Colin Leys is an honorary professor of politics at Goldsmiths College London, who has worked in the UK, Africa and Canada, and was until recently the co-editor of Socialist Register.

An expert on the politics of health, Colin has recently written The Plot Against the NHS, co-authored by Stewart Player. The following interview, conducted by James Arnold, provides a meticulous and systematic treatment of the issues raised in the book. This part focuses on the implications of Lansley’s bill, strategies for resistance, and the nature of the progressive alternative. Part 1 can be found here.

Moving from the steady drift towards marketisation, we’ve now got Lansley’s proposals, which are, if you like, openly declaring what was previously a covert or perhaps not even fully formulated plan. So I wanted to talk about the details of this. How does transferring the NHS budget away from PCTs [Primary Care Trusts] and into GP-run consortia, regulated by the independent regulator Monitor, how does that lead to a privatised system?

The starting point should be that the Bill removes the responsibility of the Secretary of State to provide universal and comprehensive health services. This is fundamental. Under the Bill, he will no longer be responsible for doing that, he’s only responsible for promoting it. Responsibility for providing anything rests with the GP commissioning consortia which are answerable to a Commissioning Board, appointed by the Secretary of State, but only loosely accountable to him. And then, as you say, there will be an oversight of the whole process by Monitor, which will regulate the emerging market. So what does this mean? It means that the commissioning consortia, the groups of GPs, get a share of the NHS budget, out of which they’ve got to fund all the secondary care for their patients. Not just secondary care, I think also community care. Anything but GP care, because of the too obvious conflict of interest, so that’s reserved to the national Commissioning Board.

So what the Consortia will be required to do is to spend that money in the interests of the patients registered with their constituent practices, and if they think that they can do it more cheaply with private providers, they will. So will private providers be cheaper? Perhaps. But the combination of, on the one hand, the drive to save money at the expense of quality (because in a field that inherently depends on skilled person-to-person care you always save it at the expense of quality), and on the other, the freedom apparently given by the Bill to patients to choose what provider they would like to have, costs will rise and the resources available will fall, so the pressure to cut costs will intensify, and so on, in a vicious circle.

Also important is the ‘any willing provider’ phrase in the Bill, which is built into the provisions around Monitor, and the mandate given to Monitor, to regulate where appropriate and promote competition where appropriate – but not to foster cooperation. Monitor’s composition is at the disposal of the Secretary of State: its chair has already been appointed from the private sector and it is likely to contain more private sector representatives. The Bill is intended to open the door to a major increase in company provided healthcare.

Within the Department of Health there is also a competition and cooperation panel…

Set up by the Bill?

No, it was set up earlier. When the commercial directorate, which was set up to introduce ISTCs [Independent Sector Treatment Centres], was closed down, something it created in its last year survived it, called the Competition and Cooperation panel. This is a group of mainly lawyers from the industrial relations and business field, and their commitment is to ensure that such cooperation as takes place is not anti-competitive. One private provider called Circle Health has already challenged two Primary Care Trusts on the grounds of their preferring NHS hospitals when awarding contracts.

So what about opening up the possibility of competition on prices? As I understand it, according to the Bill you don’t have any fixed prices, or, I don’t know if there’s a lower-bound…

At the moment, you’ve got a national tariff, which is a price list of procedures or completed treatments for a whole range of conditions, graduated according to the risk level of the case. So it’s a complicated price list; the kind of thing you see in a pub, but multiplied by 5,000. About 60% of all hospital work is based on the tariff, so when they do a hip replacement, there’s a price for it depending on the risk category of the patient concerned, and they get paid by the PCT when it’s done. Some non-hospital work is on tariffs, but not very much; ambulance work, and mental healthcare, for example, are much less tariff-driven. All tariff work is fixed price, but everything else is not. So, for example, when UnitedHealth was awarded the contract to run two surgeries in Camden, that was awarded on price. So there already is price competition. The question is not whether there will be price competition, but whether what is currently on tariff will give way to price competition. There was a big reaction against that, and now they’re being more cautious. But David Bennett, the senior McKinsey staffer who is now chair of Monitor, has said more than once when pressed that there will be price competition for specialist care, but of course it will have to be introduced carefully and gradually.  So yes, there is going to be price competition, no question.

