The following article has been published in the May edition of Socialism Today, our monthly magazine carrying up-to-date socialist analysis of events in Britain and internationally.

This article will be of interest to our readers as the Coronavirus pandemic continues to stretch services at Walsgrave Hospital, our local PFI hospital predicted to pay out £3.7 billion to profiteering private investors despite initial investments being worth just a tenth at £379 million.

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Despite the heroic efforts of health workers the NHS has been ill-prepared to cope with the coronavirus pandemic. But the roots of this lie in years of neo-liberal policies, including the marketisation drive of the New Labour governments of Tony Blair and Gordon Brown, argues Jon Dale.

Ten years of ConDem coalition and Tory austerity left the NHS ill-prepared for the sudden huge increase in very ill patients suffering from Covid-19. Over 100,000 unfilled staff posts (one in twelve), 17,000 fewer beds to their lowest level ever, equipment and personal protective equipment (PPE) stockpiles run down – these resulted from annual 1% funding increases when 4% was needed just to stand still.

Financial cuts were aggravated by years of upheaval following Tory Health Secretary Andrew Lansley’s Health and Social Care Act (2012). This caused such disruption to services that even his successor, Jeremy Hunt, was forced to row back on some of its measures. Lansley wanted NHS services provided by ‘any willing provider’ – private companies who would tender to win contracts. In a dire financial situation the lowest tenders were always likely to be picked, whatever the price in terms of quality. The drive towards privatisation has weakened NHS capacity to respond to Covid-19’s challenge.

But Lansley followed tracks left by Tony Blair and Gordon Brown’s 1997-2010 New Labour governments. Although elected pledging to end Thatcher’s NHS ‘internal market’, within four years Labour re-introduced and accelerated it. Frank Dobson, Blair’s first health secretary and an old-style Labour right winger, was shunted aside in 1999 to make way for Alan Milburn, who was fully committed to the project.

“We must develop an acceptance of more market-oriented incentives with a modern, reinvigorated ethos of public service”, said Blair in 2003. “We should be far more radical about the role of the state as regulator rather than provider, opening up health care, for example, to a mixed economy under the NHS umbrella”. ‘Market-oriented incentives’ meant big business profits.

Blair and Milburn saw the role of the NHS (and other public services) as planning and monitoring (the ‘regulator’), paying private companies to be ‘providers’. Milburn negotiated a ‘Concordat’ with the private sector, inviting them to take over clinical services paid for by the taxpayer. (After leaving government he became a well-paid adviser to Bridgepoint, a venture capital company closely involved with NHS privatisation. Another Labour Health Secretary, Patricia Hewitt, took a similar path after government, working for Syngenta.)

Tony Blair’s health policy adviser at the time was Simon Stevens, who subsequently became Vice-President of United Health, the giant USA health corporation. He is now the NHS Chief Executive, appointed by David Cameron. Stevens’ Five Year Forward View, due to be completed in 2021, breaks up England’s national service into 44 ‘Integrated Care Systems’, modelled along the lines of US Health Management Organisations and ripe for takeover by such companies. Had this plan been completed, the NHS response to Covid-19 would have been completely disjointed.

Neo-liberalism in public health policy

Capitalism tries to turn everything into commodities to be bought and sold. Profit-seeking corporations were happy to accept Blair’s invitations to carry out x number of hip replacements or y number of MRI scans. Less well-defined areas of health care, such as contingency planning for a possible pandemic in the next 20 years, were never likely to attract the marketeers.

Turning the NHS into a market led to a huge increase in health workers’ time measuring activities that could be priced and paid for. Contracts needed negotiating, results counted, procedures invoiced and paid for, disputes legally challenged and so on. Frank Dobson complained that “paperwork used to cost 4% of the NHS budget, but now costs 15-16%”. (The Guardian, 24 March 2006) The proportion of NHS staff in management increased from 2.7% in 1999 to 3.6% in 2009.

In 2002 the authoritative British Medical Journal published a biased flawed article written by a World Bank associate and former employees of Kaiser Permanente, the massive Californian health insurance company. It claimed Kaiser was cheaper and more efficient than the NHS, but compared costs for medically insured (mostly healthy) people to NHS costs, which included caring for older people and those with long-term conditions. Nevertheless, the article was used by Milburn’s Department of Health to justify accelerating privatisation. United Health and other companies were awarded the first contracts to provide the NHS with clinical services.

Then Coventry Councillor Dave Nellist on NHS demonstration 1st November 2006, photo Paul Mattsson

Foundation Trust status was created in 2003. Hospitals and Primary Care Trusts could become semi-independent, no longer under direct Department of Health control. They were able to borrow money on the private market, enter into commercial agreements with private providers, and generally run as commercial companies.

