One of the panellists was the IEA’s Kristian Niemietz. The article below is a rough transcript of his opening remarks.
Liberal critics of the NHS often describe it as a centrally planned, top-down bureaucracy. They see it as a miniature version of the old Soviet Union.
But that perception is actually no longer fully accurate. The NHS has changed quite a lot over the past two decades. It now makes much greater use of market mechanisms than it used to for most of its history.
The main changes occurred in the New Labour years. They introduced a much greater degree of patient choice. They also started to roll out a new payment system, under which money follows patients. This means that up to a point, NHS organisations now compete for patients. And they gave NHS hospitals greater independence, by converting a lot of them into so-called “Foundation Trusts”, which are semi-autonomous enterprises.
That’s not very Soviet. If you want to compare the NHS to a historic example of an economic system, it would not be the Soviet Union. A better example would be the Socialist Federal Republic of Yugoslavia (SFRY). They had this system which they called “Market Socialism”, under which all major enterprises are collectively owned, but the economy is not centrally planned. Collectively owned enterprises still have to compete for customers, in a market-like setting. Today’s NHS is a bit like that.
Now, what does this have to do with today’s topic, which is staff shortages in the NHS?
The answer is: the quasi-market reforms of the New Labour era were a major improvement over the old NHS, as far as they went. But there was one major omission from that market reform programme, one major area of the healthcare system which has been virtually untouched by it. And that is the medical labour market.
We don’t really have a medical labour “market” in this country. Wages, working conditions and working hours in the NHS are not set by market forces; they are not determined by supply and demand. Instead, they are set by national pay scales, which use a points-based system. It is a bit like a points-based immigration system, except, it is even more complex and bureaucratic. Professions in the NHS are grouped together, on the basis of variables such as skills, level of responsibility, and experience. And then, a monetary value is assigned to each group, and each subgroup within it.
So here, the liberal critique fits again. It may no longer be accurate to describe the NHS, as a whole, as a “Soviet-style system” – but when we are specifically talking about the wage-setting, training and recruitment process, it still very much is. We now have a strange hybrid system. We use something like Yugoslavia-style Market Socialism for the delivery of healthcare. But we still use conventional, Soviet-style socialism to organise the medical labour force.
Unsurprisingly, the latter leads to the same problems that central planning always leads to: shortages on the one hand, surpluses on the other, and a generally inefficient use of resources. Some medical careers are heavily oversubscribed, others have permanently unfulfilled posts. What holds between medical professions also holds between regions. The NHS also makes much less use of standard personnel management methods – simple things like annual appraisals, working out individual performance goals, or bonus payments – than almost any other industry in the country.
So what can be done? I would simply extend the quasi-market reforms of the 2000s to the medical labour market. Those reforms worked, as far as they went. They measurably improved the delivery of healthcare, if from a low base. They could also help with sorting out the issues with staffing and recruitment.
In practice, this means phasing out national pay scales and national contracts entirely. It means treating every NHS organisation – every NHS hospital, every NHS walk-in clinic, every NHS diagnostic centre, etc – as an employer in its own right. They would negotiate directly with their employees, and/or their representatives. No national body would be involved. The Health Secretary would have nothing to do with it. It would no longer be a political issue.
NHS organisations would also have much greater autonomy with regard to the entry requirements for particular jobs. They could change those specifications. This could be along the lines that Mark Tovey describes in his recent IEA paper. My guess is that it often would be, because Mark’s proposals seem eminently sensible. But it wouldn’t have to be that particular solution. I would simply leave that up to them.
20 years ago, this would have been a radical proposal. It would probably not even have been feasible. Market mechanisms would have been alien to the old NHS. Today, it is not a particularly radical proposal anymore. It would merely mean bringing the medical labour market into line with the rest of the NHS.
But even if not especially radical – would it not be highly disruptive, at a time when the health service needs stability and predictability?
It wouldn’t have to be. I’m not suggesting tearing up existing employment contracts, and starting everything from scratch again. I’m talking about changing the rules, not the outcomes. All existing contracts would, of course, still be valid. In the short term, nothing would change. The status quo would remain the default option.
From now on, however, NHS actors would have the freedom to deviate from that inherited default position – if, when, and how they see fit.
Suggestions for further reading:
- “Is there a doctor in the house? Averting a post-pandemic staffing crisis in the NHS” by Mark Tovey
- “Internal Markets, Management by Targets, and Quasi‐Markets: An Analysis of Health Care Reforms in the English NHS” by Kristian Niemietz