And what’s the impact going to be of this emphasis on competition and cost-cutting? You mention in the book a report by McKinsey saying that they should reduce the number of nurses by 15%, which I found shocking given that it’s common knowledge that nurses are already under a lot of pressure. What are the impacts likely to be on staff, delivery of care, and so on?

In general, everybody knows that if you reduce prices you reduce quality, there’s just no way around it. Everybody knows this, but not everybody admits it. And one of the arguments is that actually prices are too high, and you needn’t sacrifice quality if you become more efficient. The evidence we’ve got doesn’t support that. For example, when Mrs Thatcher moved long-term care out of the NHS into the private sector, and it became fee-paid, the private sector reduced standards in two ways: first of all, staff ratios, and second, levels of qualification of staff. And when the government sought to regulate those things, and raise standards, the private sector simply said ‘if you do that we’re going to close x% of the homes, they won’t be viable if you force us to have more staff, more qualified staff, and single rooms.’ And the government backed off. This exemplifies the problem: if people are seeking to maximise profits and maximise the share price of a company, they will always look to see if they can do it with less, and less means a quality drop. Healthcare is above-all billions of transactions a year between highly qualified staff, and so cuts must invariably mean a reduction in that key equation.

And I suppose it’s not just about shareholder profits, it’s also about the market share. You see in America these enormous organisations like UnitedHealth and so on, who become almost monopolistic in certain areas. The marketisers talk about breaking it up and competition and so on, but we can see that the drift is toward private monopolies anyway.

That is a feature of markets in general under capitalism. Big ones eat little ones, and mergers and acquisitions are the name of the process. The American phenomenon is a little different because of the scale of the country. Here you wouldn’t get geographic protection for a monopoly to the same extent, but you can get some.

Another element in this is fraud. One statistic that shocked me is you say that in September 2010, the state of California said that they were seeking $9.9 billion in fines for alleged legal violations by UnitedHealth. The scale of the fraud is astonishing. I was wondering if that was really possible in the UK. It seems like an American phenomenon, but perhaps it wouldn’t arise here…

The first thing to say about the data we have on fraud or malpractice in the private sector in the United States is that it’s a different legal system, both positively and negatively. To take that particular case, I think what happened was that UnitedHealth bought a health company, and over a two year period that company had been in arrears with its payments to the providers of healthcare, and under state regulation it could not delay those payments. The doctors and hospitals and so on were all waiting for their payments. At the rate fixed for fines under that system they had accumulated nearly $10 billion worth of fines. It’s like somebody who has 214 parking tickets that haven’t been paid. So UnitedHealth basically bought that liability, and found themselves facing a prosecutor who said ‘you owe us $10 billion.’ Typically what happens in these cases is there’s a settlement. It’s more or less seen as a cost of doing business in the United States that you will have fraud, you will be sued for it or prosecuted for it, privately or publicly, you will make a settlement, but you don’t admit liability, and it’s a game that’s played on both sides.

So in a way it’s a result of the profit motive, because they say ‘well the legal cost is a cost, but then what profit could we make out of pursuing this illegal action anyway?’

Occasionally it goes wrong and the company’s reputation takes a bad knock, they fire a couple of rotten apples, pay them off with a handsome settlement and things continue as before. The main lesson to draw from it, I think, is that fraud is implicit in all government–private sector relationships. It’s not as though we haven’t had plenty of fraud in this country, though it’s been more limited by cultural and other factors. But if you open up a department with a huge budget, say 14+% of government spending, to the private sector, in a myriad set of connections and contracts and sub-contracts and so on, it’s opening the door to an awful lot of malpractice; you won’t be able to monitor it all.

Moreover, you won’t be able to prosecute it all, because the costs of prosecution are considerable and you have to make a judgement as to whether it will be worth it. It would require an enormous expansion of the Crown Prosecution Service for a start. And there’s also a culture in this country of basically not worrying too much about a certain degree of malpractice. What strikes you so much when you read the American cases is you have these prosecutors competing for office, who make a name for themselves standing up for the public and saying ‘this horrible corporation has ripped off the public Medicare system by $x billion.’ The company then settles for $300 million, and the prosecutor fights an election on that basis. I’m not being cynical about it: I think among these people there are some very serious guys who want to defend the public interest. The other thing the Americans have that we don’t have, and I think it’s really important to stress, is they have legislation – the False Claims Act -  that allows a whistleblower who thinks the public is being cheated to bring a case. They typically find a law firm that will take it on pro bono, and if the case begins to look strong typically the public prosecutor will join the case themselves. Then, typically, it’s settled for millions of dollars, and the person who brought it to begin with gets a share. It may be a small share, but given the scale of the sums involved it’s a very substantial amount. So there’s a huge financial incentive for people to look out for the public interest. We have no legal culture whatsoever like this.

