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Socialism Today 120 - July/August 2008

NHS at 60

The real history of the struggle for a national health service

The NHS has always been fiercely defended as the biggest social reform the British working class has won. But it has been under increasing attack for 30 years. Although still widely valued, its image has been tarnished by years of underinvestment, cuts and scandals. New Labour’s increased spending swells business profits rather than public services. JON DALE reports on how the NHS was won and whether it can survive.

THE NATIONAL HEALTH Service was born on 5 July 1948. Memories of life before the NHS are passing into history. Those who witnessed 1930s poverty recognised the great achievement of guaranteed healthcare for all, regardless of ability to pay.

Medical treatment has always been available to the wealthy. For centuries they mostly wasted their money! However, 19th and early 20th century advances in surgery and medical science meant ill health became treatable. The advantage of wealth in giving access to these treatments became real.

Before the NHS, family doctors (General Practice) charged for their service. Low-paid families called a GP as a last resort, borrowing from neighbours or the pawnbroker to pay the bill. Better-off workers paid into ‘Friendly Societies’ as insurance. In some areas, workers banded together to pay a doctor with a weekly stoppage out of their wages. These ‘clubs’ were also organised by trade unions. Some cottage hospitals were built with workers’ contributions, particularly in mining areas like South Wales.

State medical services were regularly debated at the Trades Union Congress (TUC) from the early 1890s, winning majority support. The ‘new’ trade unions, representing unskilled workers, argued that their members could not afford higher subscriptions to provide benefits, and that such activities were diversions from their main aim: improved wages and working conditions. They argued that keeping enough funds to meet benefit obligations might inhibit unions from taking costly industrial action.

Confronting two big-business parties in parliament and chained by anti-union law, unions took the giant step of organising their own political party. The Labour Representation Committee, formed in 1900, quickly gained MPs, becoming the Labour Party in 1906. A new mass workers’ party on the scene changed the landscape. Trade union militancy grew rapidly before the first world war. TUC membership doubled between 1905 and 1914 to four million. There were 1.9 million strike days in 1907, 38.1 million in 1912.

To stem the flow of workers towards Labour and socialist ideas, the first National Health Insurance Act was passed in 1911. Lloyd George, Liberal chancellor of the Exchequer, assured employers it would calm the unsettled workforce and raise productivity by reducing sickness absence. The ruling class also worried whether "stunted, anaemic, demoralised" slum dwellers could defend its empire.

The act provided medical insurance for lower-paid workers. They had to pay a contribution of fourpence a week. The employer paid twopence and the state threepence. This entitled the worker to free GP consultations, medicines and sickness benefit, but not hospital treatment, dentistry, opticians, artificial limbs, X-rays, physiotherapy or district nursing. Non-wage earners (mainly women and children) were excluded. Bosses were grudgingly prepared to spend money keeping workers on the tools, but on no-one else.

The act was not universally welcomed by workers. Labour’s leader, Keir Hardie, retorted: "What was the answer received when a minimum wage of thirty shillings [£1.50] for all and eight shillings [40p] per day was demanded for those who worked underground in unhealthy conditions? No, say the Liberals, but we will give you an Insurance Bill. We shall not uproot the cause of poverty but we will give you a porous plaster to cover the disease that poverty causes". Many trade union and labour activists believed government reforms would strengthen the capitalist state, buy off sections of the working class, and divert attention away from the struggle for socialism.

National medical insurance was not administered by the state but by ‘approved societies’, supposedly operating on a democratic and non-profit basis. Eventually, there were over 7,000 of these, although large profit-making companies like the Prudential dominated. Seventeen percent of contributions went on administration, not including wasteful duplication of buildings and equipment, or the cost of regulation. This was far more than for state-run unemployment insurance – a lesson for today’s increasingly fragmented services.

