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Social Enterprises: Part of the Solution or Part of the Problem?


I was disturbed to hear the new government crowing about the number of NHS employees planning to bail out and work independently in it's response to the consultation on the recent health White Paper. By next year, we expect 25,000 staff – delivering some £900 million of NHS community services – to be doing so as members of social enterprises.’ It’s noteworthy that this is a part of a bigger plan to allow ‘any willing provider’ to deliver larger and larger proportions of NHS services. Apparently this isn’t privatisation, because the services will be delivered as a part of the NHS ‘brand’. Some of us, though, think of the NHS as rather more than just a brand.


At Christmas this year I gave my Dad a photo taken on Blackpool beach shortly after the outbreak of World War II. Sat on the donkey behind him was my namesake, his brother John. John died from flu not long after the photo was taken, and the impact on my family was devastating. My Grandad was a teacher so the family were comparatively well off and could afford the doctors fees. But many of the families of children who died during the war could not afford to pay, and had to live with the guilt and anger for the rest of their lives. For that generation, the most important principle of the NHS was that people from poor families shouldn't be denied essential medical treatment. It wasn't about brands or patient choice, it was about what kind of society we all wanted to build for the future.


Like most health and social care workers of my generation, I began my career in the NHS and still feel a strong sense of fellowship with my colleagues in the ‘statutory sector’. I know that many are deeply uneasy about the government’s proposals; they see the prospect of having their employment contracts transferred to large American healthcare providers who want to run hospitals and GP practices for profit. Hardly surprising, then, that many will prefer the prospect of working for themselves as part of social enterprises. But most would rather not see the NHS dismantled at all.


The lessons from the past


This isn't the first big lurch towards the privatisation of the NHS, and it isn't the first time that the third sector has been used as cover. In the early 1990s most NHS hospitals turned into semi-autonomous ‘NHS Trusts’. In order to apply, they had to buy their assets from the government, saddling them with enormous debts that they could only repay by cutting costs. Management structures were ‘delayered’ - management posts at a particular grade were abolished with tasks being reallocated to the people above and below in the structure. Contracts for non-clinical services like cleaning were ‘outsourced’ – bad news for cleaners (who found themselves with worse pay and conditions) and patients (who ended up with dirtier wards). Senior managers gave themselves massive pay increases, of course. But it wasn’t all bad news. The government used some of the new income to pay for new services in the community, many of which were run by charities.


At the time many of us thought that commissioning services from charities was all part of a cynical exercise in cost-cutting. Perhaps that was part of the motivation, but the benefits have been undeniable. Health and social care services delivered by organisations that had campaigned for patients rights were more empowering, less authoritarian an in many cases more innovative than those provided by the NHS. The smaller organisational structures meant that there was less red tape to cut through every time someone had a good idea, which speeded up change. Modern social enterprises have the capacity to take this a stage further, and could deliver significant improvements for service users.


So what's different this time?


Although the National Health Service and Community Care Act 1990 was implemented in the midst of a recession triggered by 'Black Wednesday', by the end of the 1990s the economy was growing and the incoming government increased investment in the NHS. This meant that even though the pay gap between those at the top and those at the bottom of the NHS was growing, people on lower incomes were still better off. And services continued to get more funding, even though some of it was being sucked out by the private sector through schemes such as the Private Finance Initiative. This time we're facing the biggest cuts to NHS funding in its history, and even some organisations that are normally friendly to the government are warning of dire consequences. Any money that comes out of the NHS to pay for dividends and bonuses will have a direct negative effect on patient care.


Part of the Community Care Act was deliberately aimed at creating an 'internal market' within the NHS, as a precursor to allowing private healthcare providers to compete with NHS bodies. But despite this and subsequent organisational changes with the same objective, the vast majority of state health provision still remains in the public sector. The third sector has become an influential player, but only at the margins. The large private providers have also enjoyed some growth, but on the whole remain much less influential than most people would have predicted ten years ago. This is partly because commissioning of NHS services was devolved to local Primary Care Trusts rather than the larger regional Strategic Health Authorities. The mega-corporations couldn't gobble up the NHS in a few easy bites - they could only nibble around the edges. This time, despite all the rhetoric about devolving commissioning decisions to GP consortia, a new national NHS Commissioning Board will oversee everything. In their consultation response, the government 'concedes' the need for stronger centralised commissioning for 'complex services'. I expect this to be the thin end of a very big wedge.


Why are the ConDems so keen social enterprises?


The reality for many NHS employees over the next few years is likely to be more work for less pay, and being able to provide less care for patients who are more and more ill. Many will find themselves unemployed, or will have their contracts transferred to private providers. No doubt many will be tempted by setting up social enterprises but these will probably remain marginal, much like charities do today. And despite the best of intentions many will struggle to improve services; unless (like us) they are prepared to get second jobs and work for nothing, they won't have the revenue to do anything but provide basic services. No, sadly the main function of the growth in social enterprises will be to provide a timely ideological smokescreen for the process of privatisation.


Readers of a certain age (my age, for example) will remember the Tory privatisations of the 1980s. Despite all the rhetoric of helping 'small investors', most of the shares in public utilities found themselves in the hands of giant overseas investors from within a few years. Of course a small number of social enterprises will remain small and independent, and continue to deliver good care for local people. We hope to be one of them. But I expect the majority will disappear over a few years, as they will be unable to compete with private companies that can offer loss leaders, economies of scale, and are prepared to force worse pay and conditions on their staff. Liberating the NHS? It doesn't look like that to me.


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