The NHS came into existence on the 5 July 1948, the result of agreement reached by the wartime coalition and widespread support for the recommendations of the Beveridge Report 1942. For the next 30 years, despite some minor reforms such as the Resource Allocation Working Party, the NHS continued to operate in much the same way as at its conception. The future for the service in 1979, even with the election of a Conservative government committed to ‘rolling back the frontiers of the state’, appeared to be merely a continuation of the past.
The 1979 Conservative manifesto stated “we do not intend to reduce resources going to the NHS” and indeed Mrs Thatcher’s team came to office with no radical proposals to reform the health service. However, throughout the following decade, the government introduced a number of measures, the most radical reforms which introduced structural changes to the NHS coming in the period after 1987 in response to the perceived funding crisis.
These changes though, despite being labelled by many as the beginnings of privatisation and the destruction of comprehensive public health provision, did not attack the basic principles upon which the NHS had been founded. Health care continued to be funded out of direct taxation, universally available with access based on need not ability to pay and still largely free at the point of use. Thus, I would argue that the defining trend of the 1980s was continuity not change. Although Conservative reforms undoubtedly represented a break with the past, and particularly so after 1987, the changes did not attack the founding tenets of the NHS and the radical New Right agenda that was introduced into many other areas was never rigourously applied to the health service.
Firstly, I shall examine Conservative policy towards the NHS before 1987. In this period some measures were taken to encourage the growth of the private sector in health provision. The Health Services Board which had regulated the activity of the private sector was abolished, consultants’ contracts were changed to allow them to undertake more private practice without being penalised and the income limit on tax relief on private health insurance was lowered.
These changes led to rapid increases in the early 1980s and again at the end of the decade in the number of subscribers to private medical insurance (although it is argued by some that the second growth in the private sector was due largely to public perceptions of the failings of the NHS). However, despite these changes, the private sector in Britain remains relatively small with only 13% of the population having private insurance in 1989 (HAM, 1992, p47).
Another change introduced by the Conservative government was the contracting out of domestic, catering and laundry services. In 1983, the government obliged district health authorities (DHAs) to invite tenders for these services that had previously been provided in-house, the assumption being that competition would be introduced and the private sector would provide more efficient, cost effective services. This would appear to have had little effect in practice though as, by 1990, only 1/4 of contracts had been awarded to the private sector (RANADE, 1994, pp48-9).
Possibly the most important reform introduced by the Thatcher government before 1987 was that following the Griffiths Report (1983) into management in the NHS. This report argued that the lack of a clear line management hierarchy in the health service led to inefficiency and unaccountability. The Conservative government sought to remedy this failing through the replacement of ‘consensus’ management between managerial, medical and nursing staff with general managers with individual responsibility for overall direction and strategic planning (HOLLIDAY, 1992, pp15-7).
The alterations to the NHS made by the government in this period were mostly of a minor nature and were largely peripheral measures concerned with efficiency and having little bearing upon the delivery of health care to the public. Much of Conservative policy between 1979 and 1987 was characterised by continuity rather than change. The Resource Allocation Working Party continued to operate in much the same way, expenditure on the NHS continued to rise in real terms and the New Right proposition that the source of funding for the NHS should be changed from taxation to an insurance system was rejected. Thus, I would agree with Le Grand et al who note that despite “ideological skirmishes on the periphery…..the most striking feature of policy towards the NHS, at least until 1988, was its continuity” (LE GRAND et al, 1991, p93).
In 1987, the government faced much criticism, not only from opposition parties but from the medical profession , the media and the public, over the underfunding crisis that was perceived to have hit the NHS. Autumn 1987 saw many health authorities taking urgent action such as closing wards and cancelling non-urgent operations in order to keep spending within their limits (HAM, 1992, p44). After initial attempts to diffuse the outcry failed, the Prime Minister announced in January 1988 that a review of the future of the whole of the NHS would be undertaken. No such pledge was contained in the 1987 Conservative election manifesto and it would seem therefore that the review was, as Butler notes, “an explicitly political response to the intense concern that had arisen about the supposedly low level at which the NHS was funded” (BUTLER, 1993, p59).
The review, undertaken by a small committee of ministers and chaired by Mrs Thatcher, took a year to complete and resulted in the White Paper ‘Working For Patients’ published in January 1989. Surprisingly, given the context in which the review was initiated, the conclusions focused upon the method of delivery rather than the funding of services. The proposals generated in ‘Working For Patients’ formed the basis of Conservative policy on the NHS after 1987 and were formalised in the NHS and Community Care Act 1990
Undoubtedly the most fundamental change to the NHS after 1987 was the introduction of an internal market. Building on the ideas of Professor Enthoven, the government established a separation between purchasers and providers within the NHS. Prior to these reforms the NHS had acted as a single organisation. The introduction of the internal market however led to DHAs and the new GP fundholders being funded by the regional health authorities as purchasers of treatment and care for their patients and hospitals (independent, self-governing trusts and those still under DHA control) competing against each other as providers.
Purchasers would negotiate contracts with providers to obtain the best possible quality and price. It was argued that money would follow the patient and the responsiveness and efficiency of the service would be enhanced. As a consequence of being in competition, it was argued that, in theory, providers would improve efficiency, quality and cost in order to win contracts. The extent to which this theory has effectively translated into practice is highly questionable. Nevertheless, the transition of the NHS in theory from a single organisation to a distinction between purchasers and providers would seem to represent a major departure from Conservative policy before 1987 and most definitely from policy on the NHS before 1979.
A concurrent change allowed hospitals to ‘opt-out’ of DHA control and become self-governing NHS Trusts. The government argued that this would allow these institutions to compete as flexible actors in the market. Again, in reality, this change, despite claims at the time that it constituted the first move towards privatisation and a two-tier health service, appears to have had limited impact upon the actual delivery of treatment and care to patients.