So paradoxically it could be even worse in some respects…

Yes, it could be worse.

As many of our readers will certainly be on the left of the political spectrum, many of them socialists, one value embodied in the NHS that they may support is that of equal treatment; a service provided equally for all. Is there a possibility these reforms will lead to more unequal treatment? You talk in the book about a three tier system that might emerge from this.

One of the effects of the Bill as it stands is that commissioning consortia can in effect define what is free under the NHS for the patients they commission services for, and set fees for what is not free. Critics of the Bill, including, I think I’m right in saying, the NHS Confederation, which represents NHS managers, are not happy about this, and think that power to set fees should not rest with a myriad of local GP commissioning consortia. But that does exist in the Bill as it stands. And the implication of this is that you will have a narrowing of what is free, and an increase in top-ups, or opportunities for top-ups. Consortia will be free to set fees, saying ‘you can have this free, but that will cost you more’, or simply, ‘this is what you can have free, and if you want more you had better pay for it privately, or take out insurance in case you do have to pay for it.’ The whole culture of top-ups is implicit in the Bill, and that means of course that people who can afford it will have better service and what is free will be a more basic service.

Then the third tier is fully privatised…

Yes, and in today’s paper one company is reported as looking forward to a real increase in private medical insurance, because it’s obvious that the NHS is declining rapidly under the regime of cuts.

So what can concerned individuals, people who want to resist these changes, do about it? Are there any organisations they can join? And is there a need for a grassroots movement as opposed to one led purely by the medical establishment?

We have to begin by noticing that the Labour party is not mobilising people against the Bill. Although I have a lot of respect for [shadow health secretary] John Healey’s mental ability, it’s fairly clear that the record of the party makes it complicit in too much of what has gone before for them to feel they can take a strong line. There are also many Labour MPs who are identified with that current, so…

But surely if the leadership wanted to they could oppose it on the grounds of breaking with prior New Labour policy? There’s a lot of dissatisfaction with New Labour…

A lot of people thought that Ed Miliband would include Labour’s marketisation of the the NHS, when he said that the era of New Labour was over. But he hasn’t. The other day he said that New Labour’s record on the NHS was excellent and that it was in need of modernisation – if anything he’s adopted the discourse of the marketisers. So it’s a huge problem for resistance. What’s striking to me is that the comparative incompetence of Andrew Lansley has succeeded in producing an alliance of doctors, nurses, health policy individuals, trade unions, right down to ordinary people in the street, who begin to realise that their hip replacement operation is being postponed because of something Lansley or [NHS Chief Executive David] Nicholson has said about efficiency cuts.

So you naturally think ‘what’s the official opposition doing?’; and it’s not doing very much.  Public awareness has been assisted by the cuts regime, which is a subject we don’t talk about in the book, which I’m very interested in. People have been sufficiently aroused and upset to cause the government to pause. The Sheffield conference that the Lib Dems held was a crucial moment, where Shirley Williams led the criticism and the conference passed a motion with eight parts which was really incompatible with the Bill. This suggests that the rank and file of the Lib Dems pose a problem for the Lib Dem members of the Coalition in government, which is where we’re at now. And the pause, the so-called ‘listening’ exercise, is really about finding amendments that they can accept which purport to be major but which will not be major. That’s the name of the game. So if the question is, ‘what can we do right now?’ it is about that game. It’s about highlighting the fact that the amendments which will be proposed as major revisions, which Cameron has said he’s up for, major changes in the Bill, are not; in fact, they are anything but.

