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 what was then a Health and Social Care Bill. 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 Bill was introduced by the Secretary of State for Health at the time, Andrew Lansley. His diaries indicate the influence of the private sector (such as US health insurer, UnitedHealth). Many of the Bill’s proposals were drawn up by McKinsey and Company (international management consultants) and included in the legislation wholesale.

The Bill was eventually passed in 2012 and, as the Health and Social Care Act 2012 (HSC Act), came into effect in 2013. This was 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 This duty has been replaced by a duty to promote a comprehensive health service – not the same thing at all.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 (NHSE), a non-governmental, largely unaccountable body that, without any mandate from the public, has the power to completely restructure the NHS. One effect (intentional or not) of this restructuring is to make it easier in future for a national health service in England to be based on private health insurance (see, for example, NHSE’s Five Year Forward View.  Notably, the current chief executive of NHSE, Simon Stevens, previously worked for UnitedHealth, an American company dealing largely with private health insurance. Although NHSE is officially at arms length from the government, it’s a short arm: for example, the current Chair of NHSE is Lord Prior, a Conservative Peer who had to be pressured to resign the Tory whip.
  • 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!

  • 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

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 As the previous head of NHS England admitted, the NHS is now “bogged down in a morass of competition law” (see also our pages on NHS privatisation under ‘Central issues”).

  • Lifted the private patient income cap – the amount of money that NHS Trusts can raise from private sources, typically private patients, but also things like car parking charges. 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%, 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.    Research indicates that 10 private patient units – mainly based in London NHS hospitals – account for nearly 60% of the £596m generated by the NHS from the treatment of private patients. For four of these hospitals, private patient income makes up more than 10% of their income. However, of 41 Trusts that provided information in response to a Freedom of Information request, nine made a loss on the treatment of private patients.
  • 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 to monitor the provision, pricing and procurement of NHS services, and set the standards that all Foundation trusts and NHS trusts must meet. Monitor was also charged with preventing ‘anti-competitive behaviour’ – it shared powers with the Office of Fair Trading to enforce competition law in the NHS. Monitor was later renamed as NHS Improvement, and now incorporates other organisations like the NHS Trust Development Authority. NHSI grants certain freedoms (such as fewer monitoring requirements) to providers, according to how ‘successful’ they are. Success is judged by a number of measures, at heart assessing how tightly providers conform to NHSE’s and NHSI’s ‘transformation’ agenda. It’s worth pointing out that the Chair of NHSI is a Conservative peer, Baroness Harding, who refused to resign the Tory whip on taking up her appointment.
  • 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 were given the power 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,  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 suggested the top-down reorganisation of the NHS that the Act brought about was damaging and distracting, and the new systems of governance and accountability that it brought in were complex and confusing. The think tank IPPR considers that the HSCA fragmented commissioning, increased complexity at a national level, and reinforced the role of competition within the NHS (based on little or no evidence of the benefits of this).

It seems that even some senior Conservatives admitted that reorganising the NHS was the biggest mistake they made in government. Downing Street sources stated that David Cameron did not understand the reforms and George Osborne regretted 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), 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 had 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 had 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 NHSE argues that, now, the emphasis is on collaboration rather than competition (even though, significantly, Regulation S75 of the HSCA remains in place!).

A core argument for the HSC Act was that the NHS would benefit from being freed from central command, with providers like hospital Trusts and health care professionals having more autonomy. This argument has been steadily undermined over time and, less than five years after the Act was implemented, planning guidance from NHSE – apart from making no reference to competition – shows increasing control from central bodies like the Treasury and Department of Health over over local decision-making.

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

Updated February 2018

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