“You can’t save the NHS by re-organising it to death”: the history of NHS reforms over seven decades

Written by Richard Vize on 5 July 2018 in Feature
Feature

The NHS has been through many “reorganisation convulsions” as successive governments sought to redefine the relationship between health services and Whitehall. Richard Vize looks at the most important shifts, including Andrew Lansley’s attempt to blow ministerial control apart, and asks what’s next for a service in perpetual motion

The seven-decade history of the National Health Service is littered with organisations which have come and gone. Regional health authorities, primary care trusts, strategic health authorities, the NHS University, the Health Education Authority, the Health Development Agency, the NHS Modernisation Agency, the Commission for Healthcare Improvement, the Trust Development Authority – all bodies scrapped in what Nuffield Trust chief executive Nigel Edwards has described as “major extinction events”.  

Politically driven re-engineering has tended to focus on intermediate management structures such as regional layers, commissioning and regulatory bodies, and agencies designed to drive system changes such as clinical improvement.

The UK’s predilection for reorganising its health system is unusual by international standards, according to Mark Britnell, former director general for NHS commissioning and now global chair of healthcare, government and infrastructure for KPMG. “That doesn’t mean to say that systems don’t change. For example, in the Nordics there has been a greater push towards regionalisation while Australia and Canada have pushed for larger hospital and health board areas to facilitate integration, but my impression is that the NHS goes through reorganisation convulsions whereas other systems try to manage change more organically.”

As Edwards noted in his history of reorganisation The triumph of hope over experience, from 1948 to 1974 there was little change in the institutional architecture of the NHS, but from the mid-1980s the pace of change accelerated. This was driven in part by a new focus on public management, and experimentation with mechanisms such as competition and outsourcing to drive efficiency and quality.

King’s Fund chief executive Professor Sir Chris Ham, who was director of the Department of Health strategy unit between 2000 and 2004, says the steady state for most of the first 40 years was symptomatic of it being an administered service rather than a managed one: “That changed with the Griffiths reforms and everything that follows on from that like performance management, the use of data and politicians trying to drive reform much more actively from the centre.”

“Ministers should not be responsible for every local decision, but they are absolutely responsible for the framework in which decisions are made and the resources available, so I think we are in a muddle frankly”
Stephen Dorrell

Sir Roy Griffiths’ 1983 report for Margaret Thatcher’s government berated the lack of leadership in the NHS, recommending robust management structures and an advisory board chaired by the health secretary to lead strategy.

Lord Norman Warner, a health minister under Tony Blair and a former civil servant, attributes the repeated failure of ministers to understand the operational consequences of reorganisations to the fact that “they think about it as a policy, not as a management issue and problem,” he observes.  “Most of them have never run anything.”

The Milburn plan

From Alan Milburn’s four years as health secretary from 1999 until the establishment of NHS England as an autonomous body in 2013, the Department of Health was unusual in Whitehall in being heavily populated by NHS managers rather than career civil servants. This reached its zenith with the appointment of NHS manager Nigel Crisp as both NHS chief executive and DH permanent secretary in 2000. 

Warner says combining the roles “was a major mistake. [Later health secretary] Patricia Hewitt and I had to reinvent the permanent secretary role because there was no one who was effective at dealing with Whitehall. It requires people who can talk mandarin to deal with the Treasury and people like that”.

Anita Charlesworth, director of research and economics at the Health Foundation, was director of public spending at the Treasury for most of the 10 years of Tony Blair’s government. She describes the relationship between the Treasury and Whitehall departments as “rather like our adversarial judicial process. Everyone has a role to play in good policy making”.

The departments provide the economic modelling and the Treasury probes their assumptions and predictions: “Critical to that is how much more productive can the system be – that is a key area of debate for the Treasury. And if you are an area that is getting expansion, how confident are the Treasury that you are going to be able to deliver? What is the added improvement?”