As the Labour Party grew, it gained power on local councils, using it to provide welfare services and unemployment benefit. Local authority spending almost doubled between 1900 and 1913. Many women in the Co-operative Guild campaigned for better healthcare for mothers and children. The East London Federation of Suffragettes converted a pub to a maternity centre, renaming it The Mother’s Arms, from where a nurse ran clinics, dispensed cheap maternity foods, and gave health education. A small group of doctors founded the State Medical Services Association in 1912, with the initial aim of getting the 1911 act extended to all.

A land fit for heroes?

THE FIRST WORLD war temporarily halted workers’ growing militancy. But soon soldiers’ horrific suffering and women’s increased factory work produced an even greater mood for change. The 1917 Russian revolution inspired workers across Europe. Lloyd George, by now prime minister, warned: "The working class will be expecting a really new world. They will never go back to where they were before the war". He promised a "land fit for heroes", hoping to convince workers that life would improve without them following their Russian cousins.

The Labour Party’s 1918 conference almost unanimously passed the socialist Clause Four of its constitution, calling for nationalisation of the means of production. At the general election that December, Labour called for full state ownership of hospitals and other health facilities, full-time salaried doctors and other personnel providing both curative and preventative services, the setting up of health centres and administration of health services by local authorities. The programme went on to demand the reconstruction "not of this or that piece of social machinery but of society itself". Labour’s vote leapt from 400,000 (in the previous election of 1910) to 2.5 million.

Despite Lloyd George’s ‘heroes’ promise, an even greater strike movement exploded after the war. In 1919, a general strike swept Clydeside. Troops were sent into Glasgow, and also to Liverpool when police went on strike. Army mutinies occurred.

1919 saw the new ministry of health created. A year later it produced a report proposing changes in the National Health Insurance Scheme, new health centres and other reforms. But these plans were never implemented. In 1921, miners’ wages were cut. Union leaders of the Triple Alliance (miners, dockers and rail workers) failed to organise united strike action in response. The resulting demoralisation led to a fall in union membership and strikes. With the pressure off, the government’s health plans quietly gathered dust.

The working class soon recovered. When miners’ wages were cut again in 1925, a general strike was threatened. Buying time (to prepare strikebreaking operations) the Tory government set up two royal commissions – on the mines and national insurance. The latter reported in 1926, recommending an expansion of benefits to cover workers’ dependents for the first time. But once again, a defeat for the working class in the general strike led to the report being shelved. Advances in health and welfare services followed militant struggles, as in 1911, when the capitalists feared the cost of withholding reforms, possibly threatening their rule, were greater than conceding them.

Defeated in trade union action, workers turned to political action, electing a Labour government in 1929. Economic crisis led to prime minister Ramsay MacDonald joining the Tories and Liberals in a national government. Labour shifted sharply to the left. Its 1932 and 1933 conferences called for a profound socialist transformation of society.

The Socialist Medical Association replaced the State Medical Services Association in 1930 and affiliated to Labour in 1931. Its programme, A Socialised Medical Service, was included in the 1934 manifesto: "The medical service must be planned as a whole… preventative as well as curative… the service must be complete and it must be open to all, so that poverty shall be no bar to health…"

A healthcare catastrophe

WITH THREE MILLION out of work and subject to the humiliating means test, the effect on working-class health was shocking. Eighty-three percent of children in Durham had rickets (soft bones from poor diet). The Workers’ Birth Control Group campaigned with the slogan: "It’s four times as dangerous to bear a child as to work down a mine". A vaccination against whooping cough was available, but 2,000 still died each year because no mass immunisation service existed.

Even sections of the ruling class recognised that big changes were needed. Harold Macmillan, later a Tory prime minister, summed up this mood: "It had become evident that the structure of capitalist society in its old form had broken down… The whole system had to be reassessed. Perhaps it could not survive at all; it certainly could not survive without radical change".

The hospital system was creaking. Specialists and treatment were available to the rich who could pay. For everyone else there were ‘voluntary’ or local authority hospitals. Voluntary hospitals were run as charities. Consultants were unpaid. They treated those who could persuade or bribe a governor to gain admission, and who had a condition the consultant could teach on and display his skills. In this way he built up his private practise. (It was an overwhelmingly male profession.) Despite turning nurses and students on to the streets for regular hospital flag days, voluntary hospitals faced growing debt. Pay beds were introduced to try to stave off bankruptcy.

