Feature

2007: look back in anger

In ten years the Private Finance Initiative will be seen as lethal medicine for the NHS, warns Dexter Whitfield

Imagine it’s 2007. The millennium has been and gone. Looking back, 1997 was a watershed for the NHS. The incoming Labour government, not for the first time, adopted Tory policies more wholeheartedly than Conservative backbenchers — the most blatant example was the Private Finance Initiative (PFI).

But the real problem was that the rest of the Labour Party and the trade unions said nothing. Few questions were asked in the election. If electors had been asked whether they wanted the NHS infrastructure privatised, the polls showed that they would have given a resounding ‘no’. But there was a conspiracy of silence, with one party pushing the PFI, and the other not wanting it raised because they too accepted the principle, even though most of their supporters opposed it.

Yet how could they have believed that the ownership and operation of buildings could be separated from the services delivered within them? The result was hospitals cut in two, with a private consortium owning and operating the buildings and a second organisation, nominally public, responsible for the health care: two employers, two sets of interests, two different sources of finance! They must have realised it would be untenable.

On reflection, it is hard to accept the economic naïveté of those who believed that PFI consortia would remain satisfied with their financial return and content with their role in providing and operating NHS buildings. People seemed oblivious to the fact that they would soon seek to provide health care directly. Not so US healthcare firms, who saw the opportunity to asset strip the NHS and provide a basis for a rapid expansion of private health care. Did no one ever consider that consultants would make deals with PFI consortia, presenting increasingly powerless NHS trusts with a fait accompli?

Project approvals soared once the Labour government announced the abolition of the public sector’s capital expenditure programme and the Chancellor had reassured the City. The programme spread to schools, colleges and other public buildings.

The ‘partnership’ idea proved to be a very temporary affair. The NHS rapidly fragmented into multiple organisations with diverse agendas and interests, with fewer and fewer people willing to argue for a publicly funded NHS.

Manual staff, mainly women, bore the brunt of the policy changes just as they had in the competitive tendering of the 1980s. In 2001 the Equal Opportunities Commission was finally persuaded to investigate the gender and race impact of PFI and partnership contracts. Their research revealed that women, black and ethnic minority staff had suffered more job losses, bigger pay cuts and loss of terms and conditions and had less well organised workplaces.

Since the 1980s Britain had virtually rejected private landlords, so the puzzle for historians is why they suddenly became an acceptable part of the welfare state. Not only did the new ‘health landlords’ — or the owner-operator industry as the CBI liked to call them — emerge, but private consortia began to take over key areas of health care planning.

Some people said the PFI and public-private partnerships to build and operate public buildings had nothing to do with privatisation. As the 2007 election looms it is ironic that the Labour government has ended up privatising the parts of the welfare state which the Conservatives couldn’t reach. Although the Tories privatised over £80bn of public assets between 1979-97, last week’s Parliamentary Written Answer revealed that, given another five year term, Labour will surpass even this.

The last decade has seen enormous changes in health trade unions. UNISON has been a general union since 2003. Most manual and administrative staff work for PFI consortia. Initial resistance from smaller unions crumbled with the fragmentation which followed the rash of PFI ‘all-in healthcare projects’ in 1999 and private firms taking over the running of existing hospitals. Their membership has declined and further mergers are inevitable.

In the final two decades of the last century there was an obsession with ‘reinventing’ the management of the state – and now we are having to reinvent the health service. One of the recent positive features has been the emergence of new health alliances committed to a publicly funded and operated health care system. But the acceptance of the PFI policy back in 1997 means we have to start almost from scratch.