Regulations laid last week will turn England's National Health Service into a competitive market. They appear to contradict assurances from the Coalition government on one of the most central elements of the Bill.
Last Wednesday the Department of Health quietly released regulations  that open up England’s National Heath Service to competition on an unprecedented scale. These regulations have started their 40-day journey to becoming law. They contradict the political assurances given during the turbulent passage through parliament of the controversial Health and Social Care Act 2012 and confirm the fears of its critics.
The extent to which competition should be applied to the NHS has been at the heart of fierce debates surrounding the Health and Social Care Bill since it was published in 2011. Government representatives have maintained that the use of competitive markets is central to their purpose . Critics warned that making competition compulsory was dangerous and driven by ideology and commercial interests rather than evidence-based best health practice. It was also feared prioritising competition indiscriminately could create a fragmented, expensive, bureaucratic health service  and a transition to much fuller privatisation .
The Government worked hard to reassure and win over opponents, softening the language in the Act and balancing mentions of competition with talk of cooperation. While the media and the public focussed on the political battle, and the language of ‘patient choice’ and ‘GPs in control’, the legal nuts and bolts of the act embodied the reality of the reforms. Few people noticed as this was obscured by technical and legal complexity and a towering tornado of spin.
The unvarnished truth was revealed in regulations  laid before parliament under Section 75  of the Health and Social Care Act last Wednesday, following a little-publicised consultation period last Autumn. They relate to the area of ‘procurement, patient choice and competition’. They expose the underlying legal and economic logic of the Act to be about embedding market competition as the driving force in the new NHS.
The regulations force health commissioners to open up virtually all services to competition, either through competitive tendering or using the Any Qualified Provider market. The AQP market operates as the ‘Choose and Book’  system which provides patients with a shopping list of services to chose their treatment from.
From the 1st April commissioners will be required to advertise  new contracts, then judge the bids received based on published criteria. The new regulations effectively close down the possibility of awarding a contract without competition, saying that this can only occur in very exceptional circumstances (namely emergency situations or when no other provider is capable of providing the same services) . They also pull arrangements between NHS bodies into the new competition regime. This appears totally contrary to former health secretary Andrew Lansley’s assurances to Clinical Commissioning Groups this time last year .
The new regulations grant Monitor sweeping statutory powers as a regulator to intervene and enforce competition . Monitor will be able to decide when commissioners have breached competition regulations, and have the authority to set aside contracts, stop arrangements that they deem flawed and to impose competitive tendering and the offer of Any Qualified Provider. During the Bill’s passage, Monitor’s role as regulator changed from one of ‘promoting competition’ to instead ‘preventing anti-competitive behaviour’, but as some suspected, this is a distinction without a difference .
Far from giving GPs flexible powers to choose the right provision for patients, these regulations force competitive markets across the board, barring only very exceptional circumstances. They bring an inherent assumption that a greater choice of providers is better for patients.
Implementing commercial competition throughout the NHS creates rights for independent providers to compete for any NHS funding that is spent on purchasing services for patients. Such a regime benefits private providers and reorientates the whole system towards the focus on penny-pinching that has just proved fatal to so many at Stafford Hospital . ‘Provider rights’ lock the privatisation of services into place because renationalisation would trigger compensation claims due under competition law, making it extremely expensive and politically difficult for a government to turn back.
The last Labour government introduced the ‘Principles and Rules of Cooperation and Competition’ which effectively applied competition law to contracting for patient services. The new regulations put the previous principles and rules on a statutory footing. Where previously Primary Care Trust commissioners were encouraged to commission services through competitive markets, CCGs will be required to do so for almost all services. These regulations take the brakes off and allow competition to freewheel.
Labour Lord Philip Hunt told us, “These regulations go to the heart of the arguments about our health service and where it’s going. If you think back to the extensive debate on the Bill, the underlying question was ‘is a market being set up?’ The government was forced to make concessions and had to insert words about integration. Whatever was said in parliament, it seems that the Department of Health and Monitor have just carried on as if nothing has changed. By hook or by crook, a market is being introduced. This fundamentally undermines the NHS and its very concept.”
Lord Hunt continued, “There is very little international evidence that a market in healthcare leads to better or more cost-effective service, in fact most suggests the opposite. Post-Francis report, the key consideration should be quality of care. This is a distraction from that. There is no doubt that Monitor are preparing the ground for a competitive market and that we’re on a journey to competition, marketisation and privatisation. We definitely want a debate and for these regulations to be submitted to proper scrutiny”.
