We all already own the NHS - the latest 'mutual' spin is about taking it out of our hands

So-called 'John Lewis style mutuals' have been tried in the NHS - and flopped badly. So they want to give this Trojan horse for privatisation and asset-stripping new legs - and teeth.

caroline m.jpg
Caroline Molloy
15 July 2014

Here we go again. Turning the NHS into a ‘staff-owned’ mutual or ‘social enterprise’ has been re-launched more times than Liam Fox’s career, generally to a resounding wave of indifference or hostility from NHS staff who are less interested in being ‘social entrepreneurs’ than in getting on with doctoring and nursing.

The latest rebranding is that ‘Mid Staffs would never have happened at a mutual’, as Norman Lamb declared when he announced a new review last October, chaired by the ever-willing Professor Chris Ham of the King's Fund.

The review’s outcomes will be launched today by Francis Maude, Norman Lamb, and Hazel Blears MPs, giving the appearance of a cosy political consensus. It's a trick that has been played for over a decade.

Today's report is vague on who actually would own the 'mutual' hospitals once they are stripped away from the NHS (with the promise of more detail in yet another report in the spring). Here lies a hint as to why the idea is such a darling to some in our elite - a point I return to at the end of this article.

Suspicions that mutuals are a trojan horse for privatisation have been around almost as long as the policy itself. Hence, despite such apparently broad-based and long-standing support amongst the political class, the idea has been roundly rejected on the ground. 

The largest attempt to ‘mutualise’ the NHS to date was in Gloucestershire in 2011/2. Nine hospitals and a swathe of community-based health services previously provided by the NHS Primary Care Trust (PCT) were to be turned into a ‘staff-owned mutual’. The plans were developed initially under policy set out by Blairite Health Secretary Patricia Hewitt, but were given new impetus by the incoming Tory government’s plans.

The public - when they eventually found out, just three months before the hospitals were due to leave the NHS - were shocked. They were reassured that the idea was ‘staff-led’. The spirit of the Rochdale co-operators was invoked.

In fact staff had - in practice - been given no other options. This was the only alternative to full-scale privatisation, they were told. Staying in the NHS wasn’t an option.

Lofty talk about ‘staff ownership’ structures turned out to be pure spin. Questions about what democratic rights (if any) staff got in exchange for their ‘penny share’ were unanswered, even on the eve of the transfer. The head of a leading body in the Co-operative Movement was horrified when she heard she had been cited as an influence on the plans. “This isn’t a co-op - this is a management buyout without the cash”, she told colleagues.

Gloucestershire campaigners took the commissioners to the High Court in London - and won. After a day in court, scenting an embarrassing defeat, the government side backed down. They were forced to agree to go back to the drawing-board and properly consult - an exercise that revealed that 91% of staff and 96% of local residents opposed the ‘mutual’ plans and wanted to stay in the NHS. After marches and lobbies of MPs, the government reversed its policy (citing ‘exceptional’ circumstances) and Gloucestershire’s community services and its 3000 staff stayed in the NHS.

Elsewhere though, the plans went ahead. The South West, under the leadership of the bruising Sir Ian Carruthers (now chair of Healthcare UK), was a particular target. Staff across the region contacted Gloucestershire campaigners in despair but were unable to mount their own challenges in time. The public were largely kept in the dark until it was too late.

And what has happened to these ex-NHS mutuals?

It’s hard to find out. Unlike NHS Trusts, they don’t have to answer Freedom of Information requests, nor have board meetings in public or publish minutes. A few do - but most don’t.

But clues are leaking out. The organisations are cast adrift from the NHS, strapped for cash, forced to cut corners. Staff training has been cut. Demoralised staff have left and not been replaced.

Late last year, Plymouth Community Healthcare (one of the SW ex-NHS mutuals) announced that it was postponing all routine medical procedures by district nurses - blood tests, continence procedures and the like - due to staff shortages. When I asked the Plymouth ex-NHS 'mutual' for information about how such decisions were taken, and what the supposedly ‘democratic’ and ‘engaged’ new structure actually looks like, they told me that as a small organisation they did not have time to answer my questions properly.

I phoned around a few of the other ex NHS 'mutuals' in the South West, and found them similarly unenlightening.

"Who owns you" I asked several. "Er.... no-one? Don't know?" came the response.

Even allowing for human vagueness, this is worrying. Attacking public ownership becomes much easier if concepts of ownership are blurred. Unsurprisingly, given their vagueness about who even owned them, few of these organisations could tell me anything meaningful about how I as a member of the public could hold them accountable for their decisions.

