Anthony Scholefield is the Director of Futurus – a think tank
specializing in EU and immigration matters – a member of the
Global Vision Academic Council, and author of ‘Warning: Immigration Can Seriously
Damage Your Wealth‘. To mark the 60th anniversary of the National Health Service he goes back to when the NHS expropriated the existing voluntary health services and asks what value it has brought to how healthcare is provided.
The Conservative Party wants us all to sign a birthday card to
celebrate the sixtieth anniversary of the NHS which is to be presented
by David Cameron. This follows the Conservative Party proposing that Aneurin Bevan was
one of twelve great Britons who should be studied in school history
It seems opportune to review again Bevan, Attlee and the establishment
of the National Health Service which continues, as Nigel Lawson once
remarked, to be the religion of the British people. Ignorance of the
world of health provision before and after 1948 and what the NHS was
really about remains profound.
It is certainly remarkable that so much veneration by the political
class, the media and even the Conservative Party, has been accorded to
a bureaucratic change which had virtually no contact with the actual
health of the people and which was based on massive expropriation of
the assets of charities.
In historical terms, the establishment of the National Health Service
was one of the two great expropriations of property in British history,
the other being the dissolution of the monasteries by Henry VIII and
the appropriation of their properties.
A contemporary analogy would be the expropriation of the assets of all
charities such as Oxfam, Age Concern, on the grounds that a
comprehensive charity scheme was more efficient.
But the most extraordinary feature of the Attlee and Bevan expropriations of the assets of the charitable hospitals and the municipal hospitals built up over centuries was that they paid no compensation to the charity or local authority owners. Yet, at the same time, over the 1945-8 period, they also nationalized gas, electricity, railways and coal mines, among others, and the previous shareholders were punctiliously paid their due compensation.
Why did the then Labour government feel it had to pay compensation to the shareholders of the nationalised industries while it felt no obligation – and came under no pressure from the Conservative Opposition – to pay compensation to the owners of the hospitals? (I leave aside the other areas of health provision.) Drawing further on the analogy of Henry VIII, while some Catholic families did lose their property after 1532, it was generally due to political rebellion and many Catholic families hung onto their property. So, in both cases, it seems it was easier to take property away from charities than from property owners.
What actually did Bevan and Attlee do then, apart from depriving charities and local government of their property?
"Just before the creation of the NHS, the services available were the same as after: no new hospitals were built nor hundreds of doctors employed. What was different was that poor people, who often went without medical treatment, relying on dubious or dangerous home remedies or on the charity of doctors who gave their services free to their poorer patients, now had access to services."
For the NHS website argument to make sense, with resources fixed, better provision could only have been provided, if either the NHS was better and more economical in using its resources, than the 2,500 or so independent hospitals, a proposition that few have put forward or there were resources lying unutilised. This again has not been claimed by the advocates of the NHS. The official NHS website contradicts itself within one sentence above, stating that resources were fixed but, apparently, more output was achieved. No evidence or basis for such a claim is put forward.
In 1948 the NHS appropriated the property of 1143 voluntary hospitals with 90,000 beds and 1,545 municipal hospitals with about 390,000 beds (190,000 beds of which were for mental illness and deficiency). By 2000/1 these 480,000 beds had reduced to 186,000. On the less-is-more principle, the NHS had only 40 per cent of the beds of the expropriated charities and municipalities’ hospitals, despite having expropriated the capital estate for nothing and sold off a good part of it. A magnificent edifice, such as the Royal Earlswood Hospital, a rival to St. Pancras, built by a list of donors headed by Prince Albert, now has been turned into hundreds of flats in the Surrey countryside. In the meantime the British population had increased by 25 per cent. So the bed per head ratio was only 30 per cent of what existed before 1948.
So the vast charitable health properties built up over centuries (45 per cent of hospitals in 1948 were built before 1891 and 21 per cent before 1861) were expropriated. Also, it should be remembered, the municipal hospitals were built up by rates paid by a relatively small number of citizens. They were also expropriated with no return to those whose taxes had paid to built up these institutions.
The King’s Fund, which had previously paid for some ten per cent of the London teaching hospital costs, turned itself into a health think tank, a worthy occupation, no doubt, but hardly to be compared with its previous key operational contribution.
Defenders of the expropriation often talk about the complexities of modern medicine and the somewhat patchy nature of health provision before 1948 and there is, of course, something in these arguments, but the fact that the charities and municipalities provided 300 per cent more beds per head in 1948 than the NHS in 2006, shows that much was right. Nor, of course, should the pre-1948 health service be compared with the 2006 health service. If there had not been expropriation, there is no reason why the charitable and municipal hospitals would not have been just as advanced as the NHS of today, probably more so.
One should not forget that the pre-NHS hospitals were also at the very forefront of medicine. On a personal note, my father was a consultant at the West Middlesex Hospital, a municipal hospital in the 1940’s, and was privileged to be among the first to receive the new wonder drug penicillin, brought down from the Oxford laboratory by Lady Florey in her Baby Austin and he used it on desperately ill patients with immediate results. Therefore, in a municipal hospital, the patients were getting the best and most advanced treatment in the world straight from the Oxford laboratory which invented the drug. Can one say this about everyday hospitals in the NHS today?
