How Austerity Caused the NHS Crisis

Yves here. While the US health care system is coming apart at the seams, it has been preforming inconsistently and increasingly poorly for some time. My impression by contrast is that the decline of the NHS has been faster, and made more visible and painful due to accidents of timing, made worse both by Brexit (departure of nurses and doctors from the EU) and Covid.

This post gives some backstory on how the Tories drove the NHS into the ditch.

In case you harbor any doubts, here are the first four tweets that came up when I searched on “NHS” in Twitter:

By Danny Dorling, a British social geographer and is the Halford Mackinder Professor of Geography of the School of Geography and the Environment of the University of Oxford. He has written numerous books and produced a number of atlases. Originally published at openDemocracy

When the coalition government first introduced its landmark Health and Social Care Act in 2010, health secretary Andrew Lansley claimed the NHS would never again need to undergo such huge organisational change.

But even at the time, one widely respected commentator warned that – far from being the final fix that Lansley had advertised – the act “could become this government’s ‘poll tax’”.

In the event, it has been a slow-burn poll tax. Only now, ten years after it came into law, are we seeing its full effects, with publications from The Times to the Morning Star reporting that “A&E delays are ‘killing up to 500 people a week’”.

This figure – 5% above the normal number of people who die each week, though that baseline is also rising – can surely be traced back to the act, which ushered in a greater wave of privatisation than ever before. It compelled NHS management to behave as if they were in the private sector, competing to win business, and led to an increase in the proportion of contracts won and the use of contracts overall.

At the time, the damage caused was little noticed because government cuts in the first round of austerity targeted local authorities and adult social care. The first group of people to see their life expectancy fall were elderly women who most often lived on their own. It was in 2014 that this connection became apparent.

Back then, the government was still confident, with the Department for Health and Social Care rebutting any suggestion that austerity and privatisation might be linked to mortality. The privatisation figures were also opaque. In 2015, halfway through Jeremy Hunt’s tenure as health secretary, it was reported that ministers were misleading the public. By that point, private firms were winning 40% of new contracts – far higher than the 6% spend share claimed by the government and almost identical to the 41% won by NHS bodies.

The first great increase in mortality was recorded in that same year, a 5% rise that the government tried to attribute to influenza. The problem with that explanation was that the stalling and falls in life expectancy were not seen to the same extent anywhere else in Europe

By 2019, life expectancy for women had fallen in almost a fifth of all neighbourhoods and in over a tenth for men. Poorer people, both old and young, in poorer areas suffered most, with infant mortality among babies born to the poorest parents rising. Later there was a rise in deaths of women who were pregnant.

As NHS waiting lists spiralled, a tenth of all adults, most of those who could, were resorting to accessing private health care in 2021. But, in doing so, they lengthened the lists further by jumping the queues and thus diverting resources.

By April 2022, the number of vacant beds in hospitals was at an all-time low. Estimates of the damage done kept rising. Less than six months later, it was claimed that austerity since 2010 had led to a third of a million excess deaths, twice as many as from the pandemic.

Now, A&E departments are stretched to capacity, unable to clear patients to other beds in our hospitals as they could in the past. Those other beds cannot be cleared as they were before because adult social care has been repeatedly decimated, with what is left being tendered out to private companies.

All of this was foretold. In the four years after 2015, the value of one group of private sector contracts in the NHS rose by 89%. These figures were released just before the 2019 general election, partly in response to Matt Hancock, then the health secretary, claiming that “there is no privatisation of the NHS on my watch.”

Again, the damage was not so much through the extent of covert privatisation, but through the wider ethos that had been promoted. Take the USA: most of the enormous amount of money spent on healthcare there has little impact on improving health, because the ethos is wrong.

It is sometimes said – wrongly, that is – that the NHS has not been further privatised because the share of its spending that went to the private sector remained roughly the same between 2012 and 2020. By 2020 that share was about 7%, or just under £10bn a year. It rose to over £12bn during the pandemic when the government paid private hospitals to treat patients, but because overall health spending rose, the proportion remained roughly the same, still around 7%.