And many of these decisions are alarming. Hinchingbrooke hospital is the poster child for today’s report launch, handed over wholesale (through a ‘franchise’ rather than a ‘spin-out’) to a non-NHS body, so-called ‘mutual’ Circle Health. But staff there are heavily demoralised, magic budget solutions have not been found - and there was only one nurse on duty in a ward for 21 people, a recent Royal College of Nursing investigation found.

Staff loss is hitting everywhere - but it's hitting mutuals particularly hard. In almost every ‘spin-out’ to an NHS ‘mutual’, staff numbers dropped by a third in the upheaval, my own research has suggested.

Not that you have a right to know this now. When questions were asked in parliament, the minister responded “The Department cannot provide details of individual social enterprise staff and turnover figures as they are commercial in confidence and belong to the social enterprises as they are now independent bodies.”

On the very day that NHS regulator NICE launches yet more (non-binding) guidelines about short-staffing and transparency, this fact alone should give ‘mutual’ advocates pause for thought.

There’s more upheaval ahead for staff and patients as a result. Many of the contracts which were handed over to ‘mutuals’ in the last wave of this policy were given only for 3 years (as they were to untested organisations) and are now nearing an end. Commissioners in Bath (where Sirona took over) and across the country have already announced that they will now put the services up for full competitive tender to the private sector.

And there were other implications of the 'spin-outs' to mutuals. As a direct consequence of being turned into ‘mutuals’, NHS Trusts had their clinics and district hospital buildings peeled off and quietly handed over to PropCo, an unaccountable private company created by Cameron’s 2012 Act, tasked with maximising income from property development.

No longer able to raise loan finance on their assets, even at risk of their assets being rent-hiked or sold from under their feet, ex-NHS ‘mutuals’ are dependent on cutting corners to save money. In Nottingham, after physiotherapy services were handed over to a ‘mutual’, patients were no longer offered ‘hands-on’ physiotherapy, just factsheets. In Hull, soon after becoming a social enterprise staff were reporting shortages of basic supplies like bandages - and several clinics were promptly handed over to the private sector.

Headed by hand-picked cronies, no longer publicly accountable, but with no genuine internal democracy to replace it. Subject only to deliberately ‘light-touch’ regulation which gives directors remarkable freedom to behave as they choose.  

A service that was owned by all of us, now owned by fewer of us, and accountable to hardly anyone.

When Norman Lamb tells you these plans are optional, that they will be better than the earlier incarnation, remember, that has been the line throughout the last 10 years. But away from the lofty words at think tank receptions, the reality on the ground with such ‘optional’ policies is that demoralised, scared NHS staff are told by demoralised, financially squeezed managers that there are no other options. Only through huge amounts of hard work and a considerable amount of luck were campaigners able to create other options in Gloucestershire. Elsewhere, they got away with it - and both legal challenges and the financial climate have been made much harder since we won this campaign.

So why, when the plans have been so unpopular, does the government persist in flogging this dead horse?

It’s all to do with staff engagement, they tell us.

But if the government really cared about staff engagement, why is it being so antagonistic to their representatives, the unions, refusing to hold proper pay talks, and talking of scrapping their right to strike? Why has it turned a deaf ear to the 83% of NHS workers who think the main aim of government reforms is privatisation not improving patient care?

Only this month, staff in Northampton pathology services who raised concerns about patient safety and the use of less well-paid, less skilled staff were ignored until they went on strike - at which point, management locked them out, and has prevented them from returning to work ever since. This is an unprecedented use of union busting tactics in the NHS - and the government has said not a word about ‘staff engagement’ and ‘patient safety’ in response.

In Gloucestershire, the secret KPMG papers revealed in court showed that the key ‘benefit’ envisaged was that the transfer of staff to a 'mutual' would enable a ‘harmonisation’ of NHS staff terms and conditions with those of (far lower paid) social care workers. In other words, the same old corner cutting and trying to get staff on the cheap, that is the eternal tactic of those who wish to turn a profit from privatising public services.

When the government talks about giving greater ‘ownership’ to staff it glosses over the fact that doctors and nurses - and the rest of us - already own our hospitals. If these plans are really motivated by concerns about problems like Mid Staffordshire, how does narrowing ownership from the whole community to just the hospital staff (or a small portion of them, alongside some private investors) really improve this? If the plans are so great for the public, why have they been implemented in such secretive fashion to date? In Gloucestershire, public engagement on the plans consisted of 2 abtruse press releases - one on New Years Eve - and one cryptically (and very boringly) titled meeting for hand-picked 'stakeholders'. 