The new regulations are likely to surprise health professionals, politicians and the public as they are clearly incompatible with the reassurances and promises that the Government made whilst they were struggling to win support for their Bill.
Andrew Lansley sent a letter to prospective CCGs on 16th February 2012 , during the height of the battle to get the Bill through parliament, in which he assured them, “I know many of you may have read that you will be forced to fragment services, or to put services out to tender. This is absolutely not the case. It is a fundamental principle of the Bill that you as commissioners, not the Secretary of State and not regulators, should decide when and how competition should be used to serve your patients’ interests. The healthcare regulator, Monitor, would not have the power to force you to put services out to competition.” The new regulations contradict these promises in Lansley’s letter.
Liberal Democrat Lord Clement-Jones was one of many who expressed concerns about the application of competition law during the passage of the Bill through the House of Lords, and received reassurances from Health Minister Earl Howe that; “Clinicians will be free to commission services in the way they consider best. We intend to make it clear that commissioners will have a full range of options and that they will be under no legal obligation to create new markets, particularly where competition would not be effective in driving high standards and value for patients. As I have already explained, this will be made absolutely clear through secondary legislation and supporting guidance as a result of the Bill.” 
These regulations do not grant commissioners the ‘full range’ of options that Earl Howe seemed to be promising. Lord Clement-Jones, having examined the regulations, told us, “Earl Howe’s statements in the House of Lords appear completely at odds with these regulations. These regulations clearly seem to go further in requiring competitive procurement than the undertakings we were given during the passage of the Bill. We will be taking this up with our colleagues within the Coalition”.
While these regulations are contrary to the spirit of the reassurances given during the passage of the Bill, they closely mirror Andrew Lansley’s speech in 2005  where he very clearly spelt out his intentions to open up the NHS to competition. Drawing on his experiences privatising utility services, he said that “the first guiding principle” of public service reform is to “maximise competition” and that he wanted to “plan positively” for health being a competitive market in the European Union. He also advocated a “right to supply for new and independent providers” and envisaged that “the Independent Regulator will need progressively to be a competition authority, with the normal application of competition rules to healthcare providers”.
Lansley’s speech reads like a blueprint for the regulations that have just been issued. Indeed, along with the ‘Principles and Rules for Cooperation and Competition’ , they represent the legislation for the implementation of EU Competition Law in the NHS.
These regulations can also be understood as part of a broader international trade agenda which involves liberalising services. US President Barack Obama recently announced  the forthcoming US-EU Free Trade Agreement, which David Cameron has said  will be a key priority for the G8 this year. As part of the preparations for this, EU countries have been instructed to harmonise their economies with the US regulatory system. Publicly-owned and run healthcare systems, many of which are at or near completion of a process of privatisation, are a little-reported but prime focus of this process. International trade researcher Linda Kaucher  put it another way when speaking to us, “The NHS is being chopped up and prepared for transnational investors.”
Chair of the Royal College of General Practitioners Dr Clare Gerada shared concern about the new regulations and told us, “This is about free markets, not healthcare. It is predicated on making money, not on doing the best thing. The NHS is a system that channels resources according to need. What the Act does is change it to a system that channels resources according to what makes money. Competition is the vehicle for changing it. I feel that it’s more important than ever that we do everything we possibly can to challenge the perversities of this marketisation. The money needed to run this new market will take away money from services.”
Caroline Molloy, a campaigner for ‘Keep Our NHS Public’ working on a briefing paper about these regulations, emphasised to us, “People never voted for NHS reforms in the last election and they proved unpopular with the public and health professionals. Now these additional regulations are being quietly slipped through trying to enforce competition in the NHS, contrary to reassurances that were given in Parliament and to commissioners. These regulations prioritise the rights of providers, not the rights of patients, commissioners, local communities or indeed elected representatives. We believe that there should be a full parliamentary debate and vote on these regulations.”
The regulations are subject to the parliamentary procedure ‘negative resolution’, which means that they don’t need to be discussed or voted on, but will automatically become law 40 days after being laid down, on the 1st April.
Any member of parliament could lay a “prayer” to start a motion to attempt to annul them within this timeframe. There seems to be plenty of appetite for such a process. With enough support, this could trigger a debate and potentially a vote in one of the houses. A statutory instrument of this nature hasn’t been successfully annulled for over 10 years in the Lords and over 30 years in the Commons , and it will require mass action to effect a change against such odds.
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A Keep Our NHS Public briefing on section 75 can be downloaded here.