But the number of private companies involved did increase greatly, particularly in areas where there was already more private healthcare. By last year, private firms were delivering a quarter of all planned NHS hospital treatment in the least deprived areas of England, and 11% in the most deprived areas. Those shares – which have risen since 2020 – are higher than the overall 7% because it is in planned hospital treatment where the private sector has most infiltrated the NHS.< Last year, the Health and Care Act of 2022 put paid to Lansley’s claim that he had fixed the NHS ‘once and for all’. The act reduces the compulsion of the NHS from having to tender so many services to private sector bidding in future, but it was not designed to stop the rot. It will not solve the service’s problems, though there is hope that it could be the beginning of an actual change in ethos.

The pandemic made the effects of privatisation clear: Britons now have the worst access to healthcare in Europe and some of the worst post-pandemic outcomes. But the successive health secretaries who inflicted this tragedy are unrepentant.

In 2018, Lansley criticised Hunt’s cuts in screening services, blaming them for delaying the detection of his bowel cancer. Hunt, meanwhile, went on to become foreign secretary and then chancellor of the exchequer. His legacy, as openDemocracy’s Caroline Molloy wrote last year, is “one of missed targets, lengthening waits, crumbling hospitals, missed opportunities, false solutions, funding boosts that vanished under scrutiny, and blaming everyone but himself.” Hancock is now most remembered for eating a camel penis and cow anus on live TV for money.

Belligerence, bravado and buffoonery. We got here because too many of us believed the words of fools.

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  1. Redlife2017

    I’m sure Sir Keith of Camden, Head of the Labour Party, will make sure that there isn’t more privatisation!

    Oh wait. His big speech he’s about to make says this:

    “None of this should be taken as code for Labour getting its big government chequebook out again…Of course investment is required – I can see the damage the Tories have done to our public services as plainly as anyone. But we won’t be able to spend our way out of their mess – it’s not as easy as that. There is no substitute for a robust private sector, creating wealth in every community.”

    And from the Guardian article:

    Starmer will also risk the anger of some of his MPs by speaking warmly about the idea of public-private partnerships…The words echo the message from his shadow health secretary, Wes Streeting, who has suggested using private health providers to bring down NHS waiting lists.

    Basically reheated Blairism without the increase in public spending. There was a guy who a few years ago had a press conference literally explaining the privatisation going on…I think his name was…Jeremy Corbyn. Sir Keith was getting ready to knife him, so I am sure that is all memoryholed now.

  2. PlutoniumKun

    The gradual marketisation (not just privatisation) of the NHS has been going on since the 1980’s. Even while the last Labour government poured a lot of money into it and improved it significantly, it also added in poison pills of new internal ‘markets’.

    On a global perspective, the UK spends a little below average on healthcare for a developed country (still a lot more than many developed Asian countries), and far less than the US. Spending has actually increased significantly under the Tories, but with demographic changes (essentially, the ageing of the population) has meant that far more would have been needed just to stand still. When you look at the famous graphic of life expectancy vs health expenditure you can see some countries you wouldn’t necessarily expect do very well. Generally healthy populations and demographics may be one reason, but its not hard to see that health policy really matters.

    But it is absolutely indisputable that the vandalism caused by the Cameron Tories and those who followed is primarily responsible for what is now genuinely a system in complete meltdown. Vast expenditure is required just to stop things getting worse. The weird irony though, as Richard Murphy has pointed out recently, is that its exactly the people who are likely to suffer most – the boomer generation – who have voted the Tories into power repeatedly, and voted Brexit too.

  3. Stephen

    From very personal family experience I would agree that the social care issue creates huge amounts of so called bed blocking issues because there is nowhere to discharge very elderly people whom hospital cannot help.

    The NHS itself has also embraced “just in time” style philosophies and seems to run on factory style metrics where beds are cut back and purposefully run at close to 100% capacity. This allows zero capacity for surges and is not an efficient way of operating in the long run. Management seem to have taken on board all the wrong private sector management philosophies.

