposition, Conservative activists published a policy book called Direct Democracy (2005). It claimed the NHS was “no longer relevant”, and proposed a system whereby patients were funded “either through the tax system or by way of universal insurance, to purchase health care from the provider of their choice” – with the poor having their contributions “supplemented or paid for by the state”. The authors included future Health Secretary Jeremy Hunt.
In its 2010 election manifesto, the Conservatives promised an end to the relentless NHS reforms of the previous government: it would inflict no major structural changes on the NHS. Once in power, with no sense of irony, Lansley introduced his reform programme as the first major NHS reform since 1948.
However, the Cameron government learned an important lesson from the Thatcher years. The Iron Lady’s confrontational style rallied supporters, but also gave opposition a clear point of attack.
In selling the NHS reforms to the public, Cameron kept repeating two points: the NHS budget would remain ring-fenced, and NHS services would remain free. We now know that the £20bn saved under the ‘Nicholson challenge’ is going straight back to the Treasury; and Malcolm Grant has warned us that after 2015, charges for NHS services are on the cards.
So, in bringing off a health policy revolution that Thatcher would have been proud of, Cameron utilised a spin technique that carried Blair’s fingerprints: Don’t show your hand.