Authors: Tom Bower
After another argument with Brown about the NHS, he resolved, once again, never to retreat. His Alamo was a breakfast in Downing Street for Britain’s top forty private health executives.
‘I know you’ve been duped in the past,’ he told them, ‘but now we do want to co-operate with the private sector.’ He then declared: ‘I no longer care who provides the service so long as patients receive the right treatment at the right price.’ No one at the end of the seductive speech doubted his commitment to the NHS contracting treatment from the private sector.
First, Milburn needed to seek Crisp’s agreement. ‘We must give these poor buggers a choice,’ he said.
‘Patients don’t want choice,’ replied Crisp, convinced that Milburn, to avoid alienating Brown, ‘wasn’t yet ready to come out in favour of the private sector’. In his distrust of politicians, he dismissed the minister for ‘playing both ends’.
‘Well, let’s test that hypothesis,’ Milburn retorted.
Some 200,000 patients were treated for cataracts every year. All waited about eighteen months, and Milburn blamed the doctors and bureaucrats for the delay. ‘They’re taking the NHS for a ride,’ he told Blair. The elite consultants were especially to blame. Their work practices were riddled with abuses, in particular keeping their NHS patients waiting for treatment until they switched to pay the same consultant for private care. Targets could not cure the exploitation. ‘We must shift from “NHS delivery” to “NHS reform”,’ agreed Blair. The removal of cataracts was offered to the private sector. Confronting the forces of conservatism would be a question of carrots and sticks, agreed Stevens’s team.
The first stick with which to beat the doctors came in the form of privately owned clinics, known as independent sector treatment centres (ISTCs), which were created to provide a free alternative service. Competition would shame the NHS into change. The next step was to
sign new contracts with the BMA. Milburn reported to Blair that his negotiations had been completed. To end their abuse of the system, the consultants’ annual starting pay would be increased from £52,000 to a maximum of £110,000.
‘Alan, I like what I hear,’ said Blair, ‘but is it truly radical?’
‘Yes,’ replied Milburn, knowing that Blair was interested only in the headline, not the details.
The doctors needed to vote their approval. Milburn’s offer was rejected. The consultants resented risking their private income and allowing NHS managers to fix their working hours. But Milburn refused to compromise. The dispute was black and white: the government against greedy doctors. Negotiations resumed.
Other negotiations were equally complicated. Under the Agenda for Change, Milburn’s detailed plan for all the NHS’s staff with the exception of doctors, the government agreed to give a million NHS employees big pay increases in exchange for their learning new skills. Better-educated staff appealed to Blair in his quest for an improved society. Focused on daily performance statistics, he welcomed the headline that, to ‘modernise the NHS’, nurses’ pay would increase by 5 per cent. He did not ask whether their productivity would improve, nor whether pay increases could be equated with modernisation.
Blair also failed to question Milburn’s agreement with the GPs. In 2001, they had threatened to resign if their demands for more money, more autonomy and less work were not met. Instead of rejecting their demands outright, Milburn delegated the negotiations to the NHS Confederation. Two years later, there was a stalemate. The BMA was demanding that GPs be able to opt out of working unsocial hours, including weekends, in exchange for reducing their annual salaries by £7,000. The government demanded a reduction of £12,000. ‘I’ve got to make a decision,’ John Hutton, the junior minister, told an official. ‘I know it’s the wrong decision but I’ve got to take it for political reasons.’ The GPs won. They received a 26 per cent annual pay increase plus a large rise in their pension in exchange for giving up well-known,
lucrative abuses of their contracts, and at the same time their working hours were dramatically reduced.
Blair was happy to buy them off. Ever since he had been ambushed during a TV interview in 2001 by angry patients complaining about the failure of the policy of giving a £5,000 reward to every GP practice that guaranteed to see a patient on the same day they rang for an appointment, he believed in buying peace. ‘We pointed out the risks to Milburn and Hutton of giving the GPs too much money,’ said Rob Webster of the NHS Confederation, ‘but it was ignored.’ In 2005, the concession would cost an extra £392 million, 22 per cent more than anticipated, and create a crisis of access by patients to GPs. ‘We made a mistake,’ admitted Hutton. Blair, he noted, was untroubled by the excessive costs.
