The Health and Social Care Act 2012

Before the election of 2010 we were promised that a Conservative government would not bring about a top-down reorganisation of the NHS. So it came as a huge surprise shortly after the Coalition government was elected that well-developed plans emerged to completely transform the NHS in England through a new Health and Social Care Act (HSC Act). Although these plans had no political mandate, their scale was massive: the then Chief Executive of the NHS, David Nicholson famously described them as ‘visible from space’.

The Health and Social Care Act, driven by the Health Secretary at the time, Andrew Lansley, was eventually passed in 2012 (and came into effect in 2013) after a very difficult path through Parliament and despite huge opposition from health care workers; professional bodies like the Royal College of GPs and British Medical Association; trades unions; and service user organisations.

One of the reasons given for introducing the HSC Act was because of the financial issues facing the NHS and the huge pressure on its services, but the Act failed to address these. The government also said that the HSC Act was largely about increased patient choice and ‘putting GPs in the driving seat’ by giving them the job of commissioning (i.e. planning and buying) the majority of health services. Others saw the Act as primarily about providing the legal framework for fragmenting and privatising the NHS, and time is now confirming their fears.

The Act is a highly complex piece of legislation that, once enacted in April 2013:

  • Brought about a massive restructuring of the NHS, costing billions of pounds to introduce and extra billions to run because of the additional costs of operating the NHS as a market.
  • Abolished the Secretary of State for Health’s ‘duty to provide’ a national health service throughout England. This was the legal foundation of the NHS and of our rights and entitlement to health care. This duty has been replaced by a duty to promote a comprehensive health service – not the same thing at all.
  • Removed day-to-day management from central government and passed it to NHS England, a non-governmental body that is largely unaccountable but has the power, without any mandate from the public, to completely restructure the NHS, including (as we can see from its Five Year Forward View) taking it in the direction of an insurance based healthcare system. Notably, the current chief executive of NHS England, Simon Stevens, previously worked for UnitedHealth, an American company dealing largely with private health insurance (see http://www.bbc.co.uk/news/health-24635890).
  • Abolished Primary Care Trusts (PCTs) and instead set up Clinical Commissioning Groups (CCGs), to be overseen by NHS England and given over 60% of the NHS commissioning budget to take on the highly complex task of commissioning health care services. CCGs were initially just concerned with commission acute (e.g. hospital) and community services, but more recently began taking on joint responsibility with NHS England for commissioning primary care (e.g. GP) services as well.

Their forerunners, PCTs, received about 80% of the NHS budget and were responsible for funding GPs as well as commissioning hospital and mental health services, either from NHS providers or the private sector. On the whole, PCTs mirrored Local Authorities in terms of the geographical areas they covered. In contrast, CCGs are not responsible for the health of a defined population: they are free to choose their patients, and it’s possible for a CCG to take on responsibility for some people living outside its area. This suggests that, in time, the patients for whom a CCG is responsible may be very different to the population living in their local area.

CCGs have been central to the Coalition’s ‘reforms’. After the HSC Act, all GP practices had to belong to a CCG. The Coalition government said that CCGs were introduced to put clinicians at the heart of commissioning because they were thought to know patients’ needs best. However – and especially because CCGs were set up so as not to have responsibility for a defined population – others believe that the HSC Act  brought in  CCGs so that, over time, they could become competing insurers, similar to Health Maintenance Organisations (HMOs) in the USA. Like HMOs, CCGs are independent organisations that take on full financial risk: they cannot look to the government to bail them out if things go wrong.

CCGs have a ‘duty to arrange’ services for the patients that they are responsible for, together with the power to decide what care they should provide from their budgets in order to meet reasonable requirements (and so, potentially, which services or treatments patients must pay for, or manage without). CCGs do not have a duty to provide a comprehensive free health service.

CCGs will remain responsible for what is done in their name (although the situation is less clear in those parts of the country where control of the NHS is being devolved to local authorities). However, even before devolution became a factor, much of CCGs’ work was delegated to Commissioning Support Units, which, in turn, have been absorbed into a Commissioning Support Lead Provider Framework. This Framework allows aspects of commissioning (such as managing service contracts or even redesigning services) to be carried out by private companies that could also be in the business of providing such health services. It’s almost as if the NHS is being returned to how it was before the introduction of an internal market – except it’s now operated by private companies!

  • Has met a long-term political aim of successive governments to use competition to drive the NHS, and turn the NHS into a market place. For example, Regulation (S75) included in the HSC Act (but not evident when the Act was being discussed or voted on by MPs) makes it compulsory for those services that can potentially be provided by non-NHS organisations to be put out to competitive tender. In effect, S75 orders the NHS to use the private sector. As Dr Mark Porter, Chair of the British Medical Association (BMA) put it, “An Act that the government denied loud and long would lead to privatisation, had done exactly that”. (See http://www.theguardian.com/society/2014/nov/19/private-firms-nhs-contracts-circle-healthcare-bupa-virgin-care-care-uk.)

