By Richard S. Grayson reinventingthestatecover100This article was originally published in Reinventing the State: Social Liberalism for the 21st Century. We are grateful to Richard for allowing us to reproduce this article. Visit the Methuen website to purchase the latest edition of this book for the discount price of £10.

The democratic deficit in the NHS

Of all issues in public policy, health care is the one in which the public is consistently most committed to a major role for the state. The basic principle of the National Health Service – a tax-funded state-run system free to all citizens at the point of use – is a hugely popular one. Even the most pro-market politicians are reluctant to challenge it. Of course, the principle of tax funding was undermined as early as 1951 when the Labour government introduced prescription charges for false teeth and spectacles, and charges were then expanded further under the Conservatives in 1952. However, charges make up a tiny percentage of the NHS budget today, and the core of the tax-funded system remains unchallenged in party programmes. Is that a problem? Some believe that funding through taxation has meant that the level of financing the NHS has been too low compared to other European countries. Michael Portillo made that case in 1998, saying that the necessary money could not be found through taxation: ‘The gap between what we spend on health care today and what we ‘ought’ to spend is large, and no party is going to make it up from taxation.’ ((Michael Portillo, ‘The Bevan Legacy’, Kathleen A Raven Lecture given at the Royal College of Surgeons on 10 June 1998; available at: However, the record of the Labour government since 1997 has suggested that this analysis is wrong. They have put billions more into the NHS; one of Labour’s proudest claims is that ‘Investment into the NHS has doubled since 1997 and is set to treble by 2008 to over £90 billion.’ (( The funding of health care in the UK now compares favourably with other European health systems, whether publicly or privately funded. This suggests that it is possible to fund the NHS through general taxation at levels which compare with other countries, and that Liberal Democrats should not be seduced by arguments that more funding means private funding. Moreover, Liberal Democrats should recognise that tax-funding is the surest way to ensure socially just funding. Such funding is socially just on two grounds. First, it is redistributive, in that the wealthiest in society pay the highest share of the costs. Second, and most important, access to health care is not limited (at least in principle) by an individual’s ability to pay charges, whether on a one-off basis or through an insurance premium. For these reasons, this chapter does not propose any alteration to the basic funding regime of the NHS. In contrast, decision-making within the NHS needs radical change. Despite the increased levels of funding under the Blair government, if only from 1999, there is no sense in which the public believes that all is well with the NHS. In particular, despite the extra money, the cumulative deficit of NHS trusts has risen past £1 billion. Consequently, some hospitals are faced with losing services or even closing altogether. The case has been particularly marked in the author’s own constituency, Hemel Hempstead. In July 2006, Liberal Democrat research found that sixteen hospital trusts, running twenty-seven hospitals in England providing acute services, were under strong pressure due to their deficits. The research identified the West Hertfordshire NHS Trust, which runs St Albans City Hospital, Hemel Hempstead General Hospital and Watford General Hospital, as being under the most pressure. Others at high risk included West Middlesex University Hospital NHS Trust, and Surrey and Sussex Health Care NHS Trust. The list suggests that deficits appear to be greatest in the south-east of England. ((Liberal Democrat press release, ‘Lib Dems highlight English hospital trusts most under pressure’, 25 July 2006; available at: The deficit means that trusts are obliged by the rules to make cuts, albeit after going through public ‘consultation’ exercises. Despite the huge public support for keeping all hospital services, trusts find they cannot do that because they do not have the money. But because they have little real meaningful independence from central government, and no power to raise extra public funds locally, they are unable to have a meaningful debate with local people about how local aspirations can be met. The end result is that after nearly a decade of increases in NHS funding, all that some local people see is the closure of wards. They understandably fear for the future of entire hospitals. The situation in West Hertfordshire is admittedly an extreme example of the problems faced by today’s NHS. But it flows from a political failure at the heart of the NHS throughout England: the inadequacy of the current decision-making structure for any kind of rational debate about the cost and shape of health-care provision in local communities. The NHS is enormous. As Patricia Hewitt pointed out in June 2007, ‘If the NHS was a country, it would be the 33rd biggest economy in the world, larger than new European Union transition economies like Romania and Bulgaria … The NHS is four times the size of the Cuban economy and more centralised.’ ((Patricia Hewitt, ‘The NHS: The Next Ten Years, Speech at London School of Economics, 14 June 2007; available at Within this massive bureaucracy the ability of local people to influence decisions is extremely limited. In the current system, ministers are able to claim that any local closures have followed public consultation and that decisions have been made locally. Yet the unelected bureaucrats who make such decisions pay scant attention to local wishes for two reasons. First, they do not have to: they are unelected and their jobs do not depend on any form of public satisfaction. Second, they are not able to act on most local demands because they work within tightly defined budgets and central rules, which do not allow them any flexibility in the amount of money they spend on local services. It is argued in this chapter that it is this absence of a democratic authority which can take decisions based on meaningful local debate that is the greatest barrier to satisfying public demands on the NHS. Without such a body, it will always be possible for everyone to blame somebody else without taking responsibility. Ministers can blame local bureaucrats, when those ministers have given the bureaucrats very little independence. Health care bureaucrats can point to rigid central controls, but can also blame the public for making supposedly unrealistic demands, when the bureaucrats have little incentive to engage with the public. The public can blame ‘them’ – usually the government or bureaucrats – despite the fact that the system allows the public to make demand after demand for high levels of local services without ever having to face their real cost. Meanwhile, without local power, demands for higher quality are difficult to balance with fairness, as only the better off can access the ‘more’ or ‘quicker’ health care which is so often what people mean by quality. In place of this current system, the NHS in England needs radical reform. We need a radically different system which puts elected local people in charge instead of the plethora of unelected bureaucrats currently in power, and the remote national ministers who set targets. Crucially, these elected local people need to have the power to raise funds for the NHS so that any demand made by the public for higher quality can have a real price attached. Only in that way can there be a rational public debate about local health-care provision in which those making the demands also pick up the tax bill. The danger of not reforming the NHS is that its noble concept will lose public support. In 1970, the economist Albert O. Hirschman wrote a classic study of what happens to organisations faced with difficulties: Exit, Voice, and Loyalty: Responses to Decline in Firms, Organizations, and States. ((Albert O. Hirschman, Exit, Voice, and Loyalty: Responses to Decline in Firms, Organizations, and States (Harvard University Press, 1970).)) This study has relevance for the NHS today. Hirschman argued that in any organisation which is failing to deliver a satisfactory service, its users have two choices: exit and voice. In the NHS today, exit is an option for the wealthy, but it is not a real choice for the many. Meanwhile, the ability to have a voice is extremely limited. Democratic reform can provide that voice.

Counties and cities, not regions

Although the NHS is notionally UK-wide, and is certainly funded as such, the system in England post-devolution to Northern Ireland, Scotland and Wales is unique to England. So although an English parliament would stop MPs from the devolved parts of the UK voting on England-only matters, it would do nothing to decentralise decisionmaking in the NHS, as the Parliament in Westminster already makes decisions on English health matters. But the problem with the NHS in England is not that Jo Swinson, Alun Michael or Ian Paisley can vote on English-only matters, but that the NHS in England is too vast. The challenge is therefore not simply to remove Scottish, Welsh and Northern Irish MPs from decision-making in England, but to devolve power below the English level that already exists. As part of a model for a federal UK, the Liberal Democrats have long argued for regional devolution. The regional dimension was a particularly important aspect of the 2002 Liberal Democrat public services policy paper, Quality, Innovation, Choice. This was the report of what was colloquially known as the ‘Huhne Commission’, named after the working group’s chair. The paper proposed that where elected regional authorities existed in England, current unelected Regional Health and Social Care Directorates and Strategic Health Authorities should be scrapped. Instead, regional assemblies would take responsibility for the strategic development of health and social care services. Crucially, these regional bodies would be able to vary taxation (specifically, a proposed earmarked NHS contribution) to supplement funding received from central government. Meanwhile, Primary Care Trusts would be scrapped, with their powers given to whatever tier of government in the area had responsibility for social services. In such a system, regions would have agreed collectively