Andrew Lansley’s Health and Social Care Bill promises the biggest top down reorganisation of the NHS since its inception. This is a consummation of the reforms that have been implemented since the 1990 NHS and Community Care Act, based on the concept of ‘marketisation’. But in fact these reforms risk increasing the power of central bureaucracy in order to drive down costs. The new ‘independent’ NHS Board – a crucial part of the plans – will be a centralised bureaucracy that allocates budgets but remains largely unaccountable to the people it will affect.

The last 63 years have seen the failure of central planning in the NHS, yet our politicians clearly remain wedded to this ineffective institution. As Hayek wrote ‘Is it really likely that a National Planning Officer would have a better judgement of the number of cars…we are likely to require in, say, five years, than Ford or General Motors?’ One could easily apply this logic to the NHS. Hayek also wrote ‘the more the state plans the more difficult planning becomes for the individual’. Central planning restricts freedom, decreases productivity and drives up costs. Despite 13 years of ‘New Labour investment’, the UK slid down to 14th in the EU annual healthcare index in 2009. In 2008 the ONS reported a 10% fall in productivity.

The coalition’s reforms are based on the premise that it is futile to diverge radically from the current model of nationalised healthcare. The state can therefore only hope to create a more efficient centralised structure and the bureaucracy will continue to misallocate resources and incur high costs (exacerbated by an ageing population). Indeed, there are a number of specific reasons to doubt that the reforms will deliver significant efficiency gains. For example, a likely result of the policy to abolish PCTs will be that many of the bureaucrats made redundant will be employed by the new GP consortia. Reforming the structure of the NHS will not solve the system’s fundamental problems.