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Conservative Government to Privatise the NHS and Save the Economy from Bankruptcy

Politics / NHS Aug 17, 2009 - 12:40 AM GMT

By: Nadeem_Walayat


Best Financial Markets Analysis ArticleThe heated healthcare debate across the atlantic last week that targeted the NHS as a bureaucratic nightmare when it comes to actual delivery of prompt and efficient healthcare has started to reveal cracks in the Tory party public position on the NHS as Tory MEP's and MP's are rebuked by David Cameron for breaking with Tory front bench policy of continuing expansion of funding for the NHS regardless of the state of the country's finances so as to maximise votes amongst the 1-2 million voters that are either directly or indirectly employed by the NHS.

My analysis of last week (America Attacked During Obama Health Care Debate by British NHS Army) illustrated many aspects of why the NHS has become a funding black hole that fails to deliver competent healthcare despite the fact that under new Labour funding of which has tripled to £120 billion, whilst at the same time productivity has fallen by 5% over the last 10 years. Let me repeat that, the funding for the NHS has TRIPLED whilst productivity has FALLEN by about 5%! which illustrates what is meant by a funding black hole.

However that is the tip ice-berg where the NHS is concerned as my ongoing analysis has illustrated over the past 3 years that there now exists a huge gap between the healthcare provision for affluent areas and deprived areas of the country that has resulted in a gap of as much as 20 years in life-expectancy between a few miles distance which is more commonly known as the postcode lottery.

Even the Lib Dem leader, Nick Clegg has spoken out at the huge disparity in health services in his home city, Sheffield.

"It is an outrage that social mobility has slowed, not increased, under the Blair-Brown years. It is an outrage that in Sheffield, where I’m an MP, life expectancy in the poorest wards is a full 14 years below the life expectancy of those living in the wealthiest wards. Your life chances are now set by the circumstances of your birth as never before."

The difference in the quality of health care is not so surprising given that those that reside in affluent areas tend to be from the higher educated professional middle classes that would not stand for incompetent healthcare services and hence put pressure on the local PCT's to channel funds into these areas. Whilst those in deprived wards have a greater tendency to suffer in silence in the face of under resourced and a barely competent health service.

Where has All the Money Gone ?

What has happened with GP Pay illustrates more than anything else of where the money has disappeared to. When Labour came to power in 1997 average MP pay was £43,722 against average NHS GP pay of £44,000, so both were inline with one another at that time. However as the above graph clearly illustrates in 2003 something started to go seriously wrong with GP Pay which took off into the stratosphere as GP's decided to award themselves pay hikes of more than 30% per annum at tax payers expense that has lifted average GP pay to £126,000 per annum against £64,000 for MP's.

How could this happen, unfortunately this was as a consequence of the now infamous GP contracts where basically devious greedy GP's hoodwinked gullible incompetent Labour government health ministers into signing upto contracts which were meant to deliver greater value for money for the tax payer but were designed to do the opposite and resulted in GP's pay doubling whilst at the same time cutting back on hours worked. This was not only a total fiasco for the nations health and finances but also ignited jealousy amongst MP's that directly led to the adoption of the policy of claiming expenses to the maximum so as to fill the ever widening gap between MP's and NHS GP's, as MP's could NOT get away with awarding themselves pay hikes of 30% per annum without losing their seats at the next general election in response to voter outcry, therefore across the board systematic abuse of expenses started to take place which basically means real average MP pay is currently approx £98,000 per annum.

NHS Bankrupting Britain

The country is suffering from a series of public spending black holes from the £800 billion and growing public sector pensions deficit to the NHS that wastes as much as 90p in ever extra £1 spent on it. The governments answer so far has been to print money and raise taxes on the rich to 50%, though basic rate tax payers should not delude themselves as come post election 2010 the basic rate tax will be heading higher towards a target of 30%, and not forgetting the semi-stealth tax of 23.8% of NI, which already brings the real tax rate for ordinary tax payers to 43.8%.

The budgetary crisis hitting Britain is most clearly illustrated by the way the Chancellor, Alistair Darling has upped his budget deficit expectations over the next 4 years from a total of £120 billion in November 2008 to £608 billion in April 2009, this is still destined to grow much higher and contrary to the political spin the debt will NEVER be repaid as I elaborated upon earlier - Labour Government Enslaves the British Tax Payer to a Decade of Paying for the Bankers Crimes

The Labour party has been on a debt fuelled spending binge that as a consequence of the bankruptcy of the financial sector has gone parabolic during the last 18 months which is destined to lift total tax payer liabilities from £1.75 trillion at the end of 2007 to £3.9 trillion by the end of 2010.

Instead of meeting the budgetary crisis head on, both major political parties continue to lie to the electorate when they both commit to real terms growth of NHS spending and other public services, despite the budget crisis demanding across the board cuts of as much as 15%!

