The Socialist response to the Hayes Report: Chapter 4






Despite its problems, the National Health Service remains the most comprehensive, fair and efficient health service in the world.  For half a century it has been envied by countries around the globe.  Now, however, its basic tenets are being questioned by almost everyone.  The possibility looms that the NHS will cease to exist as a truly national, free and comprehensive service in the next period.


It is not only the health service that is under attack but every aspect of what has become known as the "Welfare State".  We are told that because of our ageing population we face "a demographic time bomb" and with only "finite resources" it follows that "rationing is inevitable".


These ideas were first put forward by right wing "think tanks" in the 1970s, they were then taken up by the Conservative Party and soon became unchallengeable tenets in academic departments of medical economics and in NHS management boardrooms.  Unfortunately these ideas have also been accepted by New Labour and are helping to shape their policies now that they are in government.


In one sense of course the NHS is facing a crisis. It is under attack as never before.  This being so we must put the principle assumptions underlying this attack under the spotlight.  Is there an iron law that says demand for healthcare rises exponentially and forever?  Is it really true that people will blindly take whatever is on offer, if it is offered for free?  Are resources, in any real and meaningful sense, finite?  Or are there resources aplenty, and the economic and social system of capitalism prevents a fair distribution of these resources? 


Are we facing a demographic time bomb, with an explosion in the numbers of old and "very old" just around the corner, threatening to swamp those of working, and tax-paying age?  Or is the time bomb image just that, an image, a mirage, unreal, not capable of withstanding scrutiny of the figures? Is it a proven fact that big hospitals are more efficient and safer than small? Or is this unproven and a smoke screen for cutbacks. If these assertions are myths, as this pamphlet argues, in whose interests is it to perpetuate them and to propagate them?  And finally, if all these arguments are marshalled to justify centralising hospital services in Northern Ireland, and they can be challenged, is there any reason to close any acute unit?


Health Service Myths


The ideological onslaught on the whole basis of the welfare state did not fall from the sky.  It has its origin in the crisis of the capitalist system.  As the editor of The Observer and social commentator Will Hutton reasons: "from the beginning the welfare state was not embraced by the entire political class, but seen as something that a conservative state had created at its discretion, for sound reasons, without cutting across the principles upon which that state had been founded".  And he goes on, "the welfare state would be vulnerable once the political circumstances of its creation had passed away".  


Political circumstances changed with the first world recession since World War Two in 1974-1975.  Since 1974 the main capitalist economies have been characterised by historically weak economic growth punctuated by three major recessions (1974-75, 1980-82 and 1990-91).  A fourth world recession is now developing.  Growth in the 1990s averaged 2/3% a year compared to 5% a year in the 1950s and 1960s.  This is the reason why there has been and is such pressure on social spending (spending on health, education etc).  The strategists of the capitalist (or ruling) class have set out to re-divide the cake:  more for them (in profits), less for the rest (in wages and social spending).


The debate on the future of the NHS is driven by the widespread acceptance of a number of ideas about the Welfare State.  It is necessary to examine each of these in turn and to demolish them in turn.       


Myth One: Resources are Finite


It is argued that economic resources are finite and rationing is thus inevitable.  In one sense resources are finite, of course, restricted by the Gross National Product, or the wealth of a country.  There is no reason why healthcare resources should be fixed at inadequate levels however.  International comparisons show that health spending is lower here than in other industrialised countries.


A conscious political decision is taken to spend a certain amount on the NHS.  The amount can be increased by a political decision, as it has been recently.  The proposed increase in spending over the next few years will help a little, but only a little.  Much more is required.  The resources are there to provide a high quality health service for all.  Our society today is wealthy but very unequal.  The richest 1% of the population owns 129 times as much marketable wealth as the 50% least wealthy.  The perceived wisdom is that this is the natural state of affairs and nothing can be done to change it.  This is certainly not the case.


Rigorous chasing up of the rich who don't pay tax and a return to 1979 tax levels would provide a huge increase in resources.  Tax concessions to the well paid have amounted to more than £50,000 million since 1979.  A massive  £23,000 million is owed in corporation tax and £1,600 million in VAT.  Each year £5,000 million of tax fraud is uncovered against only £500 million of benefit fraud.  (Despite this each year 4000 people are prosecuted for benefit fraud, a mere 200 for tax fraud).  A serious attempt to collect taxes due would go a long way to make up the deficits of the NHS.