on setting minimum health care standards across England. The role of central government would be limited to public health, regulation, medical research, and medical, nursing and other professional training, while a new Finance Commission for the Nations and Regions would allocate central funds to each region based on need. ((Liberal Democrats, Quality, Innovation, Choice (Liberal Democrats, London, 2002), pp. 50–51.)) There was no alternative proposed for regions without an assembly because implicit in the policy was the belief that in time, regional assemblies would cover all of England, and those which did not initially want such a body would be encouraged to adopt one through the promise of more control over the NHS in their area. I was closely involved in developing these policies as the party’s Director of Policy at the time, and I still believe that given the assumptions of the time, they were the right policies for us to develop. However, it now turns out that one of our key assumptions was wrong. The context in which we operated was a shared belief, held in both the Labour Party and the Liberal Democrats. We believed that regionalism in England offered the only way in which England could have the same measure of democratic devolution as that enjoyed in other parts of the UK through elected bodies in Belfast, Edinburgh and Cardiff. It was assumed that there would be a rolling process of devolution across England, with the North East being the first to adopt a regional assembly. However, those assumptions were faced with a reality check when the North East decisively rejected such a body in 2004. It had always been known that some ‘regions’ (notably the South West, which has always had strong county identities) were resistant. But from the south of England, the ‘Geordie nation’ looked like exactly the kind of region that could blaze a trail for regional devolution. With even the North East rejecting a regional assembly, that chapter in progressive plans for devolution is now closed. The Labour Party rapidly shelved further plans, and even the Liberal Democrats downplayed the proposal in the 2005 election. Three lessons came out of the North East case which need to be learned by anyone who wants to see decentralisation in England. First, people are inherently sceptical about additional layers of government or bureaucracy. There is always a fear that such a body could be a gravy train for politicians who had not quite made it to Westminster. Second, there is no appetite for ‘talking shops’ as bodies with minimal powers tend to be called. This was a major problem with the type of regional body proposed by Labour in 2004. However, it is not at all clear that people would have opted for a more powerful body, for the third problem that emerged from the North East is that regions, even in the North East, are not natural communities. For all that there is a ‘Geordie nation’, it is easy to forget that such a label does not apply to the people of Sunderland, Middlesbrough or Durham, and within each region there are often major divisions. Put simply, regions are just too big and too recent a creation for people to feel any emotional affinity to them. So anybody who wants to decentralise within England has to look for alternative natural communities. These must be ones through which people will consent to organise services and with which people will feel some community of interest. They must also be large enough in which to take strategic decisions. Do they exist already? The simple answer is yes: they are counties and cities. Crucially, although county identities are not as strong as they once were, people already understand them as legitimate political entities because they exist in the form of county councils, and the same can also be said of England’s major cities which have their own authorities. The task therefore becomes to prove that they are large enough units to take on strategic health care functions, or that in the cases of very small counties, there is a way of pooling responsibilities with neighbours. Part of the evidence lies in another part of the UK. Northern Ireland manages to take strategic decisions for its share of the NHS with a population of around 1.5 million. That is significantly below the populations of the current ten strategic health authorities and more in line with the size of many of the twenty-eight strategic health authorities that existed in England between 2002 and 2006. The NHS in Northern Ireland is also the part of the NHS with integrated decision-making on, and provision of, health and personal social services. Does it work? Mortality rates per 100,000 of the population (standardised for age) are about 2.4 per cent higher than for the United Kingdom as a whole. However, the direction of this figure is downwards, and at a faster rate than for the rest of the UK. Between 1996 and 2001, for example, overall mortality in Northern Ireland fell by nearly 14 per cent, which was faster than for the whole United Kingdom, at 9 per cent. ((Angela Jordan et al, Health Systems in Transition: the Northern Ireland Report (World Health Organisation, Copenhagen, 2006), pp. 1, 6.)) However, further evidence of such a scale of decision-making can be found from another country: Denmark.