At the monthly stock-takes, Blair never asked Crisp whether he was monitoring expenditure. Neither he nor Milburn realised that Crisp shared their fondness for good headlines. At the regular NHS board meeting, Crisp beamed about newspaper reports describing ‘panic’ among the private health insurance companies because their business plans were ‘going up in smoke’ as NHS waiting lists fell. During those meetings, he did not question the NHS’s accounts, which revealed that some hospital operating theatres remained unused for 43 per cent of the week, or that staff in some A&E wards were grossly inefficient. Andrew Foster, responsible for human resources, noticed that Crisp usually listed pay negotiations at the end of the board’s monthly agenda – and the meetings ended before personnel contracts were discussed. Such managerial habits were, naturally, unknown to Blair. To secure a headline about saving a small sum of money, Blair would approve reducing staffing levels at Richmond House by 38 per cent in order, he explained, to have less ‘unproductive interference in the day-to-day management’ and to direct civil servants to be ‘focused on strategic leadership rather than micro-management’, but he did not engage in forensic discussions about NHS finances.
During his regular meetings with Barber and Milburn, Blair rarely discussed the changing skills required from doctors and nurses. New
drugs, keyhole surgery and revolutionary diagnostic equipment ought to have prompted Crisp to revise the job descriptions in the new contracts awarded to NHS employees, but the technical revolution was ignored. Crisp’s mistake, he would later admit, cost hundreds of millions of pounds every year.
Blair also never questioned whether the new medical gospel of dispatching patients as fast as possible from hospitals might not contradict Brown’s £12 billion PFI scheme for 107 new hospitals. ‘We created overcapacity,’ Crisp would later acknowledge, ‘so we had waste.’ He blamed the politicians for lacking the ‘political appetite’ to close unnecessary buildings.
By then, the Princess Royal in Bromley, one of the first PFI hospitals to be completed, was crippled by debt. Undeterred as ever, in 2003 Blair opened the new Hexham General Hospital to display his commitment to PFI. His publicists mentioned that the rebuilding had cost £51 million. They omitted to disclose that the hospital trust would need to repay a debt of £249 million over the following thirty-two years, including £114 million to the private financiers. The total PFI debt was heading towards £100 billion, yet the burden was not recorded in the national accounts.
Borrowing, Blair and Brown agreed, should increase to create a positive legacy for the 2005 election. Brown now posed as the protector of NHS spending. While Treasury officials devoted inordinate time to scrutinising the cost of widening a single road or ordering the sale of an embassy’s wine cellar, they never challenged Crisp’s accountants about reducing the cost of hospital care, and the additional £8.7 billion allocated by Brown in 2002/3 was soon spent.
Blair’s tool for changing the NHS’s culture remained foundation hospitals. The legislation had been delayed by the Iraq war and compounded by media storms about gun crime, the A-levels fiasco and a strike by firemen seeking a 40 per cent pay increase without any change to their work practices. To keep the flag flying during these storms, Blair continued to speak about the modernisation of the NHS. Brown, he knew, would lead the opposition, despite the facts.
Anderson’s plan for some cataract operations to be treated privately had proven the value of the private sector. Phaco, the ISTC contractor, used a much faster American procedure that NHS doctors had resisted, one that took twelve minutes rather than nearly two hours. Fearful of losing their jobs, NHS doctors quickly adopted the new method and immediately increased their workloads. Although barely 4 per cent of the operations in Britain were conducted by Phaco, the NHS’s waiting time for cataract removal contracted from eighteen months to near zero within the first year. ‘75 per cent of patients with the opportunity did make a choice,’ Milburn pointedly told Crisp.
‘The NHS got a huge jolt from the private sector,’ noted John Hutton. ‘It was a fundamental wake-up moment, because the private hospitals’ treatment was so much better than the NHS’s.’
Not everyone was pleased. Among the critics was Crisp, who accused private contractors of being overpaid and of ‘draining the NHS of funds’. He was supported by Brown and the chancellor’s media sympathiser, Polly Toynbee of the
Guardian
. To prick that bubble, Milburn took Toynbee to a hospital in Peterborough to meet an NHS doctor who specialised in cataracts. ‘I’m absolutely against these ISTCs and choice,’ the doctor told her. The journalist glowed sympathetically before the doctor continued: ‘It’s absolutely ruined my private practice.’ Milburn watched Toynbee’s astonishment with pleasure. However, experience had taught him not to expect the facts to influence her journalism, and she continued to support Brown’s opposition to foundation hospitals.