    The U.S. always gets used here as a comparative barometer too, especially when it comes to the perils of private provision. Many of my friends from continental Europe tell me that a big problem is that we have a fully centralized system. Austria and Germany, for example, seem to have a much more mixed model of provision still based on the original Bismarckian construction and seem to achieve much better outcomes. But our political system always seems to look to the US. The Blair government did precisely that, some of which I saw at close hand. A Texan, for example, was appointed by Blair as Department of Health Commercial Director. That was an interesting period.

    As an anecdote. My then eighty year old father broke his hip 15 years ago. Unfortunately, it was on a Saturday. The NHS does not carry out such hip operations on a Saturday. In fact, most NHS hospitals seem to operate almost a Tuesday to Thursday cycle for anything elective. So he was in hospital until Tuesday when they managed to schedule the hip replacement. But by then he had contracted high grade pressure sores, which were a consequence of being in bed and by definition of poor nursing care. He then spent six months in various hospitals. By contrast I know of another precisely similar case from my circle in Austria at the same time of an elderly man breaking his hip on Saturday and being operated on precisely that same day. He was then discharged a couple of days later. Achieving the latter requires surge capacity and weekend working but in the long run was far cheaper with a far better result than the experience my father had. He was never the same again. Just one anecdote that may or may not be representative. The Austrian hospital was not run by the central government in the way that the NHS is but was I believe a service of the City. We need to look far more to European models for our inspiration in the UK.

    1. Philip Davis

      There are pluses and minuses to all social systems, but I don’t think there is any doubt but that the regulated insurance systems of Germany/Netherlands/Austria are more inherently flexible and patient oriented. The NHS (even in its good old days) can be its own worst enemy in terms of taking a factory farm type approach to health. But its worth pointing out that the Germans and Austrians devote significantly more of their GDP to health than the UK. The Dutch system is excellent, but its so complex that I’ve heard it joked that only half a dozen people in the entire country understands how it works.

      There is certainly a lot to be said for taking a regional, decentralized based approach to health policy. The Spanish system is quite decentralized and comes out very high in most international metrics. 20 years ago in Ireland an overenthusiastic Health minister decided that all the regional health units were inefficient and abolished them centralized everything into one structure (needless to say, this was after listening to some advice from economists and MBA’s). After a few years of ineptness, they quietly rebuilt the old regional bodies at great expense as it turned out they were more efficient after all.

      However, I do think the most important step to improving any health service is pretty simple. Fire anyone with an MBA.

      1. Stephen

        I agree with this. But according to World Bank data (2019) the UK spends 10.15% of GDP on health, Germany 11.70%, France 11.06%, Netherlands 10.13% and Austria 10.43%. I agree that twenty plus years ago the delta was higher but the UK spending ratio now is still lower but very much in the ballpark. Especially versus the Netherlands and Austria.

        1. Revenant

          Treat the figures with caution. Most medical expenditure occurs at the hatch and dispatch ends of the life curve, where the border between medicine and social care is impossible to draw. My father once prescribed a new, ruck-free stair carpet to prevent a second fall and hip break. He filled the scrip from a roll in our garage but my point is that the UK is a one club golfer relying on the NHS to deliver health and wellness in an ageing population when Austria and Germany spend far more on key social determinants of health / recovery in the first place: health visitors, meals on wheels, domiciliary care, sheltered housing and home adaptation, retirement and nursing homes, fuel subsidies etc. In the NHS a high percentage of beds is blocked by the elderly, often with complex care needs and/or no family carers, aware ng discharge to a nonexistent suitable publicly funded care home place….

    2. Carolinian

      Here in America many hospitals were once county owned and run including the local hospital I was born in. Back then our US system wasn’t the giant money pit it has since turned into. Today that same hospital has been privatized and has even bought out the smaller competing hospital to become a local monopoly (although the hospital of a neighboring county is opening a few branches to poach patients).