Although ‘non-profit making’, Foundation Trusts could form profit-making joint ventures with private corporations and also sell off NHS assets, especially land. Competing for patients (who brought in ‘payments’) with other Trusts undermined the collaboration needed to plan services to meet community needs and absolutely vital during a pandemic. The scandalous treatment of elderly people with Covid-19 in privatised care homes, cared for by insufficient staff paid even less than the pitifully low NHS rates, is also partly a result of this competition.

The proportion of GDP spent on the NHS under Labour went up from 5.4% cent in 1996-97 to 8.5% in 2009-10. However, much of this increase ended up in private bank accounts through contracted out services and Private Finance Initiative (PFI) construction.

A former head of NatWest bank, Derek Wanless, was commissioned by New Labour to report on future NHS funding in 2002. With his background he was regarded as ‘someone the government could trust’. Pleased with his report, Gordon Brown asked him for another, which came out in 2004.

“Individuals are ultimately responsible for their own and their children’s health”, wrote Wanless. “People need to be supported more actively to make better decisions about their own health and welfare”. He anticipated a dramatic improvement in health and life expectancy through ‘efficient’ use of NHS resources and increased use of technology, saving an estimated £30 billion.

This outlook saw much ill-health as the result of individual failings rather than society’s. A COPD (chronic lung disease) sufferer needed support to stop smoking (which of course some did), but air pollution, damp housing, dusty working conditions, lack of accessible exercise facilities and other factors outside individual control got much less priority.

Boris Johnson’s government echoed this approach with its initial Covid-19 advice, placing responsibility for controlling the epidemic on hand-washing and coughing into our elbows, rather than testing everyone with symptoms, then tracing and isolating their contacts.

Blairism and the SARS experience

The 2002-04 Severe Acute Respiratory Syndrome (SARS) outbreak was a global alarm bell of future pandemics. Like Covid-19, SARS was a new coronavirus crossing from animals to humans and then spreading between humans. Starting in China, where the regime covered up its emergence for months, it had a big impact in Hong Kong and Vietnam.

However, although SARS had a higher death rate than Covid-19 it was less infectious so did not cause the massive number of cases and deaths we see now. Twenty-eight countries recorded cases with 774 deaths, including 22 in Toronto in Canada. The Chinese economy accounted for 4% of world trade in 2003 compared to 14% in 2019, with many more people from all over the world travelling to and from China.

In 2004 another infectious disease reinforced the lessons from SARS. A new influenza virus spread from wild birds to poultry to humans. Industrial-scale poultry farming produced the ideal environment for its rapid spread. Many countries in East Asia had to slaughter all poultry to stop the disease spreading. Some farm and veterinary workers became ill and a few died but this virus did not spread from human to human. More dangerous was so-called ‘swine flu’ in 2009-10, first identified in Mexico. It spread quickly around the world with between 151,700 and 575,400 deaths estimated to have occurred.

What was New Labour’s response? They were certainly warned of these dangerous threats. Speaking in a House of Lords debate on SARS in May 2003, Baroness Finlay, a doctor and cross-bencher, said: “As of yesterday, there were 187 deaths in Hong Kong, principally among those who had a history of chronic disease… 20% of cases are among healthcare workers and their families and the volunteers working with SARS patients”.

“Research among healthcare workers”, she went on, “has shown that those who have become infected have had a significant failure in using one of the protections, particularly a surgical mask. Paper masks are inadequate… Long hospital stays are required… It is reckoned that 23% of sufferers have required intensive care and ventilation”.

“I ask the minister: could we cope with such a situation here if we had a similar number of sufferers? Could we cope in terms of the supply of masks? In Hong Kong there has been a major voluntary fund-raising effort to buy enough equipment to provide the staff with adequate masks, gowns and gloves. Are we accepting adequate precautions here? Do we have enough supplies of disposables? Could we cope – or do we have to take the model of the giving people who have worked in healthcare in China and Hong Kong to try to contain the epidemic so as to protect us?”

In the same debate Lord Turnberg (then Chair of the Public Health Laboratory Service – PHLS – and a Labour peer until 2019) said: “Some people might think that the £50-£60 million per year provided by the Department of Health for the Public Health Laboratory Service – which, interestingly, contrasts with the £170 million that we heard about for advertising – is so small as to suggest an unthinking disregard for the dangers that come from neglecting our defences against infection… the Chief Medical Officer has clearly stated that the change to the Health Protection Agency is to be achieved without additional funds”.

Other speakers in the debate made similar points. Yet New Labour went ahead to break up the PHLS and privatise NHS Logistics – two factors to have direct bearing on the current Covid-19 crisis.

PHLS dated back to world war two, when the threat of germ warfare loomed. It was formally established in the 1946 National Health Service Act to investigate disease outbreaks, drinking water and food products. In 2005 it was disbanded and its functions transferred to a new ‘arms length organisation’, the Health Protection Agency (which the Tories later turned into Public Health England). Its specialised laboratory work was hived off to hospital laboratories around the country, becoming a poor relation to the pressures of daily clinical tests in an NHS increasingly cash-starved by the Tories.

