Allyson Pollock, professor of public health research and policy at Queen Mary, University of London, points out that by removing the NHS from direct democratic accountability, New Labour reforms are at the root of a lapse in NHS standards. These have seen the Care Quality Commission (CQC) cover up an investigation into baby deaths at Furness Hospital in Cumbria, and investigate failures at Mid Stafforshire Hospital.

In 2009 New Labour “stripped out public accountability for the NHS,” moving it to arms-length, market-based inspection and enforcement under the new Care Quality Commission and Monitor – the economic regulator for the newly-marketised NHS. Until New Labour’s meddling, the NHS was directly accountable to the public, since it was under the direct control of the government.

Stealth privatisation of NHS gives perverse incentives to cover up failings

New Labour marketisation of the NHS provided a perverse incentive for the CQC to cover up hospital failings, since all hospitals wanted to gain Foundation Trust status. Prof Pollock explains that Foundation Trusts are

“…a halfway house to privatisation. Foundation trusts have powers to generate up to half their income privately, and can use half their beds and staff for that purpose. They can enter joint ventures with shareholders and corporations, and sell land and buildings and lease them back. In short, they have the power to redesign NHS services for the private sector, or franchise them to big business.”

Evidence of failings in a hospital’s quality of health care would damage its prospects of gaining Foundation Trust status. Add to that, the fact that the CQC was under-resourced. And on top of that, Monitor obliged the CQC to register 378 NHS trusts by April 2010, all within a year of its own set up. It becomes clear why CQC swept disasters at Mid Staffordshire and Furness Hospitals under the carpet.

Prof Pollock identifies political pressure to authorise most NHS hospitals as NHS Foundation Trusts by 2014 as key to the CQC cover ups. Recognition of the hospitals’ failings would have delayed their progress to Foundation Trust status, and this would in turn have slowed the quick march to NHS privatisation under the Health and Social Care Act 2012.

Foundation Trust status and the Private Finance Initiative scam

The further sting in the tail is that Foundation Trust status is a blank cheque for rip off Private Finance Initiative (PFI) schemes that are already bleeding the NHS dry. For example, Calderdale Royal Hospital, which cost £64.6m paid through a Private Finance Initiative scheme, will end up costing Calderdale and Huddersfield NHS Foundation Trust a total of £773.2m. PFI repayments for Calderdale Hospital increase each year. They will be £24m in 2013-14 – almost 10% of the new Calderdale NHS budget of £256m.

Legislation that makes a Foundation Trust (FT) “irreversible according to the law” serves as a cunning wheeze to take taxpayers’ money out of the NHS and into the pockets of vulture funds and tax-avoiding private companies who are bloating themselves on PFI rip offs.

This is how it works. If a FT hospital fails to generate enough income it can be closed, no matter that the public needs it – unless it is a PFI hospital, in which case it will be protected  by special measures. These include closing down non- FT hospitals and transferring their services to Foundation Trust Hospitals, which then suck up all the income that comes from delivering those services.

The government is desperate to do this because the Department of Health already expects to have to bail out seven trusts that are unable to repay their PFI repayments over the remaining life of their contracts – to the tune of £60m/year. The situation is a massive mess, as the House of Commons Committee of Public Accounts reported in 2012-13.

The government is trying to close non-FT hospital and services – like the successful and much-loved Lewisham Hospital – against massive public opposition and despite the fact that overall, the NHS is performing under budget – in 2011-12 it returned £2.1bn to the Treasury.

The government wants to sacrifice Lewisham Hospital so that its services can transfer to and fund the South London Hospital Trust, which, writes Prof Pollock includes “six hungry PFI schemes. PFI currently consumes more than 16% of its income, compared to capital charges of 4% before PFI.” South London Hospital Trust is one of two London Foundation Trusts which between them have a deficit of over  £115m, and the government placed it in special administration in 2012.

New Labour and ConDem legislation to stealth-privatise the NHS has created both hospital financial deficits and poor quality of care. Managers must conceal these in order to survive in the marketised NHS.

It was a big mistake to move away from direct political control of the NHS, and the public accountability this guaranteed. Neither New Labour nor the ConDems can be trusted with the NHS, which both have done their damnedest to privatise by stealth.

Nye Bevan must be spinning in his grave.