      Of course many of our private hospitals are allegedly non-profit which might get you a discount on the bill in exchange for huge tax advantages to the hospital system. But that bill itself will be enormous and the pricing often arbitrary. In short we have a medical system that claims to be a business but isn’t run like a business. Instead it doubtless seems to some a kind of “money or your life” shakedown. This is the system your Conservatives and Blair-ites want to embrace.

      All we Yanks can say is “good luck with that.”

    1. paul

      They don’t really, 44% of a 67% turnout means about 29% of them do.
      ..and that was a good year for them.

      1. Yves Smith Post author

        Also there was a very good district based discussion that showed that the horrible-looking performance of Labour the year the red wall broke was almost entirely due to the SNP. Close vote in key districts, plus in fairness clever Tory targeting. The total vote breakdown was nowhere near as bad as the MP results suggested. But politics ain’t beanbag….

        Labour has also been running terrible candidates. Keir Starmer is almost a reason to vote Tory. He reminds voters that Tony Blair was no friend of workers.

        1. PlutoniumKun

          Do you mean the Lib Dems? The SNP only runs in Scotland (although of course they deprive Labour of many formerly safe seats north of the border). In theory, Labour and the SNP and Plaid Cymru could be allies in Westminster, but Labour is congenitally incapable of making any left of centre alliances. They have made clear, for example, that they would rather lose seats to the Tories than do local deals with the Greens, who also take a significant amount of the vote in some key urban constituencies.

          It has to be said that the Tories are much better at local and cohort vote management than Labour, although of course the Brexit Party did huge damage to their local turn-out in key places. But I think its a close run thing in assessing which of the main two parties is more incompetent when it comes to local politics, especially as both have pretty much wiped out their own grassroots.

    2. Mr Robert Christopher

      Labour are worse than the Conservatives, but that doesn’t say much!

      *Labour passed the 2008 Climate Change Act, which the pseudo-conservatives supplemented with the NET Zero policies. That is affecting hospitals.
      *Brown, when CoE, announced that he was selling off a large amount of the nation’s Gold, which dropped the price before he sold any! And he bought Euros! It now looks like more than stupidity!
      *Blair built public hospitals and schools with private money, with many of those companies based in tax havens. And it’s costing NHS an absolute packet.
      *Cameron won in 2010 and has continued the pseudo-Labour policies, so we have had pseudo-Labour and pseudo-Conservatives running the country, taking the worst of each!
      *Every time there is an attempt to improve the NHS, usually by the Conservatives, it’s to the US they turn, when there are so many other, better examples, even in Europe! And Labour screams NO TO PRIVATISATION. So nothing gets done, apart from more money is thrown at it. It has its complement of Diversity Officers and Climate Change Managers though. :)
      New figures show that, in the last 3 to 4 years the NHS has, IIRC, had funding increases of 15% and treated 15% fewer patients, but management mustn’t be touched, (may be thankfully :) ).
      Like many countries in the West, each government and opposition are promoting the same, anti-voter policies. The Conservatives have had to deal with the virus, the pseudo-vaccine, the Energy Crisis, and much more, but they haven’t had an official opposition for years!

      But much of the trouble has been caused by their own hand, from not preparing for a virus, (that’s what SAGE is for), and getting the Russian sanctions implemented to Johnson persuading Zelenskyy to undo his negotiations. Not encouraging Germany, France and Ukraine to implement the Minsk Agreements would be the cause of much that is wrong. And both parties LOVED the US Democrats, yet disliked a president that was eager to do a generous trade deal. What is it with them?

      I have read that senior nurses can earn £50k/yr, but a third goes in pension contributions and then there are other extras, so the gross monthly pay is much reduced. Since many private sector jobs are quoted without this hidden pension benefit, there needs to be a discussion about just how much should pension contributions be, in the public and private sectors. Also, nearly all the defined benefit pensions are in the public sector, with DB pensions having no extra taxes below a £50k/yr pension, while DC pensions over £1m fund have extra taxes, and that is equivalent to around £33k/yr, depending on investment returns, which could be a lot worse.
      It’s a complete mess, with government not implementing any benefits of Brexit, because the majority of Westminster and Whitehall are against Brexit and want, with all their hearts, to go against the referendum result (that they promised they would do) and rejoin the dysfunctional European Union, where Germany is owed £1Trillion, has no reliable gas supply and they still continue to fight a war in Ukraine that they cannot win.

