What underlies the changes proposed for the NHS…

The Health and Care Bill is the latest attempt by the government to solve a problem that has existed since the founding of the NHS in 1948, namely, how to run the NHS in England in the most efficient, cost-effective manner. The eternal challenge is to arrange a better system which delivers the maximum level of healthcare improvement for the level of public funding that the government is prepared to allocate to it – in simple terms: “How to make the English NHS work better”. Health is a devolved responsibility so the Bill only affects the NHS in England. The Welsh, Scottish and Northern Ireland NHS systems operate under different arrangements.

Three dilemmas have been consistent in all previous NHS reorganisations. First, what is the balance between competition and co-operation between NHS bodies? Secondly, what is the balance between local decision-making, where differences are derided as a “postcode lottery”, and national decision-making, where Ministers have to take the blame for unpopular local decisions. Thirdly, how to ensure enough money goes to preventative and community health services (which generally deliver more healthcare gains per pound expended) and stop too much money flowing into the large hospitals.

In 1998, Lord Ken Clarke of Nottingham looked back on his time as a Health Minister and said the NHS, “was being run into the ground in the 1980s and it had become a hopelessly out of control bureaucracy. There was no management worth the name taking place anywhere, just a constant lobbying cacophony of demands from various parts of the service that had run out of money”. His solution was the NHS “internal market”, dividing up “purchasers” of health services (later called “commissioners”) and NHS Trusts who would become “providers” of NHS services, alongside private business which ran NHS GP and dental practices. That new structure was created by the NHS and Community Care Act 1990 and was implemented in 1993. Management information for those running the NHS was supposed to emerge from the contracts between commissioners and providers and this should have allowed the service to be managed more effectively at a local level. The internal market created an NHS bureaucracy but there was limited evidence that the internal market delivered better outcomes for patients or more a efficient or cost-effective NHS for taxpayers.

The internal market process was largely continued by the Labour government between 1997 and 2010. That government vastly increased NHS resources but, other than creating NHS Foundation Trusts and NICE, allowed the internal market to remain in place. In 2013, the strength of the internal market was radically boosted by the changes to NHS structures brought about by the Health and Social Care Act 2012, including mandatory competition and mandatory procurement processes.

Post 2013, competition between NHS providers was supposed to create efficient patient facing, thereby delivering better services for patients and greater efficiency for the taxpayer. That Bill also promoted localism, removing powers from the Secretary of State thereby making the centre weak by emphasising the importance of local doctors (mostly GPs) making their own local decisions. This may have aggravated post-code prescribing.

The flaw in the “competition” model for the NHS was, of course, that whilst Tesco, Sainbury's and Morrisons may become more efficient by competing with each other, they do so without co-operating with each other (and are prohibited by competition law from doing so). In the NHS, patients only get a seamless service if NHS bodies co-operate with each other as well as with social care providers. Prior to 2013, this balance between competition and co-operation was never properly resolved in the legal structures created for the NHS or in the practical arrangements between NHS bodies. However, the 2012 Act swung the pendulum firmly in the direction of competition, with market disciplines preferred over the messy business of quasi-cooperation. It also trumpeted localism, giving the NHS centrally weak powers of intervention.

NHS England de facto moved away from the 2012 Act as early as 2015 when it started to establish partnership structures which led to sustainability and transformation partnerships (“STPs”) and integrated care systems (“ICSs”). These were partnerships of NHS commissioners, providers, and local government in 42 areas of England—to join up local services. However, these partnerships had no formal powers and had to work hard to navigate around the 2012 Act’s rules on competition.

The 2021 Bill creates statutory forms for the STPs and ICSs. Many of the legal changes follow on changes that are already in existence on the ground in non-statutory form. Hence, on this occasion, the legal pendulum has swung firmly away from competition and towards co-operation, with a raft of powers for NHS England formalising its new role as the referee of good behaviour. This is a regulatory role NHS England already undertakes, with varying degrees of success.

Under the 2021 Bill, local decision-making is maintained in name only, but with clear NHS England oversight and little room for manoeuvre for anyone not following the NHS England line.

There are also new powers for Ministers but, if NHS England does its job properly, these ministerial powers are probably little more than window dressing.

Changing these approaches has produced a massive legislative Christmas tree, with numerous baubles hanging off it. The Bill is 232 pages long, with 135 clauses and 16 Schedules. If the Bill ever becomes law, we can be confident it will be far longer and more complex, as has been the case with every predecessor NHS Bill. Further, it takes legal effect by amending the National Health Service Act 2006, and in many cases removing or making new amendments to that Act, as made by the Health and Social Care Act 2012. That means working out the effect of a clause is far from straightforward as it will sit within provisions which are not within the present Bill.

However, at the heart of the Bill is the abolition of clinical commissioning groups as the creation of statutory “Integrated Care Boards” (“ICBs”) and “Integrated Care Partnerships” (“ICPs”). The role of ICBs is to undertake “the function of arranging for the provision of services for the purposes of the health service in England”; in other words, commissioning NHS services. The legal split between NHS commissioners and NHS bodies which are providers of NHS services has been dropped. Thus, the non-statutory STPs and ICSs are now finding a statutory home. The result is that the market is largely removed and co-operation among NHS bodies and between NHS bodies and social care providers, is now mandated. Thus, the Bill attempts to legislate for good and responsible behaviour.

It is, at present, wholly unclear how the new ICPs will confront the dilemma faced by all attempts from Norway to Scotland at Integrated Care Systems, namely that whatever steps are taken, money always flows from preventative and community services to the large hospitals. That is the balance between investment in long term benefits and supporting people with long term conditions and investment in acute services. The 2012 Act tried to solve this problem by giving commissioning clout to primary care but, despite numerous statements to the contrary, money continued to flow into the large hospitals. However, enhancing investment in preventative and community services is essential as part of any drive to reduce health inequality.

The huge winner in the Bill is NHS England which has powers to back up the role it has already taken for itself in managing the NHS. In this context, the appointment of the new Chief Executive of NHS England may have as much influence on the future direction of NHS policy as the recent change of the Secretary of State.

Over the coming months, we will be publishing a series of articles about how the legal structures of the NHS will change if the present Bill becomes law. But for present purposes, the headline messages are that power is moving to the centre, mandated co-operation is “in”, and market-based structures are a relic of a bygone era.

David Lock QC is a specialist practitioner in this area. He has advised NHS bodies for 20 years, is one of the authors of NHS Law and Practice with Hannah Gibbs and is a visiting professor in practice at the London School of Economics.

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