Danish lessons

In the early part of this century there was a vogue for examining public services in other parts of Europe – and indeed outside Europe – in order to see what can be learnt. The think-tank Civitas has carried out extensive research on health care. Conservative spokesmen were dispatched to the continent, prompting wry smiles from those who had grown used to the Conservatives being at best wary of the supposedly pro-state solutions of the French, Germans and, not least, the Scandinavians. Liberal Democrats took part in this exploration too, first on education, and then on health. Within the party, some of this research had an impact on policy. The Dutch model of funding schools, set out in a pamphlet by myself and Nick Clegg, found its way into the party’s policy in 2002. ((Nick Clegg and Richard Grayson, Learning from Europe: Lessons in Education (Centre for European Reform, London, 2002), pp. 19–21; Quality, Innovation, Choice, p. 57.)) Meanwhile, the Centre for Reform’s work on comparative systems of health funding offered strong arguments against health insurance schemes at a time when the party was looking at all options and ended up not choosing insurance. ((Nicholas Bromley, Universal Access, Individual Choice: International Lessons for the NHS (Centre for Reform, London, 2002).)) However, the party skirted round the need for radical devolution. That was despite the fact that Denmark, the country with the most radically devolved health system in Europe, was cited as a model of good practice. The 2002 public services paper said, ‘Although Denmark has a population of just 5.3 million, its popular and tax-funded health service is run by its 14 counties and two cities. Denmark spends modestly more than we do as a proportion of national income – about 1.2 per cent – but has the highest satisfaction ratings in Europe.’ ((Quality, Innovation, Choice, p. 21.)) Having failed to follow this approach through in 2001–02, it is now time that the Liberal Democrats revisited the Danish model as one that could be transplanted to the NHS in England. The Danish system is now even more appropriate for England than it was in 2002. At that point, as the policy paper said, it was run by fourteen counties and two cities (Copenhagen and Frederiksberg). These bodies were responsible for both GPs and hospitals and they funded them mainly from county taxes, used primarily for health. Below the counties were local authorities (273 of them) which had responsibility for matters such as school health care. At a national level, the government played a hands-off regulatory role, for example on parents’ rights. ((Ministry of Health and the Interior [Denmark], Health Care in Denmark (Ministry of Health and the Interior, Copenhagen, 1997, revised August 2002), pp. 8–10 and 15–17.)) However, even though the Danish public were very satisfied with health care at that point, there was a sense that the system was not as efficient as it could be. Moreover, in a relatively small area, there were difficulties in coordinating between a large number of decentralised authorities. ((Ministry of the Interior and Health [Denmark], The Local Government Reform – In Brief (Ministry of the Interior and Health, Copenhagen, 2005), p. 7.)) Even the counties were often very small compared to England. The smallest, Bornholm, had a population of 43,245 in 2006. The largest, Aarhus, at 661,370, was smaller than most English counties. Several were smaller than all English counties except Herefordshire, the Isle of Wight and Rutland. As a result, the Liberal Minister of the Interior and Health, Lars Løkke Rasmussen, pushed a series of proposals through the parliament, the Folketing, in 2005. These measures, a total of fifty acts under a broad ‘Agreement on Structural Reform’, abolished the counties (including the two city authorities) and replaced them with five regions, ranging in population from about 600,000 to 1.6 million, thus making them analogous in size to English counties rather than regions. The 273 municipalities were replaced with 98 on revised boundaries. ((The Local Government Reform – In Brief, pp. 53–56.)) The powers of the new levels of government, which came into being on 1 January 2007, are now as follows:
  • Municipalities:
    • Preventive treatment, and non-hospital care and rehabilitation,including that at home; and
    • Treatment of alcohol and drug abuse.
  • Regions:
    • Hospitals;
    • Psychiatry; and
    • General practitioners, specialists and reimbursement for medication. ((Note that this category is described as ‘health insurance’ in the English translation of the Danish documents. However, this is misleading as the ‘insurance’ is simply funded by taxation, and is not a form of insurance as understood in the UK.))
  • State:
    • Planning for specialist treatment; and
    • Follow-up on quality, efficiency and IT usage.