According to the Office for National Statistics, healthcare productivity suffered an annual decline of around 0.3% between 1995 and 2008, calling into question the NHS’s ability to spend extra money effectively. However, from 2010 to 2015 it increased by 1.4% a year in England, outstripping the rest of the economy. This highlights the way the health service ramped up activity to meet rising demand even as funding was squeezed.

In 2000 Milburn’s NHS Plan exemplified the tension between ministers’ instinctive desire for control with the understanding that hospitals needed more autonomy and greater local accountability to improve quality and be more responsive to patients’ needs. It led to the establishment of foundation trusts, overseen by independent regulator Monitor. 

Bill Moyes, its executive chair for six years until 2010, says: “Alan Milburn did the right thing in making it clear that he was trying to take away the party political element in decisions about how hospitals should run themselves.”

But Moyes believes Labour should have followed through the logic of the foundation trust reforms and reconsidered the role of the Department of Health. “Alan made one big mistake which was that he and the civil service saw the passage of the legislation as being the end, and in fact that’s the beginning,” he said. “Foundation trusts’ independence and Monitor’s independence raised a lot of questions about what is the role of the Department of Health.”

By the time the NHS was celebrating its 60th birthday, 100 trusts had been awarded the financial and operational freedoms of foundation status, making the question of the DH role more acute. But successive health secretaries proved less enamoured of the foundation trust idea than Milburn.

“The further away you got from the legislation the less ministers understood what this was all about and the more they reverted to the old-fashioned model of [acting as NHS] headquarters. This was partly because they were being told by civil servants ‘you can’t run this system unless we’re in charge of it’.”
Mounting deficits, missed performance targets and the Mid Staffordshire scandal have all but brought the foundation trust era to a close – except now the control is largely exercised by NHS England and NHS Improvement, not Whitehall.

Ministerial successes

While it is easy to criticise ministerial actions over the NHS, at key moments they have made a decisive difference. Norman Fowler’s determination to educate the public about HIV/AIDS exemplified the value of brave politicians. Frank Dobson, faced with conflicting advice on the risk of blood transfusions causing vCJD infections, committed millions of pounds which was later shown to have saved lives. 

Then in 2004, with a growing scandal about hospital-acquired infections, health secretary John Reid set a target of reducing MRSA infections by half. Many clinicians believed the infections were an unavoidable consequence of modern medicine, but concerted action driven from Whitehall pushed rates far lower than even Reid had hoped. 

Warner says: “When the MRSA storm broke, John Reid’s view was, ‘This is your responsibility Warner, get on with it’. I found that the only real lever I could reach for was a target, and they did actually work. Around the targets we built some policies such as washing your hands which led to managerial and practical actions.”

The Lansley blunderbuss

Under the coalition government, Andrew Lansley tested to destruction the idea of devising an entire healthcare system from Whitehall. Nick Timmins, in his history of the Lansley reforms, Never again, quotes an adviser to then prime minister David Cameron despairingly describing them as an attempt to create “a perfectly incentivised perpetual motion machine”.

It was a system rather than a structure, with nobody in overall control. It was so complicated that it defied being explained in a diagram and ministers struggled to articulate the point of it all. Then-NHS chief executive Sir David Nicholson warned that it might not work. As austerity drove a slowdown in NHS funding increases, the multiple shortcomings of the new regime were soon exposed.
Stephen Dorrell, health secretary from 1995 to 1997, once said that legislation requires a rifle shot rather than a shotgun. He believes that, after the Lansley blunderbuss, Whitehall and Westminster have got the message. “The machinery of government was scarred by what happened with the Health and Social Care Act,” he said. “It wasn’t even principally the Department of Health; it was the Treasury, the Cabinet Office, No 10 that realised they were launched upon something for which they had not considered all the consequences.

