The great lie we are told about the NHS

The internal market does not foster efficiency, it merely allows the blame for cuts to be passed down

Much has been made lately of the failure of government to fund social care, and the resulting pressure on the NHS. However, the crisis here is not a peculiarly British phenomenon. Most health systems around the world are facing the same issues: demand that is seemingly infinite and expanding exponentially, while the supply is, at best, constrained.

Life expectancy in the UK has increased by approximately four months per annum for each of the past 30 years. When I graduated as a doctor in 1983, you retired at 65 and could expect five years or so in which to draw your pension. Now, you can be retired for almost as long as you were in work. It’s not hard to see why both healthcare and pensions systems are creaking at the seams.

Yet, from northern Europe to Australasia, different models do provide healthcare of a high standard with equality of access. What none of them has chosen to do is copy the internal market that has existed in the UK since the 1990s.

The British theory is this: all state-run enterprises are innately inefficient and uncompetitive; the privatisation of public services was “one of the central means of reversing the corrosive and corrupting effects of socialism”, as Margaret Thatcher wrote in her memoirs.

Of course, Mrs Thatcher did not dare to privatise the NHS, but she did come up with the internal market, purportedly believing that the inefficiencies inherent in the NHS would be overcome if we obliged it to operate under the “rules” of a market.

In its current iteration, this means that budgetary responsibility is handed down to local commissioning groups who “pay” hospitals and others on an item-of-service basis. The price of these items is determined not by “market forces” but by dividing the total sum of money available by the number of items needed. The internal market no more transforms the NHS into a business than playing Monopoly with my daughter makes me Donald Trump. What it does do is create wholly artificial rules whereby the pile of money you are given at the start of the game can be spent, and if you generate a surplus, you win; if you don’t, you lose.

Winning means that you can expect a visit from Jeremy Hunt. Losing means you can expect your own slot on the Today programme and to be put into “special measures”.

The internal market doesn’t generate capital that could, in some theoretical world, be returned to shareholders in order to fund more/ better/new healthcare. The flaw is that the internal market isn’t a market at all: the payer and payee are, in effect, one and the same. It is genuinely more akin to a board game than a market.

What the internal market does do is allow the devolution of blame to be handed down to those responsible for delivering care (the local NHS managers). It allows successive governments to continue to peddle the lie that there is actually more than enough money to pay for all the services we need, if only the wretched doctors and nurses could be bludgeoned into spending it more efficiently. By tinkering at the margins of that which is permitted under the rules, putting up parking charges here, confiscating the coffee and biscuits there, hapless managers are just playing NHS England’s game.

The internal market has been with us through the terms of office of six prime ministers. It is a bastardised hybrid of private enterprise and it doesn’t work.

The crisis in the NHS is political, not commercial. It needs both a shortterm plan and a long-term plan – the former so that next year’s flu epidemic and the one after that don’t come as a surprise (again), and the latter so that we can all have a part in deciding what, and how, healthcare will be funded in the next generation.

That requires the boldness and leadership that the Clement Attlee government demonstrated in setting up the NHS 70 years ago, something which was accomplished within a single term of office. The debate we need doesn’t have to be endless. It should take the form of a Royal Commission – something called for from across the political divide. And we have to get on with it.