The argument here is this: if Danish counties, which were smaller than English counties, could deliver a health care system, funded from general taxation, that was the most popular in Europe, why cannot English counties do the same? Moreover, why is this model not even more appropriate now that it has been established on a working basis in units that even more closely match the English counties in size? The arguments against are only those about whether the units are to small for strategic thinking, but the Danes have shown that a radically devolved system can work, and work well. The argument about exactly what a Danish transplant would mean for England in terms of organisation is developed further below. However, one other issue from Denmark needs to be discussed before that: funding. Under the pre-2007 model, most of the money for health care in the counties was raised in the counties. In the new scheme, approximately 80 per cent of each region’s funding comes from a national health contribution, amounting to a rate of around 8 per cent on income tax. That is part of the replacement of county taxes which had been, on average, over 30 per cent, and which were completely scrapped in the 2007 reforms, so it is not an additional tax. The minimum national health contribution per year is 1,000 Danish kroner (about £90) and the capped maximum is 1,500DKK (about £140). That represents only a small amount, but it can provide useful extra funding at a local level, and can be vetoed on a vote of two-thirds of the municipalities. The final 10 per cent of the regional health budget comes from a basic contribution payable through municipalities, but set by the regions, described as an ‘activity-related contribution’. Since the municipalities have a non-hospital care role, the amount they pay through this final contribution is reduced as they make relatively low demands on hospitals, thus rewarding effective preventive treatment care. ((The Local Government Reform – In Brief, pp. 36–39.)) As with decentralisation, the funding aspect of the Danish model is similarly capable of being transplanted to English counties without being rejected by the host. At its core are concerns for equalisation and redistribution, to ensure that the very different tax bases of the regions and municipalities do not result in disparities in funding. As the Danish government said:
If each municipality were to finance its own expenditure, the service level and tax burden of the municipalities would … vary considerably. The purpose of the equalisation system is to ensure that the same service level involves the same tax percentage regardless of the income of the inhabitants and any demographic factors … [T]he grant and equalisation system means that money is transferred from the rich municipalities to the less affluent ones. ((Ibid., pp. 36–37.))
However, the system also allows local flexibility in funding should more funds be needed and rewards attention to preventive measures. That makes the Danish funding system compatible not only with the principles of a National Health Service, but also with the Liberal Democrat commitments to localism.

The absence of democracy: the NHS in England today

To determine what could be devolved in England, the starting point has to be an analysis of the situation as it currently is. There are two main levels of the NHS which ministers regularly describe as ‘local’ and are concerned with commissioning services: Primary Care Trusts (PCTs) and Strategic Health Authorities (SHAs). Yet neither are democratic in any meaningful sense, as local councillors have very limited powers of scrutiny. Meanwhile, the Strategic Health Authorities are hardly local, as they operate on a regional basis. There are also other bodies, such as acute trusts, which will be discussed briefly. The Primary Care Trusts are the key building blocks of the NHS. Created in 2002 following the government’s 2001 Shifting the Balance of Power initiative, they are responsible for 80 per cent of the NHS budget. PCTs can provide services but their main role is to commission services from GPs, hospitals and other parts of the NHS. Their role is officially described as to ‘make sure there are enough services for people within their area and that these services are accessible’. ((Details of the scope and roles of trusts are available at: The boundaries of PCTs are often counties, but they can be smaller. For example, in the East of England region, there are fourteen PCTs. There are two for Hertfordshire and five for Essex; four nominally cover whole counties (Norfolk, Suffolk, Beds and Cambridgeshire), but a further three cover parts of these counties: Luton, Peterborough and Great Yarmouth & Waveney. Although these PCTs match local government boundaries in some cases, they do not always do so, and one result is a confusing array of mechanisms for accountability to local people. The Strategic Health Authorities were created in 2002, to replace existing health authorities. They are the link between the Department of Health and the local NHS, ensuring that national targets are incorporated into local health service plans. They also develop strategic plans for health services across the region and monitor performance. There were originally twenty-eight of them, based on a city or one or more counties, with London divided into five. Most covered an area containing 1.5–2 million people. However, in 2006, they were reduced to ten: London, South East Coast, South West, South Central, East of England, West Midlands, East Midlands, Yorkshire and the Humber, North East, and North West. They range from a population of 2.2 