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The Privatisation Fetish

NHS-PLC: The Privatisation of Our Healthcare by Allyson M Pollock; Verso, London, 2004;
MOHAN RAO This is an extraordinary book, written with commitment and occasional passion, but at all times with care for facts. It is carefully written and well argued, and presents us with a narrative difficult to believe: the dismantling of the National Health Services in Britain, the actors involved, their ideologies and the effects on population health. What is difficult to believe is the sheer

The Privatisation Fetish

NHS-PLC: The Privatisation of Our Healthcare

by Allyson M Pollock; Verso, London, 2004; pp 320, £ 6.59.


his is an extraordinary book, written with commitment and occasional passion, but at all times with care for facts. It is carefully written and well argued, and presents us with a narrative difficult to believe: the dismantling of the National Health Services in Britain, the actors involved, their ideologies and the effects on population health. What is difficult to believe is the sheer “spin” (or is it lies?) that went into this privatisation enterprise, and the huge amounts of cash transfers this involved. In other words, privatisation was a method for the transfer of resources to a range of multinational actors in healthcare, and sections of venture capitalists in Britain who were encouraged by policy to create a market in healthcare and thus reap unimaginable profits. Along the way, rentier incomes increased through transfer of property to these motley “stakeholders”, including construction firms, real estate and financial consultants. The state stood guarantee to this, while health inequalities increased, the poor were disinvested of their right to healthcare, and the talismanic concepts of universality, comprehensiveness and egality, that had guided the formation of the NHS, died a painful death.

This sadly emblematic story of neoliberal times in important because the NHS had provided a model for health sector development in a number of countries along the world. The establishment of the NHS itself has a complex history with a mix of politics and economics. When during the Boer War, Britain embarked on conscription, half the potential male recruits were deemed unfit on health grounds.1 This set off concerns about the health of the British populations and the efforts to be made to improve the “racial stock”. Soon after the first world war, the Soviet Union announced that health was a fundamental right of all citizens, and a responsibility of the state. These ideas influenced the Webbs – architects both of the London School of Economics and the idea of the welfare state. And finally, the Keynesian revolution in economic theory laid the grounds for the Beveridge Committee. The Beveridge Committee laid the foundations for the welfare state, and the NHS, inaugurated by the post-war Labour government. That the Beveridge Committee strongly influenced the Bhore Committee in India is another story. Fundamental to this was also the fact that access to health was an issue of the working class struggles at that time.

The 1980s was a different zeitgeist. Margaret Thatcher had broken the back of the labour movement. Ronald Reagan had initiated the new era of Friedmanism that overthrew Keynesianism. The market as the fundamental arbiter of human life had received a new impetus, indeed it transformed into what has been frequently called market fundamentalism. The NHS in the UK was a victim of this transformation.

Market Mantra

This admittedly brief background has not been discussed in Pollock’s excellent book under review. What this book reveals, with evidence, is the systematic efforts made since the 1980s to apply the mantras of the market in an area hitherto considered a merit good, and therefore invoking state action. That the NHS had been underfunded over the years, leading to its problems, was not in question, rather the prescriptions provided were driven by market fetishism and proved to be its death knell.

Margaret Thatcher’s initial aims included reducing the spending on the NHS, weakening its public sector unions and replacing existing administration with private sector consultants with the vision of a “new public management”. The aim of this was that the NHS should efficiently provide a core set of services, while outsourcing the others to the private sector. Thus cleaning, laundry and catering were initially outsourced, and this was soon followed by selected non-clinical services such as pathological laboratories. This argument, ideologically driven, was that the public sector was wasteful, lacking competition, and that the private sector provided more efficient services. Pollock provides exhaustive data that questions this assumption, but nothing was to come in the way of the privatisation juggernaut.

Economic and Political Weekly July 21, 2007

Soon, long-term care for the elderly was also transferred from the NHS to private nursing homes.

What these moves did achieve were cuts in employment: from 2,60,000 in 1981 to 1,20,000 in 1994. The staff who were employed by the private sector to provide these services were typically paid about 20 per cent less and were not entitled to any other benefits. It is not surprising that evidence soon mounted on falling standards of quality.2 “Incredible as this might seem, 10 per cent of seriously ill patients were found to have suffered malnutrition while they were in hospital” (p 40). Costs did not come down; indeed evidence provided indicates that they mounted, partially on account of the huge salaries paid to the private consultants and managers and the humungous increase in administrative costs. Soon to be axed from the NHS were eye and dental care. At the same time, the ratio of hospital beds and doctors to population fell more and more behind comparable countries.