NHS Spending Black Hole

The NHS is a spending black hole that has grown to more than 10% of GDP from 3.5% of GDP in 1948 that carries more than a million passengers on its its gravy train. As mentioned before every extra £1 spent on the NHS only generates barely 10p in increased output. Britain spends 3 times the amount on the NHS per capita than most Eastern European States that still somehow manage to delivery a better health service which leaves Britain languishing at the bottom of the European Health leagues.

Incompetence, greed and waste are the operate words, NOT value for money or putting patients first as illustrated by an opinion poll amongst 156,000 NHS staff that found that patient care is not a top priority for the NHS. It is no wonder that patients in their hundreds of thousands are seeking private health screening and GP services for if the truth of the matter were told, if patients left themselves to the NHS then they would in many cases be dead before the NHS got around to calling them in for their consultations from the waiting lists. Why wait as long as 18 months for an NHS screening appointment when you can have one next week for £150? That is if the patient makes it past the 2 minute GP diagnoses sessions that are akin to GP's swiping patients in and out of their doors as credit cards to bank profits on, so much for the objection that a privatised NHS would result in profits for private companies.

According to the National Audit Office, the number of NHS GP's has increased by 15% from 26,833 to 30,931 since 2003, this is as a consequence of the GP contracts debacle, at the same time GP's are working on average 7 hours per week less, therefore a cut in productivity of 18% on a normal working week and thus on balance resulting in little improvement in patient healthcare despite a tripling in costs, with the National Audit office reporting am actual continuous year on year loss of overall productivity.

The government has attempted to address the impact of over payment and reduction in services to the public by the implementation of Super Surgeries, which is an attempt to by-pass traditional GP surgeries that have proved inflexible and resistant to change by means of delivering health care through Poly Clinics or Super Surgeries that aim to provide all in one centre's with better management of GP's so as to deliver an improved standard of diagnoses and preventative care which is lacking under the existing system. An additional major improvement will be in the offering of longer opening times so as to meet the needs of the working population that tends to be ignored by the present GP system where working patients are required to usually take half a day or a full day off work that's IF they are able to get an appointment in the first place.

Super Surgeries aim to give the patients the real choice of GP's amongst a number of professionals under strong management guidance, rather than the current system where the GP's are left to their own devices which usually results in diffusion of responsibility amongst GP's within small family surgeries and therefore putting of competent diagnoses to the next GP, with firm management procedures in place to prevent a lax working environment from developing.

The British Medical Association (BMA) (Representing GP's) during much of 2008 fought against the implementation of super surgeries by compiling and presenting a petition of more than 1 million signatures to Downing Street against the implementation of 150 ‘Super Surgeries' and for existing GP Surgeries to be protected.

The Health Minister, Ben Bradshaw in response lashed out at the scare tactics accusing the BMA of "misleading and mendacious" behaviour in getting patients to sign up to the petition.

"I am not surprised the BMA has collected so many signatures, given the misleading and mendacious nature of its campaign.

"If I were to run a campaign making false claims that something terrible was about to happen, a lot of people would sign my petition too.

"We have received widespread anecdotal evidence of patients feeling pressurised to sign the petition as well as practices telling their patients blatant inaccuracies about local plans." he said.

NHS Wasting Tens of Billions Every Year.

The approximate amount of extra real terms spending per year is put at £47 billion, of which 50% has gone on pay rises and of the remaining, 20% on a series of wasted initiatives and projects such as the billions spent on a computer system that still does not work. This means that the more money that has been spent on the NHS the less productive it has become as staff (primarily doctors) lose the incentive to work more and hence cut back hours. After all if your pay was tripled for the same work, would you opt to work more or less ?

Privatise the NHS and Save Britain.

Margaret Thatchers government that inherited an economic crisis from the last Labour government was given the green light by the British electorate to abandon the consensus that had existed since world war 2 of a creeping socialist bureaucratic state and set about systematically dismantling inefficient loss making stat run entities in favour of free market competition that aimed to deliver choice as well as efficiency.

Similarly today's Conservative party on winning the next election has in its means to turn the current economic crisis into a golden opportunity to embark up on a similar radical departure of the last 17 years trend of expanding socialism that had manifested itself in the huge growth of the bloated public sector over the past 12 years which was preceded by 5 years of the the weak dithering Major government.

It may now be lost in the mists of time but there was a missed opportunity during the Thatcher years with regards to real market orientated reforms of the NHS with a view to putting the patient first, unfortunately of the two remaining objectives for reform during Margaret Thatcher's third term of either the NHS or local government taxation, Margaret Thatcher sought to reform local government taxation by means of the community charge which became to be known as the poll tax and resulted in the downfall of her premiership. Had she chosen reform of the NHS then how things may have turned out differently for both her premiership and for the healthcare of Britain.