million in the North East to 7.4 million in London, with most in the 4–5 million range (that is, as large as Denmark as a whole). In addition to PCTs and SHAs there are other bodies which aim to make the administration of the NHS more local. Acute trusts manage hospitals and are sometimes regional or national specialist centres. They employ those who work in hospitals and thus have a crucial role in spending the money that comes from elsewhere in the NHS (for example, from PCTs), while those attached to universities have a role in training professionals. The acute trusts often have boundaries which come close to those of PCTs, but not always; for example, the East of England’s fourteen PCTs are joined by eighteen acute trusts. Some of the acute trusts have become the controversial foundation trusts, of which there are fifty-four across England. Other types of trusts include ambulance trusts (which largely match SHA boundaries), care trusts (covering only thirteen very specific parts of the country), and mental health trusts (MHTs). As regards the latter, their boundaries can match those of other trusts, but not always. To take the East of England as an example again, its fourteen PCTs and eighteen acute trusts are joined by eight MHTs. The result of this is a confusing mish-mash of overlapping boundaries which can bemuse any member of the public who is trying to work out who runs which part of the NHS. But all these bodies have one thing in common: democratic accountability, and the ability of local people to make meaningful choices about levels of service, is extremely limited. Theoretically, the Secretary of State for Health can intervene in decisions made by trusts, but they have been reluctant to do so, sometimes deploying the argument that local decisions should be made by local people. That is right, yet it is not what happens, because local people have very little power or meaningful voice over decisions. There are plenty of ways for the public to make their views known about the NHS and to scrutinise its work. Not only can they lobby politicians, but they can currently get involved in Patient and Public Involvement (PPI) Forums. These Forums monitor each NHS trust (including SHAs) and monitored bodies are obliged to respond to their reports. However, the government is in the process of abolishing PPI Forums and replacing them with Local Involvement Networks (LINks) which will be organised in such a way as to match social service boundaries. In addition to this, since 2000, local authorities (both counties and boroughs) have had powers to scrutinise the NHS in their area, and councillors have been vocal in criticising all types of NHS trusts. However, they can only challenge trusts over whether procedures have been correctly followed. Consequently, the central political problem of this system in the NHS in England is that there can be mass consultation on local health care, but there are rarely the means to implement local people’s wishes on the most controversial issues such as keeping hospital wards open. Those running trusts are able to respond to local demands by saying that they would like to do as the public wishes but simply cannot. They can say that they are unable to act because they do not have the money within existing budgets and do not have the power to raise extra funds. Moreover, because local people are never faced with a real choice – such as having to pay higher taxes for the services they went – they end up feeling profoundly powerless and dissatisfied. The only way to change that is to introduce radical democratisation of the NHS at a local level.

A democratic and local NHS

One option for democratising the NHS in England is simply to elect Primary Care Trusts, replacing them with elected Local Health Boards. The attraction of this option is that it would not involve any reorganisation of the current NHS management, and would recognise the extent to which people see the NHS as separate from other parts of government. With all the change that there has been in the NHS in recent years, such an approach has huge practical attractions and may be necessary as a first step to further reforms. However, in the long term, more radical democratic decentralisation is necessary if we are not only to devolve decision-making in the NHS but to create the kind of devolved government in England that is enjoyed in the rest of the UK. Such radical reforms should be centred upon counties, which are historic units of England, and many of which encourage strong feelings of local identity. Creating a democratic NHS at a county level will mean revisiting the boundaries of existing trusts. As part of that, the distinction between PCTs and SHAs should end, with their commissioning powers given to elected local people who are in touch with local needs and have the ability to raise extra funds to meet local demand. That will mean centralising some functions which currently take place at a level below that of counties (or a similar level of government), and decentralising those which are dealt with at a regional level. But it will mean democratisation all round, giving real power to elected local people. The last thing the public wants is another level of government. Indeed, in many places, the number of levels is already being reduced with the introduction of unitary authorities. So instead of creating regions, the powers of SHAs and PCTs should be given to more local levels. The most obvious boundaries, very much in line with the Danish model, are those of the thirty-four counties, six metropolitan counties, or forty unitary authorities across England. London is a special