Patients with chronic conditions, and who did not have the money to pay, had local authority hospitals. Until 1928 these had mostly been workhouses – grim Victorian institutions with few trained staff, set up "to establish a discipline so severe and repulsive as to make them a terror to the poor and sick and prevent them from entering". Nineteenth century public policy had aimed to keep out all but the most desperate so taxes could be kept low.

The second world war brought the hospital crisis to a head. The chaotic and unplanned system was totally unprepared for the expected numbers of military and civilian casualties. The Tory government set up the Emergency Medical Service in 1939, controlling over 1,000 voluntary and 1,500 local authority hospitals. Wartime planning and government financial backing succeeded where the pre-war patchwork had failed. This increased support for post-war change, as did the exposure for the first time of many doctors and middle-class patients to the horrors of the ex-workhouses.

War speeded up the application of medical advances, like antibiotics, blood transfusion, laboratory services and plastic surgery. Medicine had an increasing range of treatments that really worked. Charity and private enterprise had proved unable to develop care in the way that public planning did.

Once the early patriotic wave waned, the ruling class became increasingly worried about the mood of the armed forces and working class. "In the aftermath of the war there will be a strong and widespread temptation to abandon the sense of a common effort for a common cause, to resume the rivalry between capital and labour for the extraction of a maximum profit from the process of production… If such trends were to prevail… our whole society – national as well as international – might well be in sight of disaster". (The Times editorial, 8 March 1941) Memories of the Russian revolution still haunted them!

The Beveridge report

THREE MONTHS LATER, Sir William Beveridge was commissioned to draw up plans for a welfare state. His task was to instil confidence amongst troops and workers that victory would benefit them and their families.

In the week before his report was published, The Times leader thundered once again: "Overwhelming evidence comes from factories and mines that fear of mass unemployment after the war is a common obsession, that it induces a cynical mood amongst many workers, and that the sense of a positive gain to be derived from the war – apart from the immediate aim of defeating and uprooting Hitlerism – has still to be won… On many sides lack of confidence in the future after the war has been a serious moral hindrance to the war effort". (26 November 1942)

There was enormous interest in the Beveridge report. On publication day a queue a mile long formed outside the government bookshop in London. Seventy thousand copies were sold by mid-day. Beveridge proposed a social security system, economic policies to maintain full employment, family allowances and a national health service. His proposals for the latter were largely based on the British Medical Association’s moderate plans.

The New York Herald Tribune reported "that he had made it plain… that he was thinking of social insurance as only one aspect of the general problem of demobilisation, of restoring peace-time production, and establishing a new society in which the maintenance of private enterprise will be related more accurately than in the past to the needs for government action".

Taking up this theme and warning against opposition from the capitalist class, The Times wrote: "So far as employers’ contributions it can hardly be claimed that the annual sum which British industry is to be called on to pay is an excessive price for a healthy, contented and fear-free labour force… Any discussion of Britain’s ability to pay the price of social security is necessarily bound up with much broader considerations… if the economy of the world at large, and of this country in particular, is to be placed on a basis of expanding prosperity and recognition of the needs of the common man, then the ability of Great Britain to finance the modest programme of the Beveridge report, as well as the corresponding social reforms in other spheres, is beyond question. If these conditions are not fulfilled, if the world reverts to the competitive and restrictive economy of the 20 years between the two wars, then not only the Beveridge report, but the whole economic, social and political structure of this country is in jeopardy". (5 December 1942)

Tory health ministers then put forward various plans for a national health service. (The phrase was first used in 1944.) But there were no details about when anything would be done and it was Labour that swept to power with a massive majority in the 1945 general election. Bonfires were lit and people danced in the streets. The Parliamentary Labour Party sang the Red Flag in the House of Commons.

