Aside Posted on
CAROLINE MOLLOY 10 October 2014
As calls mount for the NHS cash crisis to be ‘solved’ by charging patients, there is one pot of money that sits glistening and untouched…
Image: Art band KLF burn a million pounds
But there is one pot of money that sits curiously unexamined, glistening and untouched.
It’s the cost of the NHS ‘market’ itself. Administering the hugely expensive artificial ‘marketplace’ created by successive governments to allow both NHS and private ‘providers’ to compete with each other to offer services to NHS and other ‘purchasers’.
No-one knows the exact cost of this bureaucratic ‘marketplace’. A recent estimate by rebel Lib Dems put the figure as high as £30billion a year. Dr Jacky Davis and other doctors and campaigners including the National Health Action Party have put it at £10billion a year. The Centre of Health & the Public Interest put it at a ‘conservative’ £4.5billion a year.
Even the most conservative of these estimates is a yearly amount which would, if re-directed away from useless market activities, fund both the £2billion annual NHS shortfall and free critical social care to everyone, which the Kings Fund’s Barker Commission recently said would cost ‘substantially less’ than £3billion a year.
Despite fierce urging from expert MPs to look at what the ‘market’ costs the NHS more closely, the government, mainstream media, think tanks and policy makers have dismissed, ignored and even suppressed this information, with unevidenced assertions that ‘modern healthcare systems’ need vastly expensive bureaucracy, market or no market.
Successive governments wedded to ‘market reform’ have refused to produce useful figures that would definitively establish the cost of the NHS market. It has been left to academics, MPs and activists to try and fill the void, through historical and international comparisons, as well as tentative attempts to cost different activities that are forced on the NHS by the ‘market’.
Hiding the figures
In 2010 the Health Select Committee found that running the NHS as a ‘market’cost the NHS 14% of it’s budget a year.
The Select Committee noted that the NHS would have some administration expenses even if it didn’t run itself as a ‘market’. But they noted evidence from the NHS Chief Historian, Professor Charles Webster that in the pre-market late-80s, the NHS spent only 5% of its budget on administration.
The difference in administration costs pre- and post-market – 9% of the NHS budget – is over £10billion a year of the current £120bn budget. That’s more than the entire cost of every GP in the land.
The government tried to suppress the 14% figure, which was in a York University report it commissioned then refused to publish for 5 years. The York study found that ‘market’ mechanisms like “the purchaser-provider split, private finance, national tariffs…mean…transactions costs of providing care have increased, and may continue to increase.”
The Select Committee report suggested that “the purchaser / provider split may need to be abolished”. They added that they were “appalled” that the Department of Health “was unable to give us accurate figures for staffing levels and costs dedicated to commissioning and billing.”
MPs concluded “the suspicion must remain that the Department of Health does not want the full story to be revealed.”
£10billion a year may be a conservative estimate
In fact the increase in administration costs due to the ‘market’ is likely to be even higher than £10bn.
Professor Colin Leys, author of ‘The Plot Against the NHS’, told OurNHS that these figures relate to 2003, before the second big wave of market ‘reforms’ including “the Independent Sector Treatment programme, the huge expansion of the Commercial Directorate of the Department of Health, the marketing division set up to help trusts learn to advertise and sell their services, the Competition and Cooperation panel, Monitor’s vast expansion…”