The reality is the government’s attempt to turn the NHS directly over to the private sector has hit stiff political opposition in communities up and down the country. Francis Maude predicted as much when - in a leaked conversation with the Confederation of British Industry shortly after the election - he warned them that the “political risk” of outright privatisation would be “unpalatable” to the government but that “joint ventures between a new mutualised public sector organisation and a 'for profit' organisation would be very attractive”.

Whilst some on the left have been sucked by the language of co-ops into a sunny, egalitarian Bolivarian fantasy, the reality in the current US/European climate is that these plans are just the latest incarnation of the attempt to break up the NHS up into isolated units that will stand - or fail - by their ability to compete in a cut-throat market. Cut adrift from the institutional support and financial muscle of the NHS, they will fail - unless they become even less ‘mutual’ and open to investment from - and effective ownership by - the private investors who are ever circling.

And this - I suspect - is the real goal of Maude and Lamb’s latest review.

Although already too lightly regulated to be properly accountable to patients, so-called ‘mutuals’ aren’t yet quite easy enough to offer an entry point for the private investors like Goldman Sachs and their ilk, currently queuing up to rebrand privatisation as some kind of ‘corporate social responsibility’ or ‘good capitalism’. They are touting products like ‘social impact bonds’ on both sides of the Atlantic as a way of “attracting new investment around outcomes based contracts” in public services.

The structure of the contracts means only investors with deep pockets will be able to offer them - and whilst they gain lucrative tax breaks and the veneer of 'philanthropy', for the public purse, the impact has been compared to the short term gains but long term crippling impact of the Private Finance Initiative. The social enterprise world is enthralled at the idea of 'social investment bonds' and similar routes in for private capital. The shakiness of the social enterprise 'solution' was brutally exposed in Mid Surrey, where the award-winning ex-NHS 'spin out', Mid Surrey Health (hailed by David Cameron as "the future"), failed in its first bid to provide a swathe of NHS services, because it was unable to raise the £10million bond needed to convince commissioners it was stable. Commissioners duly handed the contract over to Virgin, instead.

Even before that debacle, though, the social enterprise literature has been littered with talk of the ‘barriers’ to ‘accessing finance’ from ‘mainstream investors’ to deliver ‘blended returns’ (both feelgood and financial). What is clear - and what Lamb's new 'pathfinders' are most likely being set up to 'discover' is that for the ex-Department of Health wonks writing this stuff, it's regulatory barriers to big finance investors that are the key obstacle to rolling out 'mutuals' - not the fact that no-one on the ground actually wants them.

Some bolder ex-NHS so-called mutuals have flirted with getting funding from the private sector - and handing share capital and profit margins back in return. But few - apart from Circle Health, a supposedly ‘employee owned’ provider actually majority owned by Tory-donating city folk - have really gone down this line. No coincidence, perhaps, that it is Circle singled out for special praise in today’s review.

Professor Chris Ham hinted on his appointment to Chair the review that all this talk of mutualisation and share ownership wasn't really geared towards employees. He suggested instead that employees didn't need to actually own the organisation - oh no. “It’s a sense of co ownership of the organisation. It’s a culture of ownership - a culture of mutuality can be as important as having a structure of mutuality.” [my emphasis].

Such blurring of the metaphorical and literal senses of ‘ownership’ is very convenient, but obscures the obvious question - why then change the structure and ownership at all? And if the hospital is no longer to be part of the NHS and hence owned by us, the taxpayers, and it’s not actually to be owned by the staff either - who will it be owned by?

And if the profits don’t go back into healthcare - as Norman Lamb hinted today they might not need to, according to the Independent - where will they go?

Today’s review gives a few hints. Chris Ham says that a big push on mutuals “should be accompanied by more proportionate regulation so that NHS organisations can look out to their patients, staff and stakeholders”.

Quite who these other stakeholders are, and quite what kind of loosening of regulations would benefit them, remains to be seen. What is clear is that the private investment world, having broken consumer capitalism with their irresponsibility, now needs to profit from our most basic needs. And they are more than happy to play the white knights helping out mutuals to split up the only behemoth that can really stand up to their profiteering, the NHS.

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Clarification: NHS Property Services has asked us to clarify that the official title for 'PropCo' is NHS Property Services and that it is a private company "100% owned by the Secretary of State" which is subject to the Freedom of Information Act. They advise us it is tasked with "managing, maintaining and improving NHS properties and facilities, working in partnership with NHS organisations to create safe, efficient, sustainable and modern healthcare and working environments." 

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