Hospital pathology (laboratory) services were prime targets for profit-seeking business. In 2009 a joint venture between Guys and St Thomas Hospital Trust and Serco formed Viapath, the largest pathology service provider in the UK. Kings College Hospital joined in 2010. A 2013 audit into three of its 15 laboratories found the NHS had been overcharged £283,561 in a three-month period. Internal emails revealed clinicians protesting that the company had an “inherent inability… to understand that you cannot cut corners and put cost saving above quality”. (The Independent, 27 August 2014)

The PHLS had a potentially profitable activity, supplying laboratories with materials needed to culture bacteria and viruses for testing. This was sold to Oxoid Ltd in 2005, becoming a subsidiary of Thermo Fisher Scientific – a $25 billion US corporation.

Johnson’s government has failed to organise Covid-19 testing on the required scale. Long-term lack of investment in hospital pathology services and privatisation, started by Blair, are part of this situation.

Privatisation, PFI and Profiteering undermined pandemic planning

and ‘pen pushing’ rose from 4% of the NHS budget to nearly 16%

In bed with Big Pharma

Protest on workers’ memorial day, 28.4.20, in London, photo London SP

Blair’s government did prepare for a future pandemic in one way, stockpiling enough anti-flu drugs to treat 25% of the population. Tamiflu was made by Swiss pharmaceutical giant Roche, Relenza by British company GlaxoSmithKline. The cost was £650 million but the money turned out to be wasted.

Between 2009 and 2013 independent researchers repeatedly asked for reports of the drug trials the companies had carried out or commissioned. Through persistent work the researchers eventually discovered that only some evidence available to Roche and Glaxo had ever been published. Drug trials had been deliberately designed to give the answers company executives demanded. Trials showing significant side effects or few, if any, benefits were suppressed. In fact, both drugs only shortened flu symptoms by about half a day with no reduction in serious complications requiring hospital admission.

Once the threat from SARS passed, pharmaceutical industry research into new anti-viral treatments dwindled. A financial analyst commented “many companies would hesitate to invest in this field. If the profit margins are horrible, why would any company take that chance otherwise?” (Washington Post, 27 November 2004)

Covid-19 shows vaccine research and manufacturing capacity must be enormously increased – dozens if not hundreds of new factories around the world are required. Traditional vaccine manufacturing facilities take three to five years to build and cost $500-600 million. Then there are filling and packing facilities needed to produce individual doses. Capitalist drug companies won’t invest in new vaccine production that might not be needed between pandemics.

New Labour’s 2005 privatisation of NHS Logistics (NHSL) handed an integrated system of purchasing, stockholding and distributing NHS supplies to DHL, the giant German courier company. This laid the roots for the current PPE crisis. ‘Just-in-time’ principles for supplying NHS trusts and maintaining stock levels meant that when there is a major outbreak, such as now, the system is already at full capacity and therefore struggles to meet extra demand.

In 2018 DHL failed to win a new contract, resulting in fragmentation into 13 different contracts for procurement, warehousing and distribution and marketing. The biggest was won by Unipart, better known for supplying components to the motor industry.

Despite a managing company, Supply Chain Coordination Ltd, which sets contracts on behalf of the Department of Health and Social Care, these divisions and poor planning have exacerbated problems of getting sufficient PPE to frontline services. This January management started reducing stock levels – right at the time that Covid-19 was developing in China!

We are paying the price today for decades of NHS under-investment, cuts and privatisation. Public health services, laboratory facilities, hospital beds and equipment, PPE and social care have all been strained to breaking point. Where was the robust contingency planning for infectious disease pandemics – predictable in their occurrence if not their timing and cause?

Unfortunately Jeremy Corbyn, when Labour leader, did not disown the record of the Blair and Brown governments, although he had voted against Foundation Trusts himself. Keir Starmer as Labour leader is not likely to attack that record. But a future Labour government would be unable to reverse damage the NHS has suffered without abolishing Foundation Trusts, renationalising privatised services, and scrapping PFI.

Moreover, the shortage of diagnostic tests, vaccines and lack of anti-viral treatments show a negligent pharmaceutical industry only concerned with short-term profits.

The industry needs to be taken into public ownership, on a global scale. All the big corporations should be nationalised, with no compensation except where proven need. Democratic planning by workers in the industry including scientists, medical experts, engineers and trade unions together with community representatives and socialist governments would ensure production was geared to meet need, not profit.

Medical supplies, including PPE, ventilators and other essential equipment must also be part of a democratically planned nationalised industry. The ingenuity shown by many workers quickly adapting machines and using their skills to produce PPE and ventilators is a glimpse of the possibilities under a future socialist society.

Read the Coronavirus Workers’ Charter