case which is discussed below. There are two options for the way in which such devolution could be achieved to provide local people with the voice that they lack. The quickest and simplest way might be to give PCT and SHA commissioning powers to existing county-level authorities. The great advantage of this approach is that it could have positive effects on the quality of government beyond the NHS. By giving county councils significant powers over the NHS, counties would become more directly comparable to the devolved bodies in Belfast, Cardiff and Edinburgh. This would help to answer the ‘English question’, which is increasingly a factor in debates on the power of Westminster. If an effect of that was that people who are ambitious to wield power in their area stood for county councils rather than Westminster, the overall quality of decision-making at a county level would be greatly increased. An alternative option would be for each county-level local authority to choose whether to run the local NHS itself, or to create a Local Health Board with powers to vary local taxes in much the same way as unelected police authorities do. Such a Board would be directly elected by local people at the same time as local elections, on the basis of manifestos put forward by local parties or independents. The advantage of this approach over the more timid measure of simply turning PCTs into Local Health Boards along current boundaries is that county boards would reflect wellunderstood community boundaries and reduce confusion about where decisions are made and by whom. Meanwhile, the advantage of such an approach over submerging NHS functions into wider county-council matters would be that there could be a very clear focus on NHS-related issues at election. All the evidence suggests that this is the primary concern to voters, so why not give them a chance to have a separate debate over how to run the NHS? This would allow clear choices to be made over, for example, additions to the NHS budget in return for maintaining a local hospital ward, rather than confusing health matters with the broad range of issues tackled by local authorities. It would also allow those with specific expertise of the health service, such as retired doctors or nurses, to get involved in the running of the local NHS, having put their case to the electorate. Their expertise could greatly inform manifestos and invigorate local debates on health care. County-level devolution – whether to councils or Local Health Boards – would be a significant development of Liberal Democrat policy. As regards the powers of PCTs, this approach is already in essence party policy in the proposal to give the commissioning powers of PCTs to local government at the same tier as social services. ((Liberal Democrats, Healthy Communities, Healthy People (Liberal Democrats, London, 2004), p. 25.)) But the proposal goes much further on SHA powers because it assumes not only that regional assemblies do not exist and are unlikely to, but also that they should not exist, as they are far too remote from local people. Overall, this proposal will mean the devolution of commissioning powers from ten regional SHAs, and the centralisation of power from 151 PCTs. So the wide-ranging but unaccountable decision-making bureaucracies of 161 bodies will be scrapped and their powers given to around eighty existing countylevel councils. Underpinning these changes in decision-making must be one crucial change on funding. Core funding has to remain at the national level, as it does in Denmark, to maintain fairness across the country and so that poorer areas do not have under-funded health care. Yet local decision-making cannot be effective unless there is local flexibility over funding. So aside from having the power to make those decisions currently made by PCTs and SHAs, local authorities must have the ability to support those decisions with necessary funding. Only by having the ability to raise extra funds can authorities truly respond to local needs because more often than not, local demands for services will have a price attached. Thus, authorities should be empowered to raise funds for the NHS through additions to the NHS Contribution discussed in the next section. That will give them the power to meet public demand, while at the same time showing the public that their expectations have costs. There should not, however, be wholesale change of all structures in the NHS. Although the commissioning powers need radical reform, there are three reasons why it does not make sense to make such major changes in the provision-side of services, as regards the role of acute and mental health trusts. First, those working in the NHS are already demoralised by government targets and consistent reorganisation. Second, giving powers over provision to politicians rather than clinicians would fly in the face of the strongly held Liberal Democrat belief that professionals should be allowed to get on with their jobs. Third, if one wants to retain the advantages of the purchaser–provider split in the NHS, which can promote value for money, then it is necessary to retain separate acute trusts so that the commissioning arm of the NHS can make real choices between them. There is the danger that acute trusts will continue to make decisions which are unpopular with local people. For example, a trust which runs the same service at more than one different hospital (perhaps in two different towns), may decide that it wishes to centralise a particular service in one hospital. Such decisions are usually driven by financial limits, and so negotiations will have to take place between