No escape from privatisation for NHS

Fifty years after the National Health Service was founded, hospitals are facing privatisation whichever party forms the next government, health- service managers warned yesterday.

Private companies are poised to take over the running of NHS trusts, including the provision of clinical care, as a condition of investing in the new buildings that the service urgently needs, the Institute of Health Services Management said. Although care would remain free to patients it would be delivered by doctors and nurses employed by private companies.

Fears that NHS hospitals would be privatised have been raised ever since the introduction of the NHS internal market in 1991 - and constantly denied. Now managers say it is inevitable because of cuts in public funding for new hospitals - amounting to 22 per cent between 1994-99 - to which both main parties are committed.

A report commissioned by the institute, from Meara Management Consultancy, said efforts to replace the lost funds with private investment under the Government's Private Finance Initiative have failed because private investors fear the risks outweigh the potential rewards.

Under the scheme, launched in 1992, private companies design and build new hospitals and manage support services such as maintenance and cleaning. The buildings are leased to the NHS which runs the clinical services. More than 50 schemes have been agreed in principle - the largest being a new pounds 170m hospital in Norwich - and more than 150 are in negotiation but none has been given the final go-ahead.

The report says that NHS managers remain unconvinced that the scheme can be made to work. It says NHS trusts are demanding "unaffordable glitz" in new buildings, and health authorities are failing to make proper estimates of future demand. There are also worries about the legality of the scheme.

A second report by researchers at St George's Hospital Medical School says that hospital trusts are cutting back on the number of beds included in new schemes to make them more affordable which will lead to a "shrunken NHS" .The report, to be published in the British Medical Journal this week says patient throughput would have to increase to unrealistic levels to cope with the reduction in beds.

Karen Caines, director of the institute, said: "Both Labour and the Tories are saying they are looking to increase private investment in the NHS. If so, given the dismal performance of the private finance initiative so far, they will have to look at how they can improve it."

Ms Caines said the scheme's track record in the NHS had been one of "delay, bureaucracy, and immense frustration". It was launched without proper thought about the process, and few people understood the implications, she said. "If private finance is to be the way forward then the new government in May needs to act urgently ... to make the system work."

Professor Chris Ham, head of the Institute of Health Services Management at the University of Birmingham, said there was an "inexorable logic" behind the private-finance initiative. "Investors who put their finance at risk will want to have a big say in how the hospitals are run. That will mean a seat on the board ... and a say in the appointment of consultants. If they are not performing successfully the investors will be bound to step in to change the management or the doctors. The end of the route will be increasing privatisation."

Michael Foot, the former Labour leader and biographer of Aneurin Bevan, said the founder of the NHS would be turning in his grave. "It is the thin end of the wedge. Bevan fought on many fronts at the same time against people who said his plan for the NHS was the wrong way to do it, and that if it took on too much it wouldn't work. But it wasn't true. There are better ways of saving money, through preventive medicine."