NHS CHECK: SPIRALLING COST OF CAMERON'S NHS MARKET DIVERTS MILLIONS FROM PATIENT CARE

REVEALED:

• Competition lawyers cream off at least £5m from NHS commissioners alone in first six months of compulsory tendering of NHS services - equivalent to cost of over 5,670 cataract operations, 873 knee operations or 841 hip replacements.

• New survey shows 9 in 10 hospital leaders want incoming NHS chief executive to make removal of competition regulations his top priority

• Current NHS Chief Executive says NHS is "bogged down in a morass of competition law" following passing of Health & Social Care Act 2012 and says it should be changed

The growing cost of market reforms imposed on the NHS by the Health & Social Care Act 2012 is revealed by Labour for the first time.

A Freedom of Information request by the Labour Party to new NHS Clinical Commissioning Groups has found that the NHS commissioners spent at least £5m on competition lawyers in the sixth months since they were set up in April 2013.

Labour conducted the survey after hearing of concerns from people serving on CCGs about an explosion in spending on legal spending arising from open tenders. However, the full amount being spent by the NHS on competition lawyers is likely to be much higher than £5m, which does not include costs faced by hospitals. NHS providers and hospital trusts also report a sharp rise in legal bills but were not included in the survey. In addition to the figures reported here covering legal advice, CCGs will have their own in-house costs for managing the tendering process under the Government’s new framework.

This new expenditure is a direct result of David Cameron’s decision to open the NHS to full market forces in 2013, with private companies given equal right to bid for NHS contracts under the 'Any Qualified Provider' principle.

Despite Government claims to the contrary, NHS bodies report that Section 75 of the new Act requires open tendering of NHS services. The Act exposes the NHS to the glare of UK competition law by making it subject to the Enterprise Act 2002 and the Competition Commission. As a result of these changes, NHS commissioners are racking up lawyers' bills running into millions for advice on applying these new rules and handling disputes between providers.

The £5 million that has to date been diverted from patient care would be enough to pay for 5,670 cataract operations, 873 knee operations or 841 hip replacements - operations which have faced growing restrictions from new CCGs.

The figures are disclosed as a new survey of hospital bosses shows 9 in ten want the incoming NHS chief executive to make cutting back the new competition rules his top priority. The call follows an admission from the outgoing chief executive that the Government’s re-organisation had left the NHS drowning in a “morass of competition law”.

Labour today restates its commitment to restore an NHS based on collaboration, not competition. We will free the NHS from the damaging effects of competition law by repealing the Health & Social Care Act 2012. To avoid a further structural re-organisation, we will deliver our new vision of Whole Person Care through the bodies we inherit.

Andy Burnham MP, Labour’s Shadow Health Secretary, said:

“While the NHS has been throwing cash at lawyers, more and more older people have been denied essential operations and the A&E crisis has got worse.

"It is taking millions away from patient care and holding back changes that the NHS needs to make. Since April this year, the NHS has been unable to make sensible changes to services without consulting competition lawyers - it is a ridiculous state of affairs that can't go on.

"We are beginning to see the true cost of David Cameron's decision to put market forces at the heart of the NHS. He needs to be reminded that nobody has ever given him their permission to put the NHS up for sale. His re-organisation has wasted billions and put the wrong values at the heart of the NHS. Labour will repeal Cameron's Health Act and free the NHS from this market madness."

Freedom of Information request findings

190 bodies responded to the request – 90% of England’s 211 Clinical Commissioning Groups (CCGs) – with 76 bodies providing exact figures on the cost of competition lawyers. The running total reached £5,007,346 - a sum that could pay the annual salary of around 120 nurses.

12 CCGs spent over £100k, with Sandwell spending half a million and Nene CCG in Northamptonshire spending £330k. Bedfordshire CCG disclosed a cost of £4k for legal advice in relation to the Government-enforced tendering of the musculoskeletal service. Following the open process, the contract was awarded to private firm Circle in August 2013 at a value of £120m over 5 years. (See Annexe A for detailed breakdown.)

The figures from Clinical Commissioning Groups make up only one part of NHS spending on competition lawyers, as hospitals trusts face the same challenges. In addition, CCGs may have significant in-house capacity specifically for managing the competitive tendering process under the Government’s new market framework.

Hospitals want competition law burden to be top priority

A survey published by the Health Service Journal on 19th December 2013 asked hospital chief executives for their priorities for the incoming NHS England Chief Executive Simon Stevens, who takes control in April 2014.

