Select Committee on Health Appendices to the Minutes of Evidence


Memorandum by GMB (PS 11)

  The GMB—Britain's General Union—welcomes the opportunity to submit evidence to this Health Select Committee inquiry. We would also welcome the opportunity to present oral evidence. The GMB represents 25,000 employees in the health care sector, the majority of whom are ancillary workers with direct experience of private sector involvement in the NHS.


NHS Concordat

  1.  The GMB believes that the NHS Concordat with the private and voluntary sectors should be a short term measure.

  2.  The Concordat is an unnecessarily expensive mechanism for reducing shortlists and that more creative, value for money solutions should be found such as the removal of bed blocking by elderly patients inappropriately staying in hospitals.

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

The Private Finance Initiative

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

  2.  There is substantial evidence that the Private Finance Initiative reduces bed numbers and increases patient throughput with unhappy consequences for patients.

  3.  The Private Finance Initiative increases the costs to NHS Trusts on a long term basis thus threaten resources for other valuable services.

  4.  The Private Finance Initiative leads to cuts in terms and conditions for NHS staff thus undermining staff morale, motivation and service quality.

  5.  There is a severe danger that the Private Finance Initiative will lead to commercial considerations being placed above patient interests.

Public Private Partnerships

  1.  Previous private sector involvement in NHS support services has lead to a deterioration of service quality.

  2.  The experience of GMB members in the Health Service is that private sector contractors pay worse terms and conditions and provide inadequate pension arrangements thus undermining the NHS' role as a decent employer.


  The GMB has no objections to measures to reduce NHS waiting lists on a short term basis whilst further investment is taking place to provide extra beds. GMB is concerned, however, that the Concordat is an open ended arrangement. We believe that in the long term better value would be achieved for the taxpayer if further facilities were provided by the NHS to reduce waiting lists rather than relying on expensive private sector provision. In the Health Service Journal on 6 September 2001 a spokesperson for a large acute trust stated that NHS hip operations cost £3,500 whilst in the private sector they cost £9,000, he followed this by saying that "the big providers are whacking up the prices". GMB has serious concerns that if NHS Trusts come to rely long term on private providers they will be held hostage in terms of price and incur unnecessary costs which could be spent on improving services.

  The GMB would suggest that a major contribution could be made to the reduction of waiting lists without resorting to the purchasing of expensive private beds by tackling the problem of bed blocking 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 the Policy Studies Institute commissioned by the NHS Executive London. The GMB believes this situation should not be allowed to continue given the spare bed capacity in the care sector and that the NHS should work together with local government social services departments to resolve this problem.

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


  The GMB believes that the Private Finance Initiative is a failed experiment. There is no evidence that it has produced better value for money or better services in the health sector. We would draw the Committee's attention to the conclusion of the June 2001 IPPR report on Public Private Partnerships which stated "of (hospital) PFI projects on which data exists, none . . . show significant value for money savings when set against the Public Sector Comparator".

  Attached to this document are two pieces of research commissioned by the GMB into the effects of the Private Finance Initiative so far in the NHS, including details of losses in beds. These reports highlight the following issues:[14]

    —  The dramatic increases in the cost of PFI schemes from original 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 PFI hospitals—this means that the NHS will be required to pay for further community health services and "intermediate" beds to offset the effects of profitable PFI hospital schemes.

    —  The bias towards the PFI option when making judgments about value for money against the Public Sector Comparator. It should be noted in this context that both the IPPR and the Office of Health Economics (The Economics of the Private Finance Initiative in the NHS April 2001) have recommended the reduction of the 6 per cent discount given to the private sector option in assessing value for money.


  The GMB's experience of private sector involvement in public services has been one of profits being made as a result of cuts in staff terms and conditions rather than on the basis of efficiency and improved service quality. We agree with the Prime Minister Tony Blair's recent statement to the Guardian newspaper that "I don't believe that that is the way to provide a better service, to reduce the terms and conditions of the staff. And I just think that's obvious".

  The GMB has serious concerns that private sector operators will achieve their profit margins by cutting staff terms and conditions. It was on this basis that we welcomed the announcement of the three pilot PFI "retention of employment model" schemes at Stoke Mandeville, Roehampton and Havering. In these schemes staff would retain their status as NHS employees despite being under the operational management of a PFI contractor. We are concerned that progress on these schemes seems to have stalled and it seems that the private sector contractors are unwilling to give up direct control of staff terms and conditions. This only increases our anxiety that cuts in staff terms and conditions are seen as the route to high profits by the private sector contractors involved in PFI schemes.

  The GMB has welcomed the Agenda for Change initiatives as part of the NHS plan and support the government's attempts to create a well trained, well motivated workforce for the National Health Service. It would be a tragic waste for this work to be undermined by the Private Finance initiative, and leave us back at square one with little prospect for major service improvements in the Health Service.


  The GMB's experience of private sector involvement in the provision of services within the NHS has not been a happy one. The use of private contractors to provide cleaning services is an example of how the introduction of the profit motive can lead to a serious deterioration of quality standards. Four out of the five trusts which run the 10 hospitals "named and shamed" as the dirtiest in the NHS used private contractors for their cleaning. The inflexibility of contract specifications, combined with blurred lines of accountability and management means that Trusts which use private contractors find it harder to deliver service improvement targets than those which directly employ their cleaning staff.

  Private contractors who provide support services in the NHS generally pay at or close to the minimum wage and offer inferior pension schemes. These reductions in terms and conditions have disproportionately affected female and part time workers in the NHS. It has also created a two tier workforce where NHS employees who have transferred to a contractor under TUPE work side by side with employees who are on considerably worse conditions because they are not former NHS employees. An example of this is Trident Contract Services whose own employees enjoy substantially less annual leave than former NHS employees (as much as 15 days a year in some cases) and who offer an inferior money purchase pension scheme rather than the NHS final salary scheme. The employer contributions to the NHS pension scheme are six times higher than those in the Trident scheme. This scenario is repeated across many areas of the NHS. The GMB fears that further expansion of the use of the private sector will mean demoralisation of staff and lower standards.

14   Attachments not printed. Back

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