For Tories, liberty means the freedom first and foremost to make money.The new Tory government has been quick to establish its credentials in the cause of liberty – first, we had the Free Schools, as opposed to the Tyranny Schools that previously existed, ground under heel by the dark forces of elected councillors. Now, we have the liberation of general practitioner doctors in the NHS, with commissioning of treatment and budgeting being handed to them, rather than the dark forces of professional bureaucracy. It is now to be composed of independent and competing hospitals and services working in an internal market, with the state playing the role of merely being an insurance provider that provides the ultimate source of funds.
As many critics have been quick to point out, doctors have spent years training in medicine, and not public administration, and so it is more than likely that in fact their liberation from public bureaucracy will take the form of hiring the services of private bureaucracies to run their funds for them. Indeed, the despicable bureaucrats who will be run out of state employment will probably find themselves being re-hired as shiny and virtuous bureaucrats by the private companies that will provide GP consortia with administrative capacities.
Profitable opportunities
The amount of economic activity in the NHS is immense, and the opportunity to turn that into profitable activity for private capitalists – especially in straightened economic times – is as alluring as an oasis to a thirsty desert traveller. For Tories, liberty means the freedom first and foremost to make money. They regard economic activity taken on by the state as ‘crowding out’ the private sector, a private sector they think is inevitably more efficient and cost effective than government bureaucracy. Of course, part of that ‘effectiveness’ would require hospitals, etc., to go bankrupt if they don’t manage their budget effectively. It would also mean that different management teams would have to be able to take over weaker organisations. This creates its own chaos and inefficiency; and it may not be possible to fully replicate a market within the NHS, because mergers to achieve economies of scale would simply see a return to one large provider – this time in private rather than state hands, which would be politically difficult.
The new NHS organisations will try and save money, and that will mostly come from the terms and conditions of their staff – sweating them, as Marx termed it: providing a service at the same or less cost as before overall, but making their profit out of paying their staff less. Outsourcing NHS administration means breaking up the national pay bargaining mechanisms. Each hospital will be an independent employer, free to negotiate its own terms with staff. Some staff will inevitably do very well out of this, and the Tories would see that as ‘rewarding excellence’ – although, in reality, often enough it will mean merely rewarding those who are in a lucky enough market position to bargain up their position. As has been seen with the banking crisis, monetary incentives aren’t sufficient to obtain good management.
Under trade union law, because they will be separate employers, it will mean that strikes across the sector will be illegal, and union power may be weakened. The example though, of the railways, where nationally solid unions were able to pick off fragmented employers may haunt the nightmares of the new government, and may be part of the reason why there is talk of further restrictions on the right to strike, by setting further conditions – such as requiring a majority of those eligible to vote, rather than simply of those voting, before a strike ballot is valid. Clearly, their love of liberty does not extend to the liberty of workers to organise to defend and advance their bargaining power in the market place.
We have the examples of other attempts to use this model of the state as a commissioning buyer. The Private Finance Initiative (PFI) was used extensively under Labour to fund public projects, for much the same reason. The problem with this is that it means the state has to behave like a private business person, rather than as a taxing power in the land. It becomes bound by its contracts, and as Private Eye has been pointing out for years, PFI contracts are locked-in spending, which cannot be altered in the same way as directly run activities can be. Providers have penalty clauses or the option of suing should the government try and reduce their payments. This means that the current round of cuts will have to come disproportionately from the directly administered part of the state sector.
Tax or borrow?
Those cuts themselves derive from the fact that over the years it has been easier to pay for state spending by borrowing from private capitalists rather than taxing them. Borrowing by the government increases capital’s revenue whereas taxing reduces it overall. The power relation is also different, with interest rates going up if lenders are not happy with a government’s policies providing a powerful tool for disciplining the state. What this means in practice is that far from the division between Labour and Tories being one of public versus private provision, but about different capitalists who gain their revenue via state or private capitalism.
Those elements of the state, such as health, education, social benefits that represent an insurance function could also be provided by the private sector. Health costs have to be paid for by someone. Unemployment must be paid for somehow. This is demonstrated in the United States, where the Obama administration has created compulsory health insurance (much as in the UK compulsory motor insurance pays for medical costs arising from traffic accidents, which are not covered by general NHS spending). Compulsory insurance is a tax by any other name, except it must be paid to competing private insurers who will ensure they make their profit from it. Of course, once the NHS has been transformed into an internal commissioning market, it would only be a small step for the government to transfer to a US style compulsory insurance scheme, and cut the state’s role down to providing a subsidy for those who cannot afford insurance. The same end result occurs as now, except that the formal ‘liberty’ and ‘responsibility’ of buying insurance care moves from the state to individual. The difference is more ideological than practical, saving that with private insurers there is profit to be made.
Of course, the NHS has always had a massive private element – staff in certain sectors have been able to accrue large wage packets from the NHS labour market; pharmaceutical companies and other providers have always been paid through the market. Doubtless, though, a huge campaign to ‘Save the NHS’ will emerge, lead by such unions as Unison which remain committed to keeping a large public sector.
Ultimately, whatever way it works out in the wash, the provision of health and social insurance within capitalism depends on the capacity of the workers as a class to wring payment out of the owners of the world. So long as the wages system exists the fight is on to secure the means of living, no matter how the owners squabble among themselves about how to pay us our due.
Pik Smeet
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