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Market state wrecks public services

The ConDems’ health bill is part of a major shift in the role of the state that dates back to the Thatcher period and the onset of corporate-driven globalisation in the early 1980s. Rather than a roll-back of history, we need real alternatives to what is effectively a market state.

As local councils struggling with reduced budgets prepare to “outsource” huge swathes of their services, and GPs line up to commission health services from all and sundry, the so-called “public services industry” (PSI) is licking its lips.

The PSI is made up mostly of commercial companies, many of them global operators like Serco, as well as some “third sector” voluntary, non-profit organisations. Together they take taxpayers’ money in return for providing services formerly delivered by the state.

By 2007, driven by the Blair governments, the PSI had grown to mammoth proportions with revenues of £80 billion year, representing 6% of the economy and employing 1.2 million people. These figures are undoubtedly far higher now.

Lobbying organisations such as the CBI Public Services Strategy Board, the PPP
Forum, the Business Services Association and the NHS Partners Network (which is actually part of the NHS Confederation) have developed close relations with government and the media.

Contractors have recruited many former government ministers and senior civil
servants as directors and advisors. Former health secretary Alan Milburn took several jobs with private health companies after leaving office.

The NHS concluded a contract with Bridgepoint Capital’s daughter company, Alliance Medical, six months after Milburn joined the parent company. Under the contract, Alliance Medical agreed to supply 130,000 MRI scans, of which fewer than half were eventually used. The government was nevertheless compelled to pay the full £16m contract price. The full scale of the revolving door between Whitehall and big business was revealed by Transparency International in its report, “Cabs for hire”.

Failure by contractors in areas like health service data management, the upgrade of the London Underground and care homes has left the state to pick up the financial pieces. Twenty-two hospitals face bankruptcy because they cannot meet exorbitant “private-finance initiative” contracts. Even the ConDems have had to come to the rescue with £1.5 billion of taxpayers’ money.

The ConDems’ bill to restructure the NHS in England is the latest chapter in a 20-year journey from a planned system to a competitive market for the supply of health care services. This began with the development of the internal market in the 1990s and the New Labour government extended it with the introduction of “patient choice”, foundation trusts, payment by results and independent sector treatment centres (ISTC).

There are nearly 35 ISTCs now operating alongside the NHS, carrying out surgical and other medical treatment on the basis of local contracts. Information about ISTCs is hard to come by on the grounds of “commercial confidentiality”, but a British Medical Association report says:

The BMA is concerned because what evidence does exist suggests that where patients’ care is bought and sold, and where hospitals, doctors, nurses and carers have to compete with one another like businesses, we find poorer health outcomes for patients, lower quality care, rising bureaucracy and the erosion of relationships where co-operation is replaced with competition.

As the state’s role is to enhance the development of capitalism, none of this should come as a surprise. As opportunities for making profit out of producing things declined in Britain, markets in public goods emerged to compensate. The private sector in turn drove down wages and conditions when they took over. Now the ConDems plan to drive down wages in the public sector to create a “level playing field” with big business.

Outsourcing state services is a project that all the major parties have championed. So returning to some mythical golden age of state ownership and provision is impossible. Instead, we need strategies aimed at ending the rule of the market state altogether, with policies and plans that shape a democratic future beyond profit and capitalism.

Paul Feldman
Communications editor
20 March 2012

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