      1. Revenant

        What are the extra taxes on a defined contribution pension compared with defined benefit? I am not aware of any.

        Or do you mean that the deemed capital value of a DB pension is lower than the corresponding DC pension and therefore preferentially taxed lower, when contributions in excess of the lifetime value are assessed for (punitive) taxation? That is a niche problem – real enough for some wealthy people and an unnecessary distortion.

        However, it is actually less important than the inadvertent consequence that the lifetime limit is so low that, even with low multiple applied to DB values, hospital consultants are quitting the NHS for private practice in their 50’s rather than pay 70% tax on their automatic excess pension contributions. That is a consequence with acute consequences for NHS capacity, all down to pension taxation.

    3. Paul Whittaker

      so why do the good people of Ontario keep voting conservative: you could run a donkey painted blue in my riding and get it elected, and they have in the past. I worked at a saw mill years ago and was on good terms with the owner. He was always outraged when the tory bagman came around and told him how much they expected hi to contribute, but paid anyway, or maybe not get a logging cut from MNR to feed his mill. On occasion he also donated small amounts to the NDP.

  4. Mary Wehrheim

    Where do those who make the rules go for their medical care? The royals seem to get excellent care. I assume the ruling class have their own private medical resources which allow them to assign the rest of the population to an increasingly feral system.

    1. PlutoniumKun

      There is a small, but very lucrative private health network in the UK. Even the very wealthy usually use the NHS for treatment as any doctor will tell you that for a wide range of complaints (especially cancer) an NHS hospital will beat a private hospital due to the sheer throughput. An exception I’ve seen anecdotally is wealthy immigrants, who usually insist on a level of attention they only get in expensive private clinics. Often its not in the UK as there is a big health tourism industry now – for many elective treatments its cheaper and better to just go to France or Hungary and pay for it.

    2. Mr Robert Christopher

      They go private. The late queen liked to consult a homeopathic doctor, but the pharmaceutical companies have been campaigning to remove that service from the NHS.

  5. Jack

    I don’t think things are going to change either in Britain or the US for that matter, until people realize that the “market” philosophy is not the be all and end all solution. As the author states, you need the right ethos in health care. Just to satisfy my own curiosity, I recently added up all of the US expenditures on publicly provided health care, Medicare, Medicaid, VA. Total came to $1800 billion. That’s $6k per capita for the US. Norway is the top ranked health care system in the world and they spend $12.5k per capita. But Germany is in the top 4 ranked, covers 100% of its citizens, and spends $6.5k per capita, using a combination of public spending and private insurance. If you are wondering the point of my comment by now, keep in mind the first US number I used, $6k. That’s PUBLIC expenditures and does not include private insurance expenditures in the US, which were $1211 billion in 2021. That means you could completely eliminate the need for private insurance in the US, IF you switched to a highly regulated not for profit system and removed the “market”, i.e. profit motive, from the system.

    1. Adam Eran

      We can thank Milton Friedman for legitimizing the “profit excuses all bad behavior” principle (either that, or Quark the bartender from Deep Space 9). Friedman’s plausible lies are still in print (e.g. Free to Choose), and the Amazon page for that book offers it at a reasonable price, plus other books, plus videos! Next Monetarist Muppets!

      Meanwhile, Elton Rayack, one of Friedman’s students, wrote Not So Free to Choose…which is clearly out of print ($84), but a simply awesome rebuttal to Friedman. Don’t miss it if you have a chance to read it!

  6. Hayek's Heelbiter

    Something I can never understand is that I was always told that practicing medicine without a license is a criminal offense.
    Yet 30% of the American healthcare dollars is spent on paying insurance company bureaucrats to weasel out of paying for treatment that doctors declare medically necessary,
    Can someone help my pea-sized brain here?

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