The Collapse

By 1987 the hospital sector, in the face of a relentless financial squeeze, was on the verge of collapse, leading to widespread public protests, including unprecedented protests from the Royal Colleges. On the advice of a US defence department economist who had been employed by a leading US arms manufacturer, Thatcher brought in the idea of creating “internal markets”, along with some funding increases. Hospitals and community health services were organised into autonomous “trusts”, legally obliged to break even, by selling their services to the “purchasers” at the prices specified in the contracts.3 Treating private patients became much more significant as a result, with more and more services being priced. What these moves also did was to remove the comprehensiveness of healthcare. As a result costs also mounted since the services now lost economies of scale. Another consequence of the disintegration of services was that the system lost its ability to plan rationally for the entire population. The bed availability rate came down from 8.1 per thousand population in 1980 to 4.1 in 2000.

The election of the New Labour in 1997 did little to halt the state-led decline of health services. The government’s schemes now included what was initially called private finance initiative (PFI), later renamed public-private partnerships (PPP), a global prescription these days. One compelling reason for this was the entry of multinational health providers from the US and even South Africa, to tap the newly opened internal markets. Under New Labour, 89 major hospital projects were announced under the PPP schemes. “The average reduction in bed numbers in the first wave of PFI hospitals was 30 per cent, while budgets and numbers of clinical staff were cut by 25 per cent” (p 59). In order to raise funds, hospitals were encouraged to sell land and other assets. Hospitals not commercially viable – as now defined – were closed down leading to a further decline of hospital bed availability. The rising costs of healthcare, with more and more services being priced, also meant that healthcare – assumed earlier as a citizenship right – became inaccessible especially to the poor, the elderly and the needy. For those who could afford it, private insurance was the answer.

Behind these moves were of course the interests of the insurance companies, private hospitals and nursing home owners, pharmaceutical companies, property development companies and management companies – the new czars of the medical industry. Though the growth of the private hospital industry also left it with unused capacities. The PPP schemes meant of course that public funds would now be used to pay for these to be used, further bleeding the resource starved public sector.

One glaring consequence of this is the widening of health inequalities, between regions and between social groups that has been extensively documented. One of the most efficient healthcare systems in the world – spending less than half what the US did, health indices in the UK were remarkably superior to the US – has been destroyed. There are valuable lessons here for policymakers around the world. This excellent book is also essential reading for public health scholars and administrators.




1 This spills over, of course, into the first world war. The most accessible social and health history of this period are in the many novels of the Booker Prize winner Pat Barker. Milk was available to the working classes now, and as real incomes increased, women entered the organised workforce, and they could actually get healthcare, spectacles and teeth! Spectacles and teeth were the first to be axed in the neoliberal regime, as the book under review testifies. Rationing and increases in employment along with welfare measures saw the maximum life expectancy increases in England and Wales in the 20th century during the decades of the wars, despite the loss of young lives.

2 Relatedly, a newspaper report in the Times of Indialast week revealed the outrageous directive to hospitals to reuse bed linen to save on costs. The nurses were apparently advised to “flip the side” and use the sheets again, unless they were really soiled!

3 Decentralisation of this nature, by doing away with both horizontal and vertical cross-subsidies, has led to widespread health inequalities and to economic wastages. The case of China in this regard is well documented.



Applications are invited for Institutional Doctoral Fellowships (Ordinary-3 and Salary Protected–1) in Economics, Geography and Sociology for the year 2007-08 at the Institute.

Candidates must be Post-Graduate in Social Science with 55% marks and should have cleared National Eligibility Test (NET) for JRF/Lecturership held by UGC/ M.Phil. or have published two research articles in reputed journals in social sciences.

The Upper Age limit is below 35 years as on 31.07.2007 (Relaxable by 5 years in case of SC/ST). For teachers and professional staff of research institute holding regular posts the age would be 40 years.

Fellowship Value: Rs.6000/- p.m. for ordinary fellowship plus Rs.12000/- p.a. as contingency grant for two years. Salary Protected Fellowship will get his/her salary for two years plus contingency grant Rs.12000/- p.a.

Last Date for Issue of the Application Form is 31.07.2007 and receipt of completed application form is 31.08.2007.


Economic and Political Weekly July 21, 2007

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