During August a lot of people are on holiday so I am going to post a weekly blog on a background issue to the current politics of the NHS before getting back to the detail of the current policy and implementation shifts in September.
The four will be
- Her Majesty’s Treasury why does it consistently resist NHS reforms that are based upon improving productivity through organisational incentives?
- Keeping politics out of the NHS .The Coalition government’s stated intention and how and why it is returning to ever more detailed political management.
- The BMA and the other NHS unions
- NHS resources over the next few years. Pressure points and deficits to come.
Her Majesty’s Treasury – why does it consistently resist NHS reforms that are based upon improving productivity through organisational incentives?
Given that the Treasury is in charge of developing the conditions for one of the biggest capitalist economies in the world, you would expect it to be near the forefront of thinking and action about how economic incentives improve organisational and individual activity. The fact that it isn’t, and consistently tries to stop various Secretaries of State for Health from implementing NHS reforms that import such incentives, is an interesting issue. It’s all a bit puzzling until you understand what the Treasury is really about.
The latest Treasury intervention is to undermine the current Secretary of State’s flagship policy of creating GP led commissioning consortia. The two reasons why the current Secretary of State felt that this policy would improve the nature of commissioning intent was first, that each commissioning consortia would be run by GPs, and second that the GPs would make it work better because they were used to working within a small business model and understood the incentives that work within the small business world.
The Treasury undermined this policy by saying that, whilst they were prepared to have GPs running commissioning organisations, all of these consortia had to be statutory organisations and not private businesses.
So we have the organisation in Government that is meant to believe in developing and progressing a capitalist economy arguing that they do not want NHS money to flow through an organisation that is structured and organised around business. The fact that this policy is imposed by a Treasury run by a Government that has a policy of rolling back the frontiers of the state is even odder. A Government that wants to roll back the frontiers of the state has been persuaded by its Treasury to nationalise £80 billion of NHS commissioning.
The Treasury exists in two different modes of thought.
First when it thinks about the economy and it is shepherding towards better growth and wealth, it sees itself as firmly in the 19th century. A century which saw Britain become the workshop of the world and overcome world markets with cheap goods. Throughout the 19th century market making drove an industrial and foreign policy that saw market incentives as the main object and subject of policy. This is what laissez faire meant. Not letting the world alone, but letting us alone to develop markets to make money.
Second the Treasury exists within another century when it comes to public expenditure. Throughout the 18th century Britain used tight control of the expenditure of monies raised by a variety of taxes to look closely at where every penny went. This money, spent on the navy and other essential activities, won Great Britain a world over that century. It was the state that won that world and it was tight control over the expenditure of that state that ensured it worked.
This clash between the 19th and the 18th century mode is strongest when it comes to the control of public expenditure. It is here that the 18th century generally wins – as it has done with the nationalisation of GP commissioning.
When controlling public expenditure the Treasury has a simple view of how it wants to do this called ‘line of sight’. This means that – as in the 18th century- you can’t control something if you cant see it. So they want to see where their money is for as long as possible and to develop their own tight relationship of accountability for that money.
18h century accountability was and is built up by having a set of organisations set up by the Treasury that the money runs through. You keep a close eye on that money by having individual officers who are agents of the state running each of the organisations that it flows through. These are called ‘accountable officers’.
The Treasury gives the money to the Department of Health accountable officer and he or she then gives it to a number of state employees that are similarly accountable officers. They all work for the state and they all have to say to the accountable officer above them where the money is at any one moment. This is a form of control that made a lot of sense in the 18th century.
That is the accountability of being able to see and touch the money and owning the person who is accountable for that money. You sack them if it goes wrong.
If you suggest creating an organisation and a set of accountabilities outside of that line of sight the Treasury will try and block it.
They did not like NHS Foundation Trusts because the whole idea of the CEO and that Board of each trust being responsible for their organisation called into question the idea of a single hierarchical set of state responsibilities.
GP led consortia that would have been run as they were intended to be – as small businesses – would have meant that there would not have been a state employee in charge of that money all the way through the process.
The problem is that it is an 18th century idea in a 21st century world.
Most of the money that I spend is not developed through a line of sight relationship. It takes place through contracts that I have with a wide variety of different sorts of organisations. I have a contract with a water company about the water I use; an energy company about my electricity, and a contract with an organisation that manages the block of flats I live in.
These contracts are managed within a legal framework and it is that legal framework that makes everyone accountable.
For most of my life I have had a contract with a public sector organisation that paid me a salary. That contract was implemented on the one side by my employee and on my side through the legal section of the trades union to which I belonged.
We are used to holding people to account through contracts, not by everyone working for the state. And in fact that is something that the Treasury believes in – but for everyone else and not for itself.
For every one else it really does want to roll back the frontiers of the state
But for itself it wants to keep control of our money. It doesn’t really understand or trust the law of contract between the state and several hundred businesses that will develop new commissioning intent. Therefore it doesn’t understand or trust the accountability that makes small businesses of GPs tick.
So it’s prepared to embarrass the current Secretary of State, who tried for 2 months to liberate the NHS, by forcing him to create more statutory organisations than existed before.
And he allows it to so embarrass him.