GMB EVIDENCE TO THE HEALTH SELECT COMMITTEE INQUIRY INTOTHE ROLE OF THE PRIVATE SECTOR IN THE NHS.

TheGMB Britains General Union welcomes the opportunity to submit evidence tothis Health Select Committee inquiry. We would also welcome the opportunity topresent oral evidence. The GMB represents 25,000 employees in the health caresector, the majority of whom are ancillary workers with direct experience ofprivate sector involvement in the NHS.

Summary

NHSConcordat

1. The GMBbelieves that the NHS Concordat with the private and voluntary sectors shouldbe a short term measure

2. The Concordatis an unnecessarily expensive mechanism for reducing shortlists and that morecreative, value for money solutions should be found such as the removal of bedblocking by elderly patients inappropriately staying in hospitals.

3. There shouldbe rigorous measures to regulate quality standards in private hospitals

ThePrivate Finance Initiative

1. The PrivateFinance Initiative is not providing value for money in the NHS.

2. There issubstantial evidence that the Private Finance Initiative reduces bed numbersand increases patient throughput with unhappy consequences for patients.

3. The PrivateFinance Initiative increases the costs to NHS Trusts on a long term basis thusthreaten resources for other valuable services.

4. The PrivateFinance Initiative leads to cuts in terms and conditions for NHS staff thusundermining staff morale, motivation and service quality.

5. There is asevere danger that the Private Finance Initiative will lead to commercialconsiderations being placed above patient interests.

PublicPrivate Partnerships

1. Previousprivate sector involvement in NHS support services has lead to a deteriorationof service quality.

2. The experienceof GMB members in the Health Service is that private sector contractors payworse terms and conditions and provide inadequate pension arrangements thusundermining the NHS role as a decent employer.

TheNHS concordat with the private and voluntary sectors.

The GMB has no objections to measuresto reduce NHS waiting lists on a short term basis whilst further investment istaking place to provide extra beds. GMB is concerned, however, that theConcordat is an open ended arrangement. We believe that in the long term bettervalue would be achieved for the taxpayer if further facilities were provided bythe NHS to reduce waiting lists rather than relying on expensive private sectorprovision. In the Health Service Journal on 6 September 2001 a spokesperson fora large acute trust stated that NHS hip operations cost 3,500 whilst in theprivate sector they cost 9000, he followed this by saying that the bigproviders are whacking up the prices. GMB has serious concerns that if NHSTrusts come to rely long term on private providers they will be held hostage interms of price and incur unnecessary costs which could be spent on improvingservices.

The GMB would suggest that a majorcontribution could be made to the reduction of waiting lists without resortingto the purchasing of expensive private beds by tackling the problem of bedblocking by elderly patients who have no suitable residential home to go to.This problem was recently highlighted in June this year by a report by thePolicy Studies Institute commissioned by the NHS Executive London. The GMBbelieves this situation should not be allowed to continue given the spare bedcapacity in the care sector and that the NHS should work together with localgovernment social services departments to resolve this problem.

The GMB believes that if private sectorhospitals are already providing services to NHS patients as a result of theConcordat, even, as we hope, on a short term basis, then there is an urgentneed to ensure that standards of care are enforced and that private hospitalsare appropriately accountable. In this context we welcome the provisions in theCare Standards Bill to regulate the private and voluntary health sector.Standards need to be enforced as soon as possible and the cost considerationsof effective regulation must not take precedence over patient safety.

ThePrivate Finance Initiative

The GMBbelieves that the Private Finance Initiative is a failed experiment. There isno evidence that it has producedbetter value for money or better services in the health sector. We would drawthe Committees attention to the conclusion of the June 2001 IPPR report onPublic Private Partnerships which stated of(hospital) PFI projects on which data exists, none.show significant value formoney savings when set against the Public Sector Comparator.

Attached to this document are twopieces of research commissioned by the GMB into the effects of the PrivateFinance Initiative so far in the NHS, including details of losses in beds.These reports highlight the following issues:

The dramatic increases in the cost of PFI schemes fromoriginal plan to final deal.

The high margins and projected profits of PFI contractors.

Reductions in staffing levels.

Reductions in bed numbers

The stripping of NHS land assets

The dramatic increase in throughput per acute bed at PFIhospitals this means that the NHS will be required to pay for furthercommunity health services and intermediate beds to offset the effects ofprofitable PFI hospital schemes.

The bias towards the PFI option when making judgements aboutvalue for money against the Public Sector Comparator. It should be noted inthis context that both the IPPR and the Office of Health Economics (TheEconomics of the private Finance Initiative in the NHS April 2001) haverecommended the reduction of the 6% discount given to the private sector optionin assessing value for money.

Termsand conditions of staff

The GMBs experience of private sectorinvolvement in public services has been one of profits being made as a resultof cuts in staff terms and conditions rather than on the basis of efficiencyand improved service quality. We agree with the Prime Minister Tony Blairsrecent statement to the Guardian newspaper that I don't believe that that is the wayto provide a better service, to reduce the terms and conditions of the staff.And I just think that's obvious.

TheGMB has serious concerns that private sector operators will achieve theirprofit margins by cutting staff terms and conditions. It was on this basis thatwe welcomed the announcement of the three pilot PFI retention of employmentmodel schemes at StokeMandeville, Roehampton and Havering. In these schemes staff would retain their status as NHS employeesdespite being under the operational management of a PFI contractor. We are concerned that progress on theseschemes seems to have stalled and it seems that the private sector contractorsare unwilling to give up direct control of staff terms and conditions. Thisonly increases our anxiety that cuts in staff terms and conditions are seen asthe route to high profits by the private sector contractors involved in PFIschemes.

TheGMB has welcomed the Agenda for Change initiatives as part of the NHS plan andsupport the governments attempts to create a well trained, well motivatedworkforce for the National Health Service.It would be a tragic waste for this work to be undermined by the PrivateFinance Initiative, and leave us back at square one with little prospect formajor service improvements in the Health Service.

Public Private Partnerships

The GMBs experience of private sectorinvolvement in the provision of services within the NHS has not been a happyone. The use of private contractors to provide cleaning services is an exampleof how the introduction of the profit motive can lead to a seriousdeterioration of quality standards. Four out of the five trusts which run the10 hospitals named and shamed as the dirtiest in the NHS used privatecontractors for their cleaning. The inflexibility of contract specifications,combined with blurred lines of accountability and management means that Trustswhich use private contractors find it harder to deliver service improvementtargets than those which directly employ their cleaning staff.

Private contractors who provide supportservices in the NHS generally pay at or close to the minimum wage and offerinferior pension schemes. These reductions in terms and conditions havedisproportionately affected female and part time workers in the NHS. It hasalso created a two tier workforce where NHS employees who have transferred to acontractor under TUPE work side by side with employees who are on considerablyworse conditions because they are not former NHS employees. An example of thisis Trident Contract Services whose own employees enjoy substantially lessannual leave than former NHS employees(as much as 15 days a year in some cases) and who offer an inferiormoney purchase pension scheme rather than the NHS final salary scheme. Theemployer contributions to the NHS pension scheme are six times higher thanthose in the Trident scheme. This scenario is repeated across many areas of theNHS. The GMB fears that further expansion of the use of the private sector willmean demoralisation of staff and lower standards.