Brown had reopened hostilities on 3 February 2003. In a speech in London, he condemned talk about choice, markets and foundation hospitals. ‘The consumer can’t be sovereign,’ he said. He wanted collectivism and co-operation in the NHS rather than competition. The state and its servants, especially doctors and administrators, knew better than patients. Milburn, he complained, had not delivered any real improvements. The following day, Ed Balls, Brown’s
consigliere
, described foundation hospitals as deliberately divisive. Blair was the party leader despite the party, implied Balls.
‘Tony felt cornered,’ noted Mandelson. To counter that impression, Downing Street leaked to
The Times
that Blair intended to revive the argument in favour of foundation hospitals by organising a Commons vote in May. The following day, 1 March, Brown’s spokesman retaliated by briefing the media against Milburn. An investigation was launched over whether the existing foundation hospitals were disobeying the Treasury’s financial rules. Then the Iraq war forced a stand-off between the two ministers.
In Blair’s interpretation, Brown was pitching old Labour against New Labour in a Commons revolt organised by his lieutenants. As many as two-thirds of Labour MPs threatened to vote against foundation hospitals in a debate arranged for 7 May. Here was another example of Blair’s folly. Political success depends upon bartering, exploiting the weaknesses and strengths of both opponents and supporters to tilt the balance and win a vote, but Blair never fully understood pork-barrel politics. He engaged in confrontation without preparing the ground to guarantee victory, or else participated in an argument without the certainty of a safe exit before defeat.
To Milburn’s dismay, despite the victory in Iraq Blair still appeared hesitant about taking on the Labour rebels. ‘It’s fucking not on,’ Milburn told him after a fractious Cabinet meeting on 30 April, when the government appeared destined for defeat in the Commons. ‘Tony, you can’t just stand there and take it. You have to do something.’
Blair stared. ‘I am,’ he replied. ‘I know I am right about this.’
Blair recognised his minister’s weakness. Since his conversion to supporting competition, Milburn had become intolerant of his Labour critics and was unloved by the NHS establishment. To push his agenda, he had bullied his path through the opposition and had lost support. In one reluctant concession, he agreed to establish Monitor, an agency to protect the NHS’s values inside the foundation hospitals. ‘The best politics’, he had announced combatively, ‘is the best policy. Labour will get the benefit.’
Brown badgered Blair to silence Milburn. In response, Blair questioned
Brown’s ability to become prime minister. In a throwaway comment, he even gave the impression he could replace the chancellor with Milburn. Then, fearful as ever of Brown on the back benches, he backed away and summoned Milburn and Stevens for an hour to seek reassurance.
‘If we lose the vote,’ threatened Milburn, ‘I’ll resign.’
‘Don’t be foolish,’ replied Blair. ‘If we lose, I’ll bring the legislation back without the Brown compromises.’
‘I didn’t believe Tony,’ recalled Milburn. ‘He wasn’t a coward but he was pragmatic. Brown had too much support in the party, and there was Iraq.’ But he did not reiterate his scepticism. He nodded as Blair repeated that foundation hospitals were of ‘monumental historic importance’, and then volunteered that he had surrendered too often to Brown; now he, Blair, needed to draw a line. Politically, he would test Brown’s motives by announcing more innovation and competition in the NHS and other public services. His reforms required new ministers, so there would be changes once the crisis had passed.
But first he needed to end the revolt. After telephoning some rebels to avoid defeat – and he counted over a hundred opponents – he called Brown over the weekend at his home in Scotland. As usual, the conversation, punctuated by threats and blackmail, ended without resolution. Many of his Labour opponents, Blair knew, were influenced by the continuing failure to find WMDs. Other critics in the party sensed that Blair’s support for foundation hospitals was not ideological. Blair could not accept that introducing the market into the NHS meant, if the circumstances arose, allowing a foundation hospital to become bankrupt. He did not rebut Brown’s spectre of abandoned patients suffering in a failed hospital with the natural answer – that a failed hospital would be automatically taken over by a successful group. Blair’s silence reflected his drift.