It revealed 88% calling for a “change to competition and choice rules to reduce their effect on the NHS” – the top priority for hospital chiefs.

Since April there have already been several instances of competition considerations interfering with and even overriding the views of clinicians.

The most notable example, now setting a dangerous precedent in the NHS, came in Bournemouth in October when the hospital made a clinical case for merging with the neighbouring Poole trust. The Competition Commission blocked the proposal on the basis that it would lead to a substantial lessening of competition.

Similarly, a merger between King’s College Hospital, Guy’s and St Thomas’ and South London and Maudsley trusts has been put on hold indefinitely, citing competition rules a major barrier.

“Bogged down in a morass of competition law”

Last month, at the Health Select Committee, the outgoing NHS England Chief Executive Sir David Nicholson highlighted the cost and frustration caused by increased competition law in the NHS. Commenting on the new rules he said:

“I think we’ve got a problem, which may need legislative change.

“What is happening at the moment ... we are getting bogged down in a morass of competition law ... causing significant cost in the system and great frustration for people in the service about making change happen.

“In which case, to make integration happen we will need to change it [the law].”
6th November 2013

Mandated tendering in the NHS

During the passage of the Health and Social Care Act, Ministers gave repeated assurances that doctors would have final say over when to use competition. However, on the eve of the legislation coming into force this year, regulations brought forward under Section 75 of the Act mandated market tendering on commissioners in all but the most exceptional circumstances.

As a result, the regulations are creating a culture of defensive contracting, where commissioners will put a contract out to tender if there is any doubt that a failure to do so could expose the NHS to a possible damages claim from private providers.

During the debate in early 2013 about the regulations, medical Royal College leaders warned that, under the Government’s plans, decisions about who provides services to patients will not be made by clinicians, but lawyers instead.

Clinical Commissioning Groups are now guided by legal advice on competition and contract tendering. The document shows the costs of that advice in the first months of the new system.

CCG Name and Legal costs

Sandwell and West Birmingham £503,310
Nene £331,356.00
Southern Derbyshire £273,000
Leeds South and East £272,431
North Derbyshire £251,000
Rotherham £206,736
West Cheshire £176,544.56
Cambridgeshire and Peterborough £147,967.49
Basildon and Brentwood £144,000
East Leicestershire and Rutland £129,069.00
Castle Point and Rochford £120,633
St Helens £101,432
Coastal West Sussex £97,211.00
Hardwick £96,877
Hull £95,580
Merton £88,414
Milton Keynes £88,000
Halton £87,409
Wigan Borough £84,345
Lewisham £84,312
Richmond £83,527
North Hampshire £81,043
Knowsley £80,990
South Sefton £80,044
South Eastern Hampshire £80,000
Thurrock £68,984
Isle of Wight £68,500
Crawley £68,273
Southport and Formby £64,680
Nottingham City £64,416
Central Manchester £61,965.36
North Manchester £61,965.36
South Manchester £61,965.36
West Leicestershire £61,694.40
Sutton £56,437
West Hampshire £55,544
Corby £47,524.00
Horsham and Mid Sussex £43,695.00
Stafford and Surrounds £41,826
Cannock Chase £38,197
East Surrey £36,927.80
Gloucestershire £35,931.60
Vale Royal £34,000
Fylde and Wyre £31,094
Redditch and Bromsgrove £27,000
South Worcestershire £27,000
Wyre Forest £27,000
Bexley £20,160
Norwich £15,600
East and North Hertfordshire £15,000
Dudley £9,732
Bedfordshire £9,631.20
Cumbria £8,483
Coventry and Rugby £7,474
Liverpool £6,000
Bath and North East Somerset £5,344.00
Waltham Forest £4,823
Mansfield and Ashfield £4,709.00
Warwickshire North £3,726.43
Ipswich and East Suffolk £3,246.93
Dartford, Gravesham and Swanley £2,898
Barnsley £2,467.18
South Warwickshire £2,400
Nottingham North and East £2,169.00
West Suffolk £1,995.13
Rushcliffe £1,826.00
Newark and Sherwood £1,813.00
Chiltern 1,686.47
Nottingham West £1,403.00
South Devon and Torbay £1,400
Doncaster £1,200
Newham £1,156.80
Dorset £1,150.50
TOTAL £5,007,346

Source: Labour Party Freedom of Information request to all NHS Clinical Commissioning Groups in England.