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The government has made it clear where its intentions for the NHS lie. Unions are gearing up for battle. But how are those battles to be fought, and won. Which way to the front?

Battleground NHS: the challenge for the working class


Under the banner of reform, the government is pursuing more and more frantically its unpopular, tired old agenda for the health service, already shown to fail in other public services.

That agenda includes contracting out services from the NHS to private companies motivated solely by profit, and putting financial straitjackets on the foundation trusts. Each trust is then required to stand alone and balance its books each year, proclaiming financial crisis at every opportunity to justify further interference.

Political profile
Meanwhile, the political profile of the National Health Service is being raised left, right and centre. Parliamentary political parties in their conferences have wittered on about its state without much import, but more importantly the trade unions representing people who work in the service are now gearing up for battle.

Or are they? And which way to the front? On 1 November, health unions are organising a lobby of Parliament (with an open meeting of lobbyists at 11 am in Central Hall, Westminster – see What's On, page 5). But what is really going on?

The current difficulties in the NHS are not described, as they would have been 20 years ago, as "cuts in service" but instead as a "financial crisis". The objective overriding all others is to balance the books by the end of this financial year (31 March 2007).

Everywhere within the service priorities are being drawn up with that one sole aim: balance the books. So why was it "cuts" then, and "overspending" now?

Some three years ago when the government was proposing foundation trusts as the future model for NHS provision, there was much opposition from both inside and outside of the trade unions. Most of the opposition focused on the "freedom" which was to be given to foundation trusts either to adopt the new NHS pay and conditions, Agenda for Change, or not to. Or "freedom" to buy and sell property, largely only of interest to London foundation trusts. But the real spectre that the establishment of NHS trusts as foundation trusts had raised was to do with finance.

At a meeting with trade unions at University College London Hospital, the the chairman of the trust, Sir Peter Dixon, was asked by the lead union full-time official, "What will be the effect on brokerage?" As might be imagined, this apparently boring question went pretty much unnoticed at the time, although a lively debate between the two protagonists ensued.

Brokerage is in fact the system whereby the NHS, via the NHS Bank, balances its books at the end of a financial year, so that those trusts that have not had sufficient resources allocated to provide services receive, on an accounting basis, funds from those who have received too much. Or, in latter-day Labour-speak, those who have overspent receive funds from those who have underspent.

What happens to the surplus?
The significance of the question of brokerage in the establishment of foundation trusts is that they are able to keep any "surplus" that they make. So that if applied across the country, brokerage would end. Those trusts with a "surplus", would simply keep it; it wouldn't go back to the NHS.

More importantly it would mean that trusts with insufficient funds that could not "balance the books" could go out of business. In other words, hospitals would close. And given that there are several hundred separate trusts which historically have gone into the red occasionally, the significance of brokerage and its destructive effect become clear.

It was thought that the government policy to ensure that all trusts became foundation trusts by 2008 would occur at the same time as the brokerage system described above would be coming to an end. In fact, the government acted even more dangerously and applied the new payments system across the NHS several years before all hospitals become foundation trusts.

This new system, called Payments by Results, is the embodiment of the destruction of brokerage and it is that which is having such dire consequences across the NHS. That and one other thing.

When Thatcher started to sell off bits of the British economy, she didn't try to flog off much of the NHS, apart from the very damaging policy of competitive tendering, which led to wholesale privatisation of hospital ancillary services (porters, cleaners, domestics, catering). What Blair and his lieutenant Hewitt are now doing exceeds anything Thatcher proposed.

There are a whole host of important functions that the NHS needs to ensure are carried out but which are not directly related to the provision of care to patients. These could range from the delivery of supplies to hospitals to providing legal defences against patients' claims. All of these services are provided by what are known as NHS Arms Length Bodies.

Jobs slashed
Two years ago the government undertook widespread reviews of these bodies, halving them in number to 21. Several thousand jobs were also slashed and many of these organisations are in the process of relocating some or all of their staff away from London.

