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Thursday, 17 May, 2001, 13:11 GMT
The NHS and the private sector
The number of beds in private hospitals and homes in England
The number of beds in private hospitals and homes in England
How the National Health Service and the private health care sector interacts has been the subject of deep political divisions for many years.

Health is a devolved matter dealt with domestically by the Scottish Parliament, and the Welsh and Northern Ireland assemblies. Westminster retains UK-wide powers over medical regulation and safety.


The limited resources of the NHS have led both patients and politicians to look to the private sector to provide solutions for their health care needs.

The private sector has operated throughout the NHS's history.

Consultants have always been able to do some private work, though the Labour government are planning to stop them doing private work for seven years after they qualify.

When the Conservatives were in power during the 80s and 90s, there was concern among its critics of "creeping privatisation" of the NHS, with private-sector style management techniques, and the contracting out of services like cleaning.

If the Conservatives gain power in this election, they plan to increase the amount of care provided in the private sector by encouraging people to take out private health insurance.

But, to the shock of the party's traditionalists, Labour too is now looking in a similar direction - though it insists its system will see the private sector delivering the goods within the NHS - rather than sending patients outside to find treatment.


In November 2000, Health Secretary Alan Milburn signed a concordat with the private sector.

It is very wrong of the government to get into bed with the private sector which, over 50 years of the NHS, constantly tried to undermine the concept of state healthcare

David Hinchcliffe,
chairman of the Health Select Committee
The agreement, first outlined in the NHS Plan, allows NHS patients to be treated by NHS or private staff in a private hospital.

It covers routine planned surgery, emergency and intensive care, and intermediate care, which covers preventative and rehabilitative care.

The move, by a Labour government, was seen as a major shift from the anti-private sector policies held by Mr Milburn's predecessor, Frank Dobson.

But in reality, many NHS hospitals already had local agreements with the private sector, and the lines between NHS and private sector provides have become blurred.

Independent providers already have contracts to provide services to the NHS, usually psychiatric care.

In the short term, the concordat was designed to help the NHS deal with the expected winter pressures.

However critics say the move could lead to an expansion of private sector, potentially damaging the NHS.

It is feared closer links could create a two-tier health system, with the private sector focusing on certain areas of healthcare, even poaching staff from the NHS.

David Hinchcliffe, Labour MP and chairman of the Health Select Committee said at the time the concordat was announced: "It is very wrong of the government to get into bed with the private sector which, over 50 years of the NHS, constantly tried to undermine the concept of state healthcare."


The way the private sector is regulated has also been scrutinised.

The Care Standards Act, last July, outlined how the Commission for Health Improvement would be able to monitor the care of NHS patients looked after in private hospitals.

The National Care Standards Commission will be established next year to monitor private healthcare facilities including hospitals and nursing homes.


The Private Finance Initiative (PFI) is a controversial way of funding new hospitals.

The Conservative government introduced it in 1992 in a bid to involve the private sector in the public sector.

It was seen as a way of accessing extra funds.

Since 1994 the NHS has had to consider private finance for all capital schemes.

When there's a limited amount of public-sector capital available, its PFI or bust

Alan Milburn,
Then health minister
But critics of the system say that under the Conservatives PFI projects failed to materialise.

When Labour came to power in 1997, 30m had been spent on consultancy fees, but no hospital contracts had been secured.

Labour was against PFI when in opposition, but changed policy on taking power.

Its government announced 14 PFI projects would go ahead while a further 23 were cancelled.

Figures from the House of Commons health committee in 1999 showed there were 22 projects worth over 10m each, 18 of which were funded through PFI.

Explaining the U-turn, the then junior health minister Alan Milburn said: "When there's a limited amount of public-sector capital available, its PFI or bust."

A report by the independent think-tank The Kings' Fund last year said there was no "strategic view" of how the new-build hospitals would fit into the hospital structure.

The public sector - the NHS - bears the risk that by the time the scheme is complete, demands on the service will outweigh its capacity.

It adds that the risk the public sector takes on with PFI have never been assessed - and that if they had, some of the schemes being built now would not proceed at all, or that some may change.


But the Labour 2001 manifesto makes the most surprising reading for many of its members.

It sets out how the private sector could be increasingly involved in delivering NHS services - and doesn't make clear whether the line will be drawn at managing buildings or the actual clinical services themselves.

The Institute for Public Policy Research, the highly-influential Blairite thinktank, has proposed to government that the private sector could, in the long run, provide health and community services for primary care trusts on a contractual basis.

It argues that Labour should "reject the defeatest strand of thought which maintains that all forms of private involvement [in the public sector] should be put on hold because the risks are too great and the politics too hot."

It appears that the Labour leadership has taken this on board.


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