The wholesale privatisation of the the NHS could yield an estimated £250 - £300 billion, as well as the positive impact of real competition between hospitals and between GP practices rather than the old boys network that prevents GP's from competing against one another that exists today. This would put the incompetent out of business and push capital and revenues towards the more competent practices resulting in huge cost savings to the tax payer of up to 30% that ARE necessary given the budgetary crisis.

Universal Private Healthcare Solution

A privatised National Universal Healthcare system could function by means of every person in Britain having a National Health Debit Card that would enable payment cover for all accidents and major illnesses, as well as annual checkups, where the patient has the choice of where to PURCHASE healthcare from ANY GP or hospital of their choosing at anytime, much as consumers today using debit cards to purchase electrical goods of their choice from any outlet of their choosing. Thus the current divide between affluent wards and deprived wards would disappear as the MONEY WOULD WALK WITH THE PATIENTS, as patients would only spend money in the competent well run institutions rather than the current system of healthcare which has NO INCENTIVE TO PUT THE PATIENT FIRST, NONE!

Privatisation of the NHS, rather than a vote loser, I believe could be a major vote winner for the Conservatives as it would fire the imagination of the British electorate that finally they would be getting a healthcare system that actually pulls out all the stops to put them first as health delivery institutions finally have a monetary incentive to do so, which means quick, efficient and comprehensive treatment. Rather that the current system of who makes the loudest noise i.e. complains the most, gets more favourable treatment whilst the quite are left to whither and die due to systemic neglect.

Not only would the patients win but also healthcare workers would benefit both psychologically from being part of a functioning health care system and monetarily incentivised to perform better and hence have a far more enjoyable career than the current one in an NHS that they KNOW IS SYSTEMICALLY FAILING PATIENTS.

Do the Conservatives Actually have the Bottle to Say What They Believe ?

That is the big question as David Cameron in public anyway has repeatedly and forcefully denounced any of his colleagues that step out of line and criticise the NHS is any form. So basically he is saying to his many colleagues that they need keep smiling and lie to the electorate on their views of the NHS so as to win votes at the next election. Perhaps the British electorate should elect the party at the next election that they believe to be the most truthful to their views in which case Both Brown and Cameron come across as Pinocchio's! Especially as we watched MP's from both parties squirm and lie to the electorate over the expenses scandal.

By Nadeem Walayat

Copyright © 2005-09 (Market Oracle Ltd). All rights reserved.

Nadeem Walayat has over 20 years experience of trading derivatives, portfolio management and analysing the financial markets, including one of few who both anticipated and Beat the 1987 Crash. Nadeem's forward looking analysis specialises on the housing market and interest rates. Nadeem is the Editor of The Market Oracle, a FREE Daily Financial Markets Analysis & Forecasting online publication. We present in-depth analysis from over 300 experienced analysts on a range of views of the probable direction of the financial markets. Thus enabling our readers to arrive at an informed opinion on future market direction.

Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any trading losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors before engaging in any trading activities.

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18 Aug 09, 17:57

The only reason the NHS has become a funding black hole is because of the internal market and encouraging business management in the NHS. It has been semi-privatisation and 'Americanisation' of the NHS that has been its downfall. Also a lot of the funding given to the NHS was to rebuild its chronically underfunded (thanks to the thatcher years) hospitals and clinics. Look at the bigger picture.

19 Aug 09, 10:01

Americanisation of the NHS ?

Where is there patient choice in the NHS ? NOWHERE !

It is run like a soviet style institution, where there is ONLY one supplier of healthcare to over 90% of the population.

Imagine if there were only ONE state run supermarket, yeh the shelves would be empty and long qeues at the checkout !

Even the russians eventually abandoned that model of healthcare!

The patient needs to come first

Mark Booth
12 May 10, 06:45

leave our NHS alone. We in Britain have no desire to be like america. The value provided by the NHS ensure all get health care in this county no matter what there problems are and can not be rejected. The many protect the few and it is fantastic. Maggie Thatcher is seen by most as the most evil vile creature ever to walk the earth. She only stayed in so long by forcing already finacially crippled familys from vating by taxing it. Americas social policys are discusting long live Britain, long live a socialist strong Europe to showw the way to the world.

12 May 10, 19:36

The NHS is bankrupting britain.

The NHS official statistics are phony.

Look at mid staffs hospital that killed 400 of its patients but rated ITSELF as one of the best hospitals in England!

In reality as the damning independant inquiry revealed it is by far the worst !

a few days later another 20 so called best hospitals were also found to be basically crap !

The whole NHS operates as such without any REAL accountability.

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