Michael Meacher - Labour's Future

It is becoming increasingly clear that the model being imposed on the health service is the wrong one. The strategy isn't working. NHS trust deficits have reached nearly £1bn and hospital treatments are being deliberately postponed for several months to save money. These are just early signs of the effects of the rapidly emerging healthcare market. And as Patricia Hewitt and David Cameron vied last week over who will provide the bigger role for the private sector in the NHS, the Audit Commission has warned that trusts' financial volatility will continue as the volume of private-sector provision increases and payment by results is applied more widely.

Other cost-reduction plans, to prevent a projected deficit of £1.6bn by the end of this fiscal year, include service cuts and hundreds of bed closures, some in new PFI hospitals such as the Queen Elizabeth, in Woolwich, south London. And these are in addition to recruitment freezes and staff redundancies. Though there is a widespread shortage of doctors, BMA figures suggest a tenth of junior doctors cannot find a UK post.

This growing instability is seen by New Labour as the price to pay for strengthening incentives to efficiency. It believes that introducing competition and giving patients a choice of provider will lead to greater equity as they are able to switch from poorly performing hospitals to better ones; and this will push up standards as providers improve in order to recruit patients, or else risk being forced out of business. This will in turn lead to greater efficiency as hospitals compete to drive down costs and money flows to the most popular ones.

Such is the theory behind the new NHS market. But there are good reasons for thinking it will not work like that, and may indeed produce results that are perverse and counterproductive.

Under the government's new centrally fixed pricing system, providers will find some services and treatments more profitable than others. To balance their budgets they will compete for those patients that are most financially rewarding while excluding, if they can, patients on whose treatment they would make a loss. Another threat to equity is that some patients are clearly less able to assess the medical options open to them and, even if they could, may well be prevented on income grounds from travelling to distant providers.

Quality may also become hostage to the emerging private market. Where a patient treatment cost is higher than the national tariff price, but the provider cannot get out of doing the work, there will be pressure to drive down costs at the expense of quality.

Efficiency in delivering healthcare does not work as in classical economic theory, where many competing providers enter or exit quickly and costlessly. Hospital services require substantial capital investment to obtain economies of scale, and inevitably involve significant time lags to respond to demand. Moreover, the transaction costs of the market - providing information, operating the pricing system, and monitoring and enforcing contracts - are very high and a serious barrier to value for money. If market logic is pursued, and hospitals are allowed to close, services dismantled and trained professionals dispensed with, the wastage of public resources and investment will be huge.

Nor is the new NHS market even a genuine market. It is rigged to protect private entrants against fair competition. Privately run independent treatment centres were introduced in December 2003 to carry out routine hip, knee and cataract operations on NHS patients at a cost of £2bn a year. For standard low-risk surgery they are paid substantially more than the rates laid down in the NHS national tariff. Another key aspect of NHS privatisation has been the courting of PFI to secure new buildings without having to raise taxes or admit the cost as part of public debt.

There are two things wrong with this whole approach. First, it's the wrong model; there is no evidence that private-sector health is more efficient, cost-effective or better-managed, or even that it provides net additional resources. Rather it is ideologically driven, and bought at a high price in terms of the enormous transaction costs and waste that the market has generated. What is needed instead is a genuine public-service model. That does mean tackling the delays and queues that were allowed to develop: partly by the huge extra resourcing steadily coming onstream; partly by greater internal management transparency to drive up standards; and partly by stronger local democratic involvement and a rigorous system of complaints and redress. But at the same time it means restoring the principles of comprehensiveness, universality and equity - and the professional morale that goes with them - that the market has subverted.

Second, the passion for PFI, outsourcing and privatisation is a fearful distraction from the real underlying issue for the NHS - how to shift from being an illness-alleviating service to a health-creating one. Less than 1% of the NHS budget is spent on the promotion of healthy living - improving diet and exercise, tackling smoking and excessive drinking, reducing stress at work and providing better housing and domiciliary care for the elderly and disabled, to reduce demand on hospitals. The canard about the need for private healthcare is irrelevant to what's really required.

Posted by Michael Meacher at 06:56 AM | Permalink | TrackBacks (0)

Proponents of civil nuclear power will use any and every opportunity to press their case. Small wonder then, that the Russia-Ukraine gas price dispute should have been so quickly deployed by nuclear power advocates. Brian Wilson, former energy minister and now a power industry consultant, told newspapers that the row highlighted the need for the UK to establish security of supply via “indigenous” sources, namely nuclear. Like many of the arguments used to promote nuclear power, this one doesn’t stand up to much scrutiny. The UK does not possess its own uranium deposits and would have to import the fuel, just as it will be importing Russian, Algerian and Norwegian gas.