The strategists of the British ruling class were in no doubt of the powerful mood for change. They had evidence of similar pressure across Europe. There was an outpouring of hatred for ruling classes who had collaborated with Nazi occupiers against their own working class. Workers overthrew Benito Mussolini in 1943, taking control in many areas and rejecting the king. Mass uprisings shook Warsaw and Paris in 1944. Civil war raged in Greece where the ruling class, backed by British armed forces, attempted to reinstall itself.

Meanwhile, the Soviet army occupied Eastern Europe and part of Germany. Capitalism was abolished and replaced with deformed, bureaucratic workers’ states mirroring Stalin’s regime. The second world war ended with a strengthened Soviet Union and weakened European capitalism. But the leaders of the workers’ parties – social democratic and Communist – saved capitalism by diverting this revolutionary wave into safe channels. American dollars then poured into western Europe to ensure capitalism was stabilised.

The National Health Service

THE LEADING LEFT-winger in the Labour government, Aneurin Bevan, became minister of health. Brought up in poverty in the South Wales coalfields, his father had been a founder member of the Tredegar Working Men’s Medical Aid Society. Embryos of a new society based on collective workers’ organisation can develop within capitalist society. Bevan applied this on a larger scale with his design for the NHS, although without any element of workers’ control.

The main components of the NHS were nationalisation of hospital services with free access; planning at regional level, enabling more equal distribution; everyone could register with a General Practitioner and receive free medical care; dentistry was freely available for the first time; opticians provided free eye examinations and glasses; prescription medicines were free. The money for this came from central government, raised through taxation, although as early as 1951, Labour introduced charges for prescriptions, glasses and dental treatment.

There were weaknesses built in to the NHS from the start. Pharmaceutical, medical supply and hospital construction industries were left in private hands, able to extract massive profits from the public sector. Bevan compromised with doctors’ leaders who wanted to maintain their private practice. In fact, they probably represented a minority of their profession and most doctors would have signed up to work in the NHS. Private practice proved to be a cancer which, partly cut out, grew back in later years.

Most general practice continued as a cottage industry of single-handed doctors working from their houses or shop premises. Such investment as did take place was geared towards treatment of acute ill health, keeping workers healthy enough to make profits for their bosses. Services for chronic illness, the elderly, mentally ill and disabled remained poor relations.

Although the immediate threat to capitalism had lifted, the 1951-64 Tory government maintained the NHS intact. Any attack on it would have aroused massive opposition. At a time of economic growth and almost full employment, big business continued its contribution towards the cost.

Rising living standards during the post-war economic boom improved health greatly. Better nutrition and housing, vaccination programmes and antibiotics cut the scourge of childhood and maternal deaths. Previously untreatable conditions became treatable with new drugs, kidney machines and transplants, joint replacements, chemotherapy, radiotherapy and many more.

However, investment in new facilities was slow and financed at the expense of health workers’ low pay. Eventually hospital ancillary workers took strike action in 1972 against the Tory government. In 1976, there was an actual cut in NHS money, when Harold Wilson’s Labour government gave in to demands from the International Monetary Fund during an economic crisis. There was another ancillary workers’ strike in 1979.

Co-operation to competition

MARGARET THATCHER’S ELECTION victory later that year coincided with a worldwide recession in which British capitalism was hit hard. Every past gain of the working class came under ferocious attack. Public spending was slashed, as were taxes on big business and the rich.

Even then, the popularity of the NHS prevented the full frontal privatisation experienced by other nationalised industries. Instead, funding was squeezed. Waiting lists grew, so more patients went private. Ancillary services like cleaning and catering increasingly went out to private contractors.

The trade union and Labour Party leaders failed to organise effective national opposition. After the defeat of the 1984/85 miners’ strike, they acted like rabbits caught in car headlights. Their inaction only encouraged the government to go further. Councillors were removed from health authorities, isolating these bodies from local pressure. Hospitals were taken out of the control of district health authorities and run by trusts. An ‘internal market’ was established, with parts of the NHS purchasing services and other parts providing them. Competition increasingly replaced co-operation.

NHS administration had been amongst the cheapest of any health service in the world. This started to change with the introduction of these business practises. Between 1989 and 1992, 30,000 extra administrators were taken on, while the number of nurses fell by 26,000.