In an additional and more sinister move many of these bodies were grouped together into an organisation called the Business Services Agency. These included NHS Logistics (the people who supply hospitals with everything from gowns to sticking plasters), the Prescription Pricing Authority (responsible for working out the messy prescription system) and the Counter Fraud and Security Management Service (doing pretty much what it says on the tin).

Blair's idea is to sell off some or all of the parts of the Business Services Agency to the private sector, wholesale. The first such sell-off has been announced in the NHS Logistics organisation, and this has already led to strike action.

NHS Logistics is to be sold (technically probably already has been sold) to a consortium of two companies which are themselves of interest. Neither is British.

The first is DHL, formerly US-owned but now a German private postal delivery company (which we are encouraged to be friendly towards as they have good relations with German trade unions!) and Novation, an American company currently under investigation by the US Senate for anti-competitive practices.

There was, encouragingly, an immediate response proposing firm industrial action in the form of strikes. Such a response from organised labour facing these sell-offs is long overdue. But there are many danger signs emanating from this dispute. The first is that one of the unions involved, the TGWU, actually voted against strike action, leaving Unison exposed. Second, the proposed industrial action was telegraphed miles in advance. This is, of course, partly a result of the draconian, near-fascist anti-trade union laws, which render effective industrial action virtually impossible, but it is also a reflection of a deeper malaise.

Real struggle
A dispute is a real struggle between workers organised in their trade unions and their employer. Often what precedes the dispute is a campaign, in essence an attempt using publicity to get the employers to change their minds. Sometimes, and mostly during the past 20 years, campaigns of this nature have completely supplanted disputes between employers and workers.

One of the worrying things about the NHS Logistics dispute – now essentially over (see "Cul de sac", page 2) – was that it showed all the signs of being a campaign. The two days of strike action were targeted to take place, the first at a meeting of the Trade Union Congress and the second at the Labour Party Conference. The conferences came and went, and there were no further planned days of strike action.

What then was to be the effect of industrial action if its objective was solely to "raise the profile of the dispute" as appears to be the case here? Any such dispute has to have as its core the objective of hurting the enemy, the employer. If it doesn't then it may as well not be embarked upon. This necessary steel was absent from this "dispute".

This was a difficult situation, as both sides, especially the government, were looking at the situation in NHS Logistics as a precursor to what happens in the far larger and more vulnerable Business Services Agency. If the Logistics organisation can be effectively flogged off, then many, many thousands more staff will face the same fate.

Far too much effort is being put into changing the minds of people who are beyond the reach of rational argument. If that were not the case, it should have been easy to demonstrate that NHS Logistics, an organisation which, in strict economic terms, is making a profit for the NHS of several million pounds a year, should not have been sold off. There was simply no business case for it, contrary to all government argument.

So the objective of the dispute had to be to hurt the government, not to provide a sound-bite opportunity at a Labour Party Conference.

Unison worked very hard to ensure that the Labour Party conference adopted a motion against this kind of sell-off – so hard and effectively that it was adopted close to unanimously. At the Labour Party NEC's subsequent meeting this decision of the more broadly based conference was overturned in order that the sell-off could go ahead. Who led the charge to overturn the decision? One Gordon Brown, erstwhile saviour for some in the trade union movement.

More of the same
It is clear that should Brown ever take over from Blair (not due to go till next May), we can expect more of the same. More sell-off, more stand-alone book balancing.

So, yes, the NHS does face serious difficulty. ("Crisis" is perhaps a word that should be reserved for matters of actual life and death, rather than potential.) And part of the danger lies within the work force. More particularly, there are trade unions that at present are tiptoeing around the edge of the problem. They don't want to break with the tradition that has got us into this mess in the first place.

Don't leave it to Labour
Leaving decisions of this magnitude (or of any magnitude) to the Labour Party is clearly not the solution. It began over 100 years ago and there has always been an argument about it, but the view of those who had prevailed throughout the period – that we send members of our own unions into Parliament via the Labour Party to carry out our objectives – was and is seriously flawed.

Something new needs to be done: dialogue and exchange within organised labour must be its precursor. It is important for there to be a good turn-out on 1 November. But it would be a dangerous illusion to think that convincing your MP to vote in a particular way will solve the problem.