The other myth about the health service is that the Beveridge Report was laughably incompetent in predicting in 1943 that the development of health and rehabilitation services would lead to a reduction in the cases requiring them. In other words, better health provision would save costs eventually as illness would be better controlled. Enoch Powell called it a case of ‘a miscalculation of sublime dimensions’. In fact, Beveridge’s prognosis was pretty accurate for the first twenty years of the NHS, even if it was a question of guesswork.
We should not forget that the NHS started with some extraordinary financial good luck with health improvement subjected to decreasing marginal costs although the system was immediately choked with bureaucracy.
First of all, streptomycin conquered Tuberculosis in the late 1940’s. As Rivett said ‘hospital beds for tuberculosis and infection disease were closed (32,600 beds), allowing cash to be released for other services’. In Glasgow alone, four large TB hospitals closed. In ten years, TB deaths fell by 85 per cent.
Second, there was already a move among doctors to get people out of the mental hospitals with better classification and better drugs and this continued in the 1950’s and 1960’s.
Third, Richard Asher, a former consultant surgeon at the Central Middlesex, put forward his theory of ambulation after surgery in 1947. His famous rhyme in his article in the British Medical Journal in 1947, entitled The dangers of going to bed, read:
"Teach us to live that we may dread
Unnecessary time in bed.
Get people up and we may save
Our patients from an early grave."
One of his Central Middlesex colleagues, according to Rivett, estimated that early ambulation, adopted by surgeons after this, saved the health service tens of thousands of beds and many people their health and lives.
Finally the Clean Air Act led to a huge reduction in respiratory cases with the age-specific death rate for men falling by 50 per cent in London.
It is reasonable to say that if these changes had happened ten years earlier the NHS might never have come into existence. Certainly the Guillebaud Committee in 1954 pointed out that the NHS was only spending £10 million per year on capital expenditure whereas the supposedly inadequate expropriated charities and municipalities had been spending £30 million p.a. in the 1930’s (in 1930’s pounds for a smaller population). In real terms, the NHS had reduced the hospital capital expenditure of the 1930’s to virtually nil. This was a typical effect of socialist or communist institutions.
Meanwhile, there had been an explosion in current running costs. When the plan for the NHS was presented to Parliament, its running costs were estimated to be £110 million p.a. yet, by 1950, they had increased to £394 million p.a. As the Guillebaud Committee said, “establishments had been progressively increased.”
To sum up, the operative side of the National Health Service began by receiving the property of some 2,600 hospitals without paying any compensation. Over the past 60 years it has reduced the number of beds by 60 per cent and sold off much of the property, pocketing the proceeds. In its early years, it had immense financial good fortune due to medical changes and advances. Virtually no money was spent on capital additions by the NHS in the 1950’s compared to what was spent by the charities and municipalities in pre-war days. Fundamentally the NHS was utilizing the asset of the former charities and municipalities and, unless one assumes they were grossly inefficient or kept resources idle, it had no more resources than was available before 1948 (less, as they were sold off) so it could hardly give a better service and capital expenditure was not kept up.
Certainly the declining marginal cost of medical treatment of the 1950’s is no longer with us. Medicine has moved towards the treatment of more complex diseases in older people. The marginal cost of treatment is on a rising curve instead of a declining curve.
What the establishment of the NHS did alter was that the hospitals had a new owner – the politicians and, since politicians cannot operate except with bureaucrats in attendance, there was a massive expansion in office staff, despite the fact that there was no longer any local financial staff employed. Whereas, pre-NHS, the West Middlesex – the biggest hospital in the country – operated with a Medical Director, an Almoner and a few clerks, by the 1960’s there was a traffic jam at the gates as the office staff came to work.
At the central level the politicians were the owners but not, of course, by right of endeavour but by expropriation. Therefore, they and their bureaucratic allies concentrated on constant re-organization of the bureaucratic empire. This still continues. NHS funding increased by 21.5% between 1999 and 2002 but the number of patients treated rose by only 1.6%.
It is more than time that the National Health Service is no longer regarded with veneration. It should be seen as the sordid expropriation of the property of charities and municipalities. Certain questions still remain unanswered. Why was no compensation paid to charities but paid to shareholders in other industries? Can expropriators, who took over the capital asset of the service for nothing, actually run a medical system or do they settle for essentially re-arranging the office furniture, having meetings and intense bureaucratic introspection? Surely some financial pain and reward needs to be introduced to the customers to re-direct expenditure into medicine and away from bureaucracy? And why were the charities and municipalities property taken away for nothing by Aneurin Bevan and why was there virtually without resistance?
The history of the Attlee government indicates that property owners will fight for their property and get compensation but that charities and municipalities had become owners of the property but failed to have the property owners’ motivation. And why is Aneurin Bevan now put forward by the Conservatives as one of Britain’s greatest men for what must be one of the most sordid and inefficient acts in British history.