The BMA, among others, has commented on how the HSC Act has introduced confusion about the circumstances in which commissioners can award a contract without using competition http://bma.org.uk/working-for-change/doctors-in-the-nhs/reconfiguration-and-integration-new/competition-and-choice-new/competition-law-guide. As the previous head of NHS England admitted, the NHS is now “bogged down in a morass of competition law” http://www.theguardian.com/commentisfree/2013/nov/15/competition-killing-nhs-bournemouth-poole). (see also our pages on NHS privatisation under ‘Central issues”).

  • Lifted the private patient income cap – the amount of money that an NHS hospitals can raise from private sources, typically private patients. Hospitals used to be allowed to generate around 2% of their income (with some regional variation) from private work. The HSC Act raised this to just under 50%. By 2014, some leading hospitals had seen an increase of as much as 40% of their private income, creating concern about the development of a two tier health care system, with higher standards of care for private patients, and a creeping privatisation of the NHS.
  • Created confusion about whether the NHS is still an enterprise that carries out a social activity or whether, despite still being publicly funded, it’s become an economic activity because of the involvement of private companies and the potential for them to make profit. This confusion leaves the NHS vulnerable to being included in trade and investment agreements like the Transatlantic Trade and Investment Partnership (TTIP).
  • created Monitor, a public body sponsored by the Department of Health that promotes “the provision of healthcare services that is economic, efficient and effective, and maintains or improves their quality”. It covers the provision, pricing and procurement of NHS services, and sets the standards that all Foundation trusts must meet. https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/326396/About_Monitor___July_2014.pdf . Monitor is also charged with preventing ‘anti-competitive behaviour’ – it has shared powers with the Office of Fair Trading to enforce competition law in the NHS, and has a role in assessing certain mergers involving health care providers.
  • transferred the provision of public health services (such as children’s services, mental health, dental health, immunisation, screening, sexual health and health protection programmes) to cash-strapped local authorities (LAs). LAs will be able to define and decide how to provide these services, which may include making them chargeable in time.

Failure of the HSC Act ‘reforms’ 

The NHS became one of the key issues for the general election in 2015. A report from the King’s Fund, a think tank whose independence from the government is sometimes questioned, (see, for example, https://www.opendemocracy.net/ournhs/gary-walker/kings-fund-suggests-nhs-fees-but-is-it-really-independent), recognised the disastrous effects of the HSC Act, acknowledging that services are rapidly deteriorating, waiting lists are at a record high, morale is low and GP and mental health services are under severe strain. It suggests the top-down reorganisation of the NHS that the Act brought about has been damaging and distracting, and the new systems of governance and accountability that it brought in are complex and confusing (http://www.kingsfund.org.uk/publications/nhs-under-coalition-government).
It seems that even some senior Conservatives are now admitting that reorganising the NHS was the biggest mistake they made in government. Downing Street sources are stating that David Cameron did not understand the reforms and George Osborne regrets not preventing what they call a “a huge strategic error”.* Sceptics might suggest that this recognition of failure makes further restructuring (as suggested by NHS England’s Five Year Plan, for example) all too necessary.

More recently

Andrew Lansley, the Health Minister who is held responsible for introducing the HSC Act (2012), has moved on to take a seat in the House of Lords and a new job with a private health company. By 2015, elements of the Act  already looked irrelevant.  GP presence on CCGs dwindled – in some instances, sharply – and a considerable part of CCG work was taken over by private companies (see Clinical Support Groups and the ‘prime provider’ frameworks). Instead of having clinicians in the driving seat (one of the main reasons, we were told, for reorganising the NHS), we now have private companies involved in both the purchasing and provision of healthcare.

The introduction of NHS England’s Five Year Forward View marks another huge restructuring of our health services, although it’s argued that, now, the emphasis is on collaboration rather than competition (but, significantly, S75 of the HSCA remains in place). (https://www.opendemocracy.net/ournhs/caroline-molloy/it-may-not-look-like-it-but-jeremy-hunt-does-have-plan-for-nhs-0)

See also our pages on:

Sources

* Chris Smyth, Rachel Sylvester and Alice Thomson, “NHS reforms our worst mistake.” The Times, 13.10.2014, pages 1 & 2

https://www.opendemocracy.net/ourkingdom/allyson-pollock-david-price-peter-roderick-tim-treuherz-david-mccoy-martin-mckee-lucy-rey

Updated January 2017

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