The annual profits of Britain's major companies added up to an incredible £151 million in the late 1990s.  Some of this was reinvested but £64 million was paid out in dividends to shareholders and in interest on loans.  In a socialist society this money could be used in the interests of everyone not just a few.  Most importantly, under socialism, democratic planning would also increase the total wealth generated.  It is not just a question of how the cake should be divided: we can have bigger cake to begin with.


The resources the government currently spends are divided out in a number of areas.  More than  £20 billion is spent on defence.  In a truly democratic society a real debate could take place about priorities.  Do we need the Eurofighter more than we need hospitals and kidney machines?  Billions could be diverted into health, housing and education. 


Over the last three decades incredible wealth has been squandered by the problem of unemployment.   Each unemployed or non-employed man costs  £9000 per year in lost tax and income support.  An estimated  £36 billion a year went down the drain in this way due to mass unemployment in the early nineties.  And of course the employed create wealth if they are given the opportunity to work.


Myth Two: Demands Are Infinite


Most health economists assume that demand for health care is infinite.  They see this as an inevitable result of a zero -priced service.  This is a reflection of their cynicism and of their patronising attitude towards ordinary people, whom they assume will take whatever they can get for nothing.  If their assumptions are true then why isn't there an infinite demand for free public toilets?  Consider this for a moment and you will realise what nonsense health economists often talk.


As the South Wales GP and veteran socialist, Julian Tudor Hart, has pointed out there is no evidence that zero prices lead to infinite demand.  Until 1979 the health service was, to all intents and purposes, entirely free.  There was no infinite demand because "medical care incurs human costs even at zero price (going to the doctor is not like eating an ice-cream)".  People don't troop off to the doctor like lemmings demanding needless treatment.


Tudor Hart continues:  “Once any service is made freely available to the entire population as a human right, it is cheaper to give than to sell.  No one has to be employed to collect the money, to make sure nobody gets care without paying for it, or to promote the product to maintain profits.  Nobody has to collect profits, opportunities for fraud are minimised, and (though this is unimaginable to anti-socialists) many if not most people work more conscientiously in a public service run to meet serious human needs, than for managers running a business for profit".


Many NHS changes since 1974 have been attempts to control demand and to introduce the rigors of the market. Before 1974, administration costs took up 2% of the NHS budget.  This figure rose to 6% after the 1974 reorganisation and to 11% in 1994 after the “reforms” of the early 1990s.  Between 1987 and 1994 the actual amount spent on administration rose from  £1.44 billion to £3 billion annually.  In the USA administration costs take up 23% of spending.  That is our future. Attempts to deal with a non-existing problem, infinite demand, lead to increased costs and decreased efficiency.


A good estimate can be made at every stage in life, from birth to death, of the incidence of disease.  The cost of treatment and, of course, prevention can be calculated.  For many services, total demand is already met, or nearly met.  Minor increases in resources would fill the gap (childbirth for example is already well-covered).  There are other areas for which services are patchy and for which there is pent-up demand.  Hip replacements are a good example.  There are long waiting lists for this operation. In addition there are many people, not on a waiting list, who would probably benefit from the operation.  If they were all sought out and offered surgery, would they have the operation?  The answer is that many wouldn't.  In other words demand is less than real need.  And even if everyone took up the offer of an operation there is still a limit to how much this would cost. 


The number of older people has increased in recent years and has put increased pressure on the NHS.  Since 1951 the proportion of pensioners in the population has risen from 11% to 18%.  The evidence is however that the steepest increase has already taken place and we are not on the edge of an unaffordable population explosion.  There certainly isn’t any risk of infinite demand on the NHS from old people.


And of course the finite resources and infinite demand theories apply only to the masses, not to the elite.  The experts argue that rationing is inevitable - there isn't enough to go round so somebody must do without.  The most sickening aspect of this is unspoken: rationing is inevitable for the majority but does not apply to the rich minority.  If you are well heeled you can buy what you want, whenever you want it.




The crisis of the NHS is the crisis of the capitalist system.  This is a wealthy society and we can afford a good health service.  If the system cannot deliver, then surely the system itself is at fault and it must go.  Capitalism cannot ensure the future of the NHS and capitalism causes may of the diseases that the NHS attempts to deal with.  The future of the NHS can only be ensured under socialism - a democratically - controlled and planned society in which resources are commonly owned and used for the benefit of all. Until we win such a society it will remain necessary to defend our health service through struggle - arguments alone will not suffice.



Chapter 5