A similarly weak claim was made last year, when nuclear energy advocates promoted their cause on the dubious basis that a civil nuclear power programme would be carbon neutral and was needed to ensure the UK met its Kyoto targets. Neither claim holds much water. The UK is one of only two countries within the EU (the other is Germany) who look likely to meet their obligations under the Kyoto protocol. Equally, though the actual generation process may be carbon emission free, the building of the plant – and the extraction of the ore – are far from being environmentally virtuous.

Then there is what to do with spent fuel. The National Decommissioning Agency (NDA) recently raised its estimates of the cost of decommissioning and nuclear waste management to £70,000 millions (7% of GDP!) a colossal cost to the taxpayer. Already there are ten thousand tonnes of high-level and intermediate level nuclear waste in this country, particularly at Sellafield, and a DTI white paper made clear that this would rise fifty-fold to half a million tonnes by the end of this century – even with no new nuclear build. The Government’s Committee on Radioactive waste management, is now saying that a new programme could create no less than a five fold increase in lethal long lasting highly radioactive nuclear waste. Yet no one in the world has found a safe way of dealing with it. These cannot be sensible circumstances under which to produce more.

The obvious, and desperately needed, alternative to nuclear is a massive expansion in renewable sources of energy- wind, biomass, solar, tidal and wave power. On grounds of both principle and cost, the case against nuclear power generation is strong: nuclear is far more expensive. The Government’s Performance and Innovation Unit estimated electricity generating costs from onshore wind at 1.5-2.5p per kilowatt hour by 2020, from offshore wind at 2-3p, and from gas at 2-2.3p. By comparison, generating costs from nuclear power were estimated at 2.5-4p per kilowatt hour, half as expensive again as gas and up to twice as expensive as wind. In a competitive capitalist economy that ought to be a killer point. We should ask why this is not paramount in the current argument about whether or not to restart a civil nuclear energy programme.

At present, we have the worst of all worlds. Contribution from renewable sources to electricity generation is still tiny – about 3% - because the Government has never given the renewables industry the lead that has been given in, for example Denmark and Germany. The UK government did make a clear declaration to push strongly down this route in its energy White Paper of February 2003, but has done almost nothing to deliver on the scale required. Yet the extent of untapped windpower capacity in Britain is recognised to be far ahead of both Germany and Spain, the EU’s leading markets, and on a global basis above Texas, the previously strongest market.

It is not that renewables have failed or are not up to the job. It is rather that they have never been seriously tried. Far too little has been done to deal with the principal barriers to expansion – planning blockages, aviation issues, grid network constraints, and grossly inadequate funding, all of which were correctly identified by the Energy White Paper of February 2003.

Nuclear currently accounts for about 20% of electricity generation in the UK. When all nuclear plants except Sizewell B in Suffolk are closed by 2020, the nuclear contribution will fall to some 4%. By contrast, the government is committed to achieve its target of 10% electricity generation from renewables by 2010, and has indicated its aspiration to achieve 20% from renewables by 2020, as most of the rest of Europe are intending. Renewables is the environmentally clean, cost effective, waste-free energy source for the 21sr Century. We need nuclear like a hole in the head.

Posted by Michael Meacher at 06:58 AM | Permalink | TrackBacks (0)

Born in 1939, Michael Meacher was educated at Berkhamstead School, New College Oxford and the London School of Economics. He joined the Labour Party in 1962 and has been Labour Member of Parliament for Oldham West (now Oldham West and Royton) since 1970. He contested Colchester in 1966 and Oldham West in 1968.

Political career

His political appointments comprise:
Under Secretary for Industry, 1974-75
Under Secretary for Health and Social Security, 1975-79
Candidate for Labour Party Deputy Leadership, 1983
Member of Labour Party National Executive Committee 1983-89
Member of Shadow Cabinet 1983-1997
Principal Opposition Front Bench Spokesman on: Health and Social Security 1983-87
Employment 1987-89
Social Security 1989-92
Overseas Development and Co-operation 1992-93
Citizen's Charter and Science 1993-94
Transport 1994-95
Employment 1995-96
Environmental Protection 1996-97
Minister of State for the Environment and Privy Counsellor May 1997 - June 2003

He is a Parliamentary representative and member of UNISON.

He was a member of the Select Committee on the Treasury and Civil Service (1981-83).

His other affiliations are the Fabian Society, SERA and the Child Poverty Action Group.

His hobbies include reading, sport and music.

Posted by Michael Meacher at 06:23 AM | Permalink