The end of an era for the NHS: seeing the wood for the trees

Since 2013 the Third Era Group (which the authors co chair) has been bringing people together to develop policies for the care system in England as it enters its third era.  The Group rightly predicted that the infamous pro market Health & Social Care Act would not destroy the NHS (as many claimed) but instead would fail and mark the last hurrah of the second era of markets and competition.  We argue against a return to the first era of Bevanite bureaucracy.  

Our Group continues to argue that the evidence from the last 30 years shows that any system for care based on markets and competition as its driving force is deeply problematic and should be rejected.  Outsourcing of care services has also been a failure and services should be brought back into the public sector unless there are compelling reasons not to do so.  Rebuilding and funding the capacity and capability of the public sector has to be a priority.

As even the government admits it has to unpick its own policies, the care system (NHS, social care and associated support and benefits) is known to be in urgent need of a radical overhaul, alongside a more realistic and much higher level of funding.  

Labour is the only party that could actually bring this about.  Yet for Labour to even start developing the necessary policies it first has to overcome the noisy minority of its members who see every proposal through the lens of privatisation (or worse).

Legitimate fears have to be addressed but the idea that any government would end the NHS free at the point of care model and hand over (or sell) the £billions of NHS assets to US health companies is not credible.  Our somewhat eccentric model for the NHS is not at risk.  It will remain mostly universal, comprehensive, free and paid for out of general taxation.  Just suggesting a small fee for GP appointments or putting up hospital car parking charges shows that any kind of system based on payments would be political suicide.  Doing the same by stealth is also unlikely to work.  The disruption and cost of making any such change to some form of insurance basis would be huge.

What is far more likely is the opposite!  Hopefully in time the NHS model will be applied to all personal care as is being done in Scotland and Wales.

Many rightly fear that more years of cuts could reduce the NHS to a poor service for poor people. On the positive side the NHS has at least so far not had the same level of cuts as other parts of the public services – like social care.  But absolutely nobody is looking at adopting any US model for the NHS.  Comparisons with US are politically inspired but bogus.  We have other nations on our doorstep or just across the channel to compare ourselves with.  

Equally baffling is the alternative suggestion that the NHS should be renationalised – moving to a model where all services are delivered by public bodies and in some versions where there is no management structure of any kind.  This would be as politically challenging and would also have huge costs, actual and opportunity, to make the change.  Yet there are even some MPs who argue this case.  This is the equivalent of moving to a North Korean model where the state decides everything and delivers (or not) everything.

Despite the pretence of the extreme activists, it is a fact that since its inception NHS care has embraced the GP small business model, including: private dentists, ophthalmologists and pharmacists; private providers of routine surgery; private providers of complex mental health services as well as buying all kinds of goods, services and medical equipment from private organisations.  The idea of a fully “public sector” service is just an idea.  

Useful discussions about structure have to get past this obsession with the US.  There are big issues to address about accountability and about the balance between local and national decision making.  There is a strong argument for some structural changes to reduce unnecessary barriers between the various organisations in the NHS and local government.  There is a strong case for a more devolved set up for the NHS and for local integrated care systems.

The more sensible debate is around delivery of publicly funded care services by private companies.  This is often tagged as privatisation but more often a form of outsourcing.  Of special interest is the delivery of NHS funded acute care – currently accounting for around 8% of the NHS budget.  Delivery of both domiciliary and residential social care is almost entirely outsourced, and a real debate is required over how to address that – we argue for bringing back these services into more public provision, but not necessarily into the public sector.

There are very good reasons why outsourcing of public service delivery and using legal contracts to manage services is a bad idea.


Much that is taught in health economics suggests that a market for care cannot be perfect. And in terms of competition, theory suggests contracting works only when 1) it is possible to actually specify what is required (over what may be many years) and 2) there are already suppliers who can deliver what is specified.  For care there is also a requirement that there should be discrete contracts so that failure of one does not immediately result in destabilisation of connected services.

These conditions might apply to buying an MRI scanner and possibly even for dialysis or physiotherapy.  They sort of apply to GP practices!  They do not apply for an ITU and we would argue not for most aspects of community care.  They might apply to simple surgery although there is a risk of impact on other services.


Contracting and procurement are not that easy to do.  The NHS is very bad at purchasing from the private sector it.  Contracts are badly managed, if at all.  The many PFI deals, the IT projects, PPE and more all show just how poor at this the NHS really is.  Other public bodies are better but in general they do not have the commercial expertise or even the internal culture that allows them to be effective.  It’s not what they do!


Perhaps the most compelling argument is that the actual evidence for the successes of outsourcing is scarce; widespread experience shows outsourcing is more related to cost cutting than to service improvement.  During the second era when choice and competition for acute services was in vogue various studies failed to show anything substantial was gained by competition between different delivery organisations for simple NHS acute care.  And the impact of poor cleaning of hospitals through badly outsourced contracts is a 30 year experiment that has failed to provide evidence that competition adds anything of value.


Some outsourcing to the private sector for acute care is due to lack of NHS capacity; the NHS operates on ludicrous levels of bed occupancy. Most residential social care is private as local authorities sold off their estate years ago.  These are responses to inadequate funding.  In the long term it is more economically beneficial to invest in the training of staff and in the infrastructure to increase public capacity.


As the population ages badly, it is ever more obvious that the fragmentation caused by a market system leads to disintegration of service delivery.  The many who rely on several organisation for their support face bureaucratic and other barriers to having joined up care.  Rather implausibly some of those who vociferously oppose privatisation also oppose integrated care we believe that integration of care is a strong argument against privatisation and outsourcing.

In summary the third era will not see the end of all private organisations being involved in delivering NHS care and support, but the NHS should favour the public and voluntary sectors and allow private (for profit) contracts only when there were compelling reasons to do so – reasons which would be fully open to public scrutiny and challenge.  Contracts would still need to be managed properly and openly.

We believe that by sticking to proper evidence-based arguments and tapping into peoples lived experiences of care we can persuade the voters to invest in better care services through their taxes. Paranoia about US takeovers and absurd claims about the extent of privatisation will not help this process.

Richard Bourne

Health Policy Advisor and former Chair of the Socialist Health Association

Steve Iliffe

Emeritus Professor of Primary Care for Older People, University College London.

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