2011 was the first full year of the introduction of the full privatisation of the NHS, and a year of the steepest decline in public satisfaction in the UK, in the first full year of the Coalition after all parties had failed to win outright the 2010 UK general election. There’s a very important notion in finance and business that the markets are very sensitive to dividends. That is why for example other investors will be interested in the corporate ‘health’ of the economy, with the shareholder dividend as a potent signal in the market, for example.

I spent this afternoon spending a couple of hours at the Socialist Health Association Annual General Meeting. Obviously rules provide that I cannot blog openly about what was discussed, partly because I cannot remember exactly what was discussed. Imagine my joy when I emerged from the Friends Meeting House on Mount Street to find that @Putneydebates has let me know that Ed Miliband had made an announcement on the NHS. This was all however relatively relaxing compared to having read all 500 pp. of the new Health and Social Care Act for an informal chat I was to have with Dr Lucy Reynolds later last week.

I have indeed had trouble in finding the actual announcement. This is the best I could find:

Please note the use of the word “reverse”. This is because Labour are intensely edgy, because they do not know the exact state of the economy on May 8th 2015. If the Conservatives inherited a “mess” due to a massive financial stimulus to the banking industry to stop an outright depression, the mess potentially handed to the governing party/parties in May 2015 could be far worse. When Labour lost the election in 2010, the UK economy was actually growing. It then predictably entered a ‘double dip recession’ earlier this year due to a lack of a Keynesian stimulus and strangulation of consumer demand (as people in the public sector had less money, and VAT went up).

Andy Burnham has previously promised to repeal the Act (as he argued for a long time in Parliament). This is not in any dispute, though critics wonder about, having made the promise, what a realistic timescale for the repeal might be. Burnham is aware that, by 2015, more of this ‘top-down reorganisation’ (which nobody as such voted for), will have been implemented. We may still be in recession in May 2015, therefore it would be impossible for Labour to embark on a costly programme for the NHS. The facts are that Labour has introduced commissioning in some form, and Foundation Trusts, but the extent of private ownership, the elaborated on commissioning, means that there are strands of policy which are indeed deeply engrained. Furthermore, it is certainly not clear what the state of the UK economy will be in May 2015; the UK economy entered a double-dip earlier this year, and borrowing is increasing, therefore Labour’s room for manoeuvre is genuinely limited.

There is no doubt that there was much distress amongst some about the UK Labour Party’s future direction on the NHS last night. The problem is that NHS has had so many operations, some plastic genuinely to make it function, some reconstructive to make it appear more attractive, that it now runs the risk of being totally unrecognisable as a hybrid public-private entity. The general public might ‘blame’ the Coalition for introducing these reforms under duress, against opposition of all the Medical Royal Colleges, in particular the Royal College of General Practitioners, under the leadership of Clare Gerada, and the British Medical Association. Some of the public even blame New Labour for introducing the marketisation of the NHS (allegedly), and some blame the BBC particularly (although the topic is incredibly complex, and various interests have been mooted as possibly for why the BBC has preferred to keep silent on the issue as the Bill went through parliament and the House of Lords). However, a growing corpus traditional Labour voters feel that Labour has betrayed its roots on a NHS, truly national, free-at-the-point of use, and paid for entirely out of the taxpayer and which does not make a profit. Indeed, aspects of the denationalisation, marketisation and privatisation can indeed viewed on a spectrum of abolition of national health bodies (such as the Health Protection Authority and National Patient Safety Agency), pricing and competition strategies, procurement contracts which have to obey UK and EU competition law, the introduction of GP Clinical Commissioning Groups (CCGs), administration and rescue of failing trusts, mergers of clinical entities, and acquisitions of State hospitals by private entities. Some of this can be unpicked, some of it is not so easy to unpick.

The extent of private involvement can be unpicked, setting caps by Government. These budgets proposed for the CCGs are sufficiently high for the Public Contracts Regulations 1996 to kick in, and because of the way that a financial undertaking is defined by Europe in case law, for EU competition law to kick in (such as article 101). Corporate restructuring and financial restructuring of failing entities are a complicated science, and could apply to CCGs and the new model army of the NHS Foundation Trust; financial assistance is a consideration, and, whilst the sector regulator Monitor will be heavily involved, also embroil in addition to the Health and Safety Act (2012) the Companies Act (2006) and Insolvency Act (1986).

Andy Burnham MP was forced yesterday afternoon to shout ‘repeal, repeal, repeal’ on Twitter, for instance:

Andy had also made this very clear in the Houses of Parliament earlier this year in the ‘opposition day’ debate on the NHS:

In this video, Andy Burnham does confirm his intention to repeal the Act ‘in its entirety’, ‘as it is a defective piece of suboptimal legislation which has saddled the NHS with a complicated mess” and “unintelligible”; Burnham adds further “it would be irresponsible to leave it in its place”. Ed Miliband, however, has previously mooted that he might   reverse clinical commissioning, but Miliband’s current position on this is unclear. To reconcile the fact the Act will be repealed but there will be a change of direction under Labour, Burnham states that “organisations will be asked to differently”, implying that the structures being abolished in the current tranche in reforms will remain abolished (i.e. PCTs and SHAs), but there will be less competition in the further evolution of the Act which might not necessitate a new full-blown act and not require yet another extremely costly “top down reorganisation”, as it is said that morale in most of the NHS is now actually extremely poor.

There is no doubt that there has to be further documented guidance on the investigative powers of Monitor, although it is true to say the onus will be on the sector to report issues (as similar for the FSA and OFT), but CCGs will need to have legal guidance about defending possible legal claims for judicial review or breach of contract in procurement contracts for enforceable legal rights. According to s.10(1) Part 2 Schedule 1A of the Act, a CCG is a ‘body corporate‘, which is extremely fortunate as the default position would have been a traditional legal partnership under the Partnership Act (1890) s.1. Whilst many CCGs may view themselves as businesses, many have not chosen to become private limited company under law; however legal clarity is indeed needed about the liability of the body corporate of the CCG in this particular case, as for example private limited companies have limited liability but traditional partnerships do not. It is patently clear that CCGs, which might still outlive this political drama, will need advice on, and more resources for, the management and legal operations of their businesses, whilst Labour struggles the ‘best’ of clinical commissioning. Labour may also have to work closely with firms such as KPMG and KcKinsey and Company, with the Coalition, in the meantime to construct a ‘risk register’ regarding issues faced by CCGs in real life (such as ongoing problems with contracts or staff wishing to resign or being made redundant). Labour also has to revisit the issues, even having repealed the Act, at an operational level to address rationing-by-cost which it has traditionally opposed, as for example shown in cataract surgery.

This has now turned into a political mess, and Labour as far as I can tell is still fully committed to getting rid of the Act. This would send out a very positive message from the Labour ‘command and control’ centre to its members and potential voters, but Labour needs to resolve as to whether this might spook out corporate investors through for example dividend signalling described above. However, whilst yesterday afternoon was ‘not great’, at least Labour appears to be willing to have a clear debate about this. Andy Burnham has asked the Coalition ‘to be honest about its true intentions about private involvement in the NHS’, and it would help all concerned, especially those in the NHS (including doctors particularly GPs, nurses, other healthcare professionals) members of the public, lawyers and management consultant firms, if Labour could be categorically repeat in a speech that (a) the Act will be repealed, (b) some indications about which strands of it (some are deeply enmeshed) will remain in situ.