What can people do? Well, Keep Our NHS Public has a network of local organisations and it has some profile. Health Emergency is a very efficient, small but effective publicity machine. But basically – this is my personal view – the more I look at it the more I think we’re into a politics of parties that are indistinguishable in terms of their overall ideological stance, but which are very sensitive to electoral opinion at the margins. So it’s a question of letter writing, of lobbying MPs, of making them all understand that if they let the NHS go, it will never be forgotten, and this will be a major issue for the future. When people ask me this question I say, ‘look, if you haven’t done two things before the end of June you’ve let yourself down, you’ve allowed the NHS to be taken away.’ It can be any two things: you can go on a march, you can write a letter to your MP, you can write a letter to Mr. Cameron, you can write a letter to Mr. Lansley, or whatever; but you should do at least two things, and you should make sure that your friends do at least two things – and be unpleasant to them until they do!

One question that’s always raised when you’re fighting changes is that it’s just resistance, it’s purely reactive, and some people see that as a negative thing, and think you ought to have a positive vision, and perhaps people feel that the NHS is a good system, but far from perfect. Is there a positive vision of improvements that could be made to the healthcare system which would take us on a very different route from that of the marketisers?

As we say in the book, the place to begin is looking at what’s happening in Scotland and Wales where they’ve chosen not to go down the market route, and are doing some very interesting things. I don’t think they’re perfect, but the theme of their changes is integrated healthcare. Whether they’ve got the capacity to shift vested interests entrenched in the hospital system, for example, or in private GP practice, remains to be seen. But they’ve made a number of changes in the way their health systems are managed that open up that possibility. In particular, in Scotland they’ve introduced an elective element into the health boards, which is going to be a very interesting experience. The health boards already comprise hospital and non-hospital doctors, and other medical professionals who are not doctors; that’s already a huge step in the direction of integrated healthcare. Whether, as a result of this, resources will be moved around as fast as would be desirable, I don’t know. But my guess is they will experiment; they will try things in some areas; they will have a chance to see what works and what doesn’t.

While the NHS is not at all a perfect system – there’s always enormous room for improvement – statements that it’s unsustainable, that we can’t go on, are just pure rhetoric. They’re not serious demands for a particular kind of improvement, they’re just ways of attacking the existing system and justifying a change – markestisation and privatisation – which the people who say this don’t wish to have discussed.

The marketisers use this rhetoric of increased ‘choice’, of handing things over from big government bureaucracies and so on. Whilst, as you say, that’s just rhetoric – they’re essentially handing it over to big private bureaucracies – there seems to me to be an appeal to this. I was reading a book by Colin Ward recently, an anarchist thinker, which discusses the self-organised, localised, working-class medical aid societies that existed prior to the construction of the modern welfare state. And he briefly considers the possibility of renewing this sort of system. He says, “As the official welfare edifice patiently built up by the Fabians and Beveridge becomes merely the safety-net for the poor” – which is what we’re seeing – the renewal of “the self-help and mutual aid principle” could emerge from “the new so-called underclass… rejected by the economy” allied with “people who just can’t stomach current economic and social values.” He concludes, “Huge welfare networks were once built up by the poor in the rise of industrial Britain. Perhaps they will be built out of the same sheer necessity during its decline.” And it does seem like a pipedream, the idea of going back to any system of mutual aid societies or anything like that. But I wondered if you see any possibility – and you mentioned elections in Scotland – of more control, and local, de-centralised control over our healthcare institutions. Because perhaps people feel like they miss that element of it.

The question I always put to people is: what do you want a healthcare system for? It’s to take care of you when you’re sick, and stop you getting sick. All these other things are a diversion. I don’t mean it can’t be made more democratic. I believe that the problem with the NHS, like a lot of Fabian structures, was a radical lack of democracy. But that has to be balanced against the specialist character of the services provided. I think the proper model is the fire service. It’s something that you absolutely need, and if you are progressive, it should be universal, and that’s not compatible with a huge degree of local variation and control. Otherwise, what are people to do when control of the local health board shifts towards a group of people who think it would be much better to divert more money to obesity treatment, and cut provision for children? Should the parents of small children have to move to an area where the provision for them is not cut?

The localist, mutual way of thinking has a lot to recommend it but in relation to health care it is unrealistic. The important thing about the health system is you pool the risk for the whole nation, and you provide a comprehensive, universal health system, which broadly speaking is the same wherever you are. You must certainly define things which patients should be left to choose, and you can have some locally determined variations in provision, provided they command a very strong level of local support, but they’ve got to be subordinated to the fundamental need for the core of the service to be universal.