A series of scandals hit the headlines – patients lying on trolleys in hospital corridors overnight waiting for an empty bed, or dying for lack of intensive care. These were a major factor in the Tories’ 1997 defeat. The day before the election, Tony Blair famously said there were "24 hours to save the NHS".

However, New Labour’s election accelerated the process started by Thatcher. After expelling Marxists and then ditching the socialist Clause Four, Labour had stopped defending a publicly-run welfare state. It maintained Tory spending plans for two years. Then real NHS spending eventually doubled. But a swelling torrent of this public money poured into private, profit-making corporations.

The hospital construction programme is now totally dependent on the Private Finance Initiative (PFI). New hospitals belong to private companies, which hire them back to the NHS with guaranteed profits for 30 years or more: 126 current and planned PFI schemes were worth £15.5bn in April 2007. A sample of eight PFI schemes showed interest payments rose from an average 4.5% to 16% – like buying a house with a credit card instead of a mortgage! Local health centres have another version of PFI – the Lift programme. The trade union Unite estimated that private companies earned £23bn profit over the length of their contracts from the building and delivery of services through PFI.

Contracts worth £5bn for operations on NHS patients have gone to Independent Sector Treatment Centres, run by private companies. They are 11% more expensive and produce worse results than NHS hospitals. They have even been paid for treatments not carried out. Meanwhile local NHS services lose funding and face closure.

‘Payment by results’ means hospitals are paid a nationally agreed tariff for various treatments. This puts patients on a fast-moving production line. The sooner they are discharged the quicker another can be admitted, maximising income. There is no time to thoroughly clean before the next person climbs into bed.

This dizzying pace is an important reason for hospital infections like MRSA. Privatisation and cutbacks of cleaning have also contributed. Health workers are under great stress from this ‘assembly-line’ pressure. They cannot give patients adequate time and personal care. Now, health secretary Alan Johnson proposes to grade nurses, with competition to see which team smiles most, while holding pay rises below rising prices! Relentless work pressure contributes to the NHS compensation bill paid for mistakes growing to £2bn (in 2005).

Foundation hospitals are run like independent businesses, competing for ‘customers’ (patients) against other parts of the health market. A deficit in one area used to be balanced by a surplus elsewhere. Today, there is a struggle for survival so co-operation is impossible. The Wales health ombudsman recently upheld a complaint against Cardiff and Vale NHS Trust and Cardiff LHB after a pregnant woman was denied a routine £100 injection. He said: "Yet again, a patient in Wales has been let down simply because individual NHS bodies are trying to protect their own budgets". (Western Mail, 6 June 2008)

The Americanisation of health

ADMINISTRATION COSTS HAVE soared from 5% in the 1970s to 20% today, an extra £10bn a year. Management consultants, often advising job and service cuts, cost a further £1bn a year. The next step down this road is private sector management being brought in to run ‘failing’ NHS hospitals, announced by the government on 4 June. Trusts underspent around £3bn last year. If they were commercial companies this would be profit.

The ultimate health market is the USA. It spends the highest proportion of gross domestic product on health in the world. But 30% goes on administration while millions still face bankruptcy if they need medical care. That’s the ‘benefit’ of the free market – free for big business to profiteer while poor people are free to go without. New Labour is steering the NHS towards these rocks.

It is no coincidence that US health corporations are muscling in on the NHS market. Blair’s health policy adviser became European president of one of the largest, United Health (UH). Chan Wheeler, Commercial Director of the NHS (a post created by New Labour on £300,000 a year), was a former UH director on a fraud charge in the USA over share dealings. "Independent sector providers will weave and integrate with the NHS", he has said, "and I hope we will start to just think of NHS-registered providers of care, so it doesn’t matter whether they are acute trusts, foundation trusts, independent sector or voluntary providers". (Health Service Journal, May 2008)

UH has been awarded contracts to run several general practices under the Alternative Provider Medical Services scheme. UH, Virgin Health and co see these contracts as ‘loss leaders’, getting their foot in the door to win much more lucrative prizes.