“In theory that nexus of the three departments – Cabinet Office, No 10 and Treasury – are there to coordinate so government has a more three-dimensional view of the risks that it’s running. When it works well it brings together policy, politics and money in a reasonably coherent way. It did not achieve that in the case of the 2012 Bill.”

Warner concurs: “What you’ve got now is broad cross-party agreement that you may have to adjust some of that legislation, but the idea of an all singing, all dancing, thunderous, top-down reorganisation is about the worst thing you could do to the NHS, particularly in its present state. You can’t save the NHS by reorganising it to death.”

The 2012 reforms have allowed what is now the Department of Health and Social Care to revert to a more traditional Whitehall role. The big hitting healthcare managers that once filled its senior ranks are now to be found at NHS England’s Elephant and Castle headquarters.

Ham, of the King’s Fund, says: “The role of the department has been reduced significantly over the last five-plus years. In some ways that’s what Lansley intended. The policy role has been offshored to NHS England and the other national bodies.”

This has enabled NHS leaders to make big changes that would once have required the Whitehall and Westminster machine. At a Public Accounts Committee hearing in 2017, NHS England chief executive Simon Stevens announced almost casually that the push for local integration of health systems would “effectively end the purchaser/provider split”. This marked the demise of government policy that had been a bedrock of NHS strategy and operations since 1991.

Stevens has tested the limits of how far an official can go in mixing it with politicians. His relentless pressure for more money prompted former Treasury permanent secretary Lord Nicholas Macpherson to call for him “to step down as an unelected public servant if he wants to campaign for more NHS funding”.

Stevens has retained the confidence of health and social care secretary Jeremy Hunt even in the face of pressure from Theresa May. Charlesworth says: “The skill that he has needed to walk that tightrope cannot be underestimated. Not many people could have survived this long.”

She believes the freedom for manoeuvre he is being allowed is down to the personalities rather than the structures, and there is no guarantee it will be replicated with other players.
But Hunt’s pact with Stevens trades wide latitude for NHS England with the right of the secretary of state to roam where he chooses. Hunt exerts immense power over the system through his famous Monday morning meetings of all the key players, and his involvement in operational detail has extended to phoning trust chief executives personally to discuss their failure to hit A&E waiting time targets. 

Although Hunt and Stevens have largely neutralised the 2012 act politically and operationally, the government cannot escape its clutches. The moves towards integrating care locally, with trusts, primary care services, commissioners, social care and others taking decisions and managing resources collectively, are built on legal quicksand. So too is the all but merging of NHS England and NHS Improvement. This is unsustainable.

What you’ve got now is broad cross-party agreement that you may have to adjust some of that legislation, but the idea of an all singing, all dancing, thunderous, top-down reorganisation is about the worst thing you could do to the NHS, particularly in its present state. You can’t save the NHS by reorganising it to death.” Lord Warner

Given the toxic political climate it is hard to imagine the government presenting Labour with the open goal of health reform, but the issue is nonetheless being discussed. May has taken the extraordinary step of inviting NHS England to draw up their own proposals on how they would like government to reform the law.
Dorrell is against the idea of the secretary of state absolving themselves from determining the direction of legislation: “The problem with that approach is that health policy is the responsibility of ministers… Ministers should not be responsible for every local decision, but they are absolutely responsible for the framework in which decisions are made and the resources available, so I think we are in a muddle, frankly.”

He sees historical resonances in the moves towards health and social care integration and the potential long-term consequences for how the NHS is controlled, especially the role of local government: “That was exactly what Nye Bevan and Herbert Morrison argued about in the 1940s.” Morrison, a senior Labour MP who led the London County Council before returning to Westminster in 1935, opposed the creation of a national system, arguing that local authorities were best placed to run health services. “If we are going to reopen the Bevan/Morrison settlement, that is a grade A political question,” says Dorrell, though he adds: “The existing settlement suits the NHS quite well – they make off with the money every time.” 

About the author

Richard Vize is a journalist and public policy expert. He tweets as @RichardVize

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