the acute trust and the locally elected commissioners. If the latter are convinced that there is no case for retaining services at both hospitals, then they will have to defend that at election time. However, if they believe that it is essential for services to remain at both, they will be able to raise money locally to pay for that. There is one important caveat to the proposed radical democratisation of the NHS in England. We need to recognise that some local authorities may feel that they are not the right size for taking sole responsibility for health care because they feel themselves to be too big or too small. It may be that larger counties wish to split the geographic areas they cover into two or more units. If so, they should be able to do that. But smaller counties may wish to work with others. So they should be given the opportunity to collaborate with other authorities by agreement. Two smaller counties may decide to commission hospital services together, and that may well make sense. In such a situation, they would have the option of making decisions either through joint meetings of the county councils or through a joint health board. But the crucial democratic accountability element should remain, so that at elections, council or health board candidates put a health programme to voters and can be held to account on their NHS-related decisions. The precise nature of boundaries is a problem that will be faced by Londoners in particular. The current London SHA covers a population of over seven million people. It may well be that Londoners would wish to run health on a city-wide basis, and if so, the Greater London Authority and Assembly already exist. However, to ensure that the potential benefits of devolution and genuine local accountability can be enjoyed across the city, London boroughs should be offered the same powers and choices as counties, or the chance to pool their powers with other boroughs. The result may be London-wide decision-making, or the city may be split into smaller units, but that will be for Londoners to decide.

Maintaining national guarantees

The Liberal Democrats have a clear position on how the national level of the NHS should be reformed and that approach is consistent with the model advocated here, though with no role for regions. ((Ibid., pp. 23–29.)) The starting point should be a reformed Department for Health. Its current role in defining national NHS targets should end, as they have consistently distorted clinical priorities. Instead, the Department should focus on matters such as ensuring standards of professional training and competence, inspection and audit, and coordinating the agreement of minimum standards for quality of care and patient experience. Funding for the NHS should come from an earmarked NHS Contribution, based on National Insurance, and distributed using current formulae. When this policy was first developed by the Liberal Democrats in 2002, the amount raised by National Insurance Contributions (NICs) conveniently matched the NHS budget. This meant that the revenue stream from NICs could easily be diverted to the NHS. However, the NHS now consumes more money than is raised by NICs. This is not a problem if five steps are taken. First, all NICs should be diverted to the NHS. Second, the shortfall should be made up by money from general taxation. Third, a rate should be set for an NHS Contribution which will provide enough revenue to maintain the current NHS budget. Fourth, the basic rate of income tax should be reduced by the difference between the NHS Contribution and the old level of NICs. Finally, there should be an exemption from part of the NHS Contribution for those pensioners who pay income tax (since they do not currently pay NICs) so that they do not pay more under the new system. The overall effects of these steps will be that the NHS Contribution will be higher than the NICs rate, but the basic rate of income tax will have been reduced, and pensioners will not have to pay the full NHS Contribution, so that the overall level of taxation remains the same. The amount of money coming into the NHS will remain the same, but the cost of the NHS would be much more transparent, greatly aiding political debate and decision-making.

Conclusion: the need for voice

Within such a national framework, a reformed local NHS can flourish. But it can only do so if the existing bodies are scrapped and given to democratically accountable local people with wide-ranging powers. Those could be existing local authorities on a county or city basis, or they could be new Local Health Boards. There may also be more short-term attractions in simply transforming PCTs into health boards, as already proposed by the Liberal Democrat health spokesman. But without one of these reforms, people will not have a voice over the local NHS and will be continually frustrated about their inability to influence decision-making in the areas of the NHS that most affect them. Without local power, local people will be continually asking for health care that is not on the menu, and for which they have not been given a price. Without local power, people have no chance to pay for the quality they want, and monitor the quality of local services. Radical devolution has happened in Denmark, and it works. The challenge in England is to sweep away swathes of unaccountable local bureaucracies and give their powers back to the people through elections in which local health care can be thoroughly debated. As regards the NHS, that does not mean reducing the overall size of the state, but relocating it.
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