Primary Care Trusts (PCTs) spend hundreds of millions of pounds. Controlling their budgets would allow companies like UH and Virgin to direct spending to the clinics and hospitals they own. Johnson has offered contracts worth £70bn to a possible 14 private companies who will then ‘help’ PCTs commission services. Four of these companies are big US health insurers.

Lord Darzi’s proposed polyclinic in every PCT is part of this plan. Of course, having local facilities like X-ray, physiotherapy and some outpatient clinics would be welcome. These all used to exist in cottage hospitals, which were closed in the name of ‘efficiency’ and ‘modernisation’!

However, the wheel is not turning full circle. New Labour wants privately owned clinics directly competing with existing GP and hospital services – as a cuckoo ‘competes’ in the nest. Over 100 GP surgeries could be closed in the first eight areas of London to have polyclinics. Those who use GPs most – the elderly, parents with young children, and chronically sick people – are least able to travel but could be miles from these ‘super health centres’. Continuity of care, where one or two GPs know us over many years, will be lost.

The £12.7bn NHS computerisation scheme is four years behind schedule – after five years work. Two of the original ‘big four’ contractors have quit. One of them, Fujitsu, has been struggling to persuade doctors and NHS IT workers of the benefits of Millennium – a system designed for American hospitals. In the eight hospitals it has been installed in so far, feedback has been awful. At least one trust was forced to take on over 30 extra staff to cope with its problems.

The IT project has produced some benefits, for example storing and retrieving X-rays electronically. But there is a threat to patient confidentiality if computerised records are available to 300,000 health staff. Its unspoken aim is to allow private health providers access to patients’ records and so compete more effectively with existing services.

Fighting the rule of profit

OVER THE LAST decade the NHS drugs bill has soared from £4bn a year to £8.2bn. The Pharmaceutical Price Regulation Scheme is a voluntary system setting a cap on the profits each company can earn selling branded medicines to the NHS. The current scheme, running from 2005 to 2010, allows drug companies to make returns on capital between 8.4% and 29.4%. Drug companies have huge profit margins – in excess of 14.3%, against a business average of 4.6%. Yet the number of genuinely new medicines – as opposed to copies of those already on the market – is decreasing. This industry must be nationalised and integrated with the NHS.

National health insurance was introduced in 1911, as class struggle heightened and a new workers’ party grew. After the second world war an aroused working class, determined to end the pre-war miseries it had endured, threatened British capitalism’s future. Its anger resulted in a massive victory for Labour, which introduced the NHS. Today, the absence of a mass workers’ party is allowing capitalism to take back reforms it felt forced to concede in the past.

Labour today shares a name with its 1945 forerunner, but little else. It is wrecking the NHS. Behind the NHS logo, multinational corporations swell like leeches on the contracts they are awarded.

Every headline about hospital infection, delays or tragic errors (often linked to overwork and understaffing) weakens support for the NHS. Those aged under 35 have never known a time when the NHS was not being rubbished in the media. All three main parties use this propaganda to justify so-called patient ‘choice’, meaning the right to choose private GPs and hospitals for NHS-funded treatment. ‘Failing’ public hospitals are threatened with closure, to be replaced by commercial hospitals, instead of being given the investment and staff needed.

Johnson is now to allow NHS patients to pay for expensive and sometimes unproved drugs currently unavailable on the NHS. (Sunday Times, 15 June 2008) Post-code rationing must be abolished, but this ‘co-payment’ is a further step towards wealthier patients getting the best treatment. The difficulty now in getting NHS dental treatment shows the future for the rest of the NHS, if all Labour’s plans go through. A two-tier system is returning, 60 years after it was ended.

A massive movement is needed to save a free universal health service. Trade unions need to fight but, like 19th century unions, have no political voice. The key task is to build a new mass workers’ party. A socialist programme is needed to rebuild the NHS, ending the rule of profit over health and reconstructing "not this or that piece of social machinery, but society itself".


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