Month: March 2011

                 This week has seen at least two attempts to destabilise the health reforms. Channel 4 came up with a very sloppy piece of journalism, wrongly claiming that the whole of Parliament had failed to spot an error in the Health Bill that would allow GPs to profit from conflicts of interest. The Today programme followed up yesterday by seeking to show that regional and national “reconfigurations” of services would not be possible if GP consortia do the buying, whilst missing the obvious point that the reconfigurations they seemed to want were not happening under the current regionally managed system.

         They clearly do not enjoy interviewing Andrew Lansley, as he knows his NHS inside out and makes them look silly by setting out the facts and the context. The interviewer is left spluttering that he wants shorter answers, in the hope that there will then be a loose phrase they can blow up out of all proportions.

         The new spectre at the feast is that someone may profit from the NHS. What kind of world do these people live in? Have they not seen the profits over many years earned by the leading pharmaceutical companies out of supplying the NHS? Or the profits of the management consultants, advertising agencies, recruitment consultants and other business advisers who had plenty of contracts under Labour? Or the profits of the cleaning, catering and supplying companies that keep the hotel services going in hospitals? Some NHS money has always gone into profits.

          Have they not also grasped that under Labour incentive pay and higher pay for directly employed managers and other senior personnel was a big part of the deal. Many senior staff now earn more for performing in certain ways. I agree with incentive pay, but it is a way of profiting from the employment.

          The new canard Channel 4 introduced was a GP might both have power to decide where someone went for care, and have shares in a private sector nursing home or private health care company which he used for some patients. Ministers made it clear the Bill said GPs should not exploit  conflicts of interest, and they are putting in Monitor, a Regulator with the duty of stopping that and other bad conduct. So why did the story run when it was clearly denied by reference to the Bill?

          Did these same journalists spend time in the last thirteen years trying to see if any GPs did behave like that?  It would be possible for a GP under the existing system to behave badly, against the spirit of the NHS, and have shares in private companies that profit from NHS purchasing. Maybe  the absence of such stories shows that GPs behave better than Channel 4 journalists expect.

          When it comes to  planning national and regional services, the criticism was again ill judged. As Mr Lansley pointed out, GP consortia can persuade the providers of health care to change what they offer through their large buying power. The irony was that the chosen case in South London was an example of where the current system of planning had failed.

                 The 84,000 MOD personnel are all civilians – in charge of desks and related duties.  These are in addition to the 180,000 or so uniformed personnel in the army, navy and air force.

            The Coalition government has been hit by a blizzard of difficult court judgements from the European Court of Human Rights (Convention) and from the European Court of Justice (EU).  They have served to underline just how constrained Ministers and Parliament now are, given the UK’s acceptance of both these jurisdictions. The European Court of human rights has become more activist, intervening in more issues.  The ECJ’s powers were mightily strengthened by Labour’s signatures on the  Nice, Amsterdam and Lisbon Treaties.

              There will be some occasions when many UK people agree with the courts’ judgements. There will be other occasions when we disagree strongly. What many will also agree is that the issues they are now settling should normally be settled in Parliament, by MPs listening to public opinion and having to defend their voting decisions to their electors. They should not be decided by judges who do not have to explain what they conclude, cannot be removed from office, and have no need to heed UK public opinion.

              I happen to disagree strongly with the recent judgement on insurance. Men should pay more for their car insurance because on average men take more risks than women. The insurance industry can measure that and reflect it in premiums. Men should receive more generous annuity payments for their pension savings, because on average men live shorter lives than women. Actuaries are employed to work these figures out, to keep the insurance company’s books straight. I do not see that judges have a better approach to running insurance companies. I doubt if the judges will want to be blamed or sued for some money if as a result of disrupting actuarial and risk assessments they undermine a few companies. If they do not want that risk they should keep out of the calculations.

           The defenders of the court say it would be wrong for insurance companies to calculate risks by ethnic groups and to charge accordingly. This is an aunt sally, as no insurance company is doing this. Differentiation by age and by sex is accepted and makes sense for pricing risk. Of course a health policy for an elderly person is dearer than for a young person. So why shouldn’t car insurance for an 18 year old man reflect the likelihood of him crashing?

              The Coalition government is currently introducing a Freedom Bill. It gives them the opportunity to bring the Uk into line with some of these European judgements. For example, the Bill does amend the rules on retaining DNA samples and details taken from innocent people when being questioned by the police. I welcome this change, though again I think it is an issue which the UK Parliament should be able to decide for itself.

               Parliament has expressed itself clearly on votes for prisoners. Time will tell whether it also marhsalls forces to resist the insurance judgement. The growing list of disputes points to the need to change the balance of powers, but this Parliament does not seem to have a wish to tackle it.

             Amidst the controversy over sacking armed services personnel I have today received the figures for the MOD headcount.

             The total is down 1470 between May 2010 and January 2011 (full time equivalents). Over this same time period 3250 (fte) left the MOD, implying they must have hired 1780 new people (fte) over the same time period. The total in employment last month was 84,180. (fte)

            There might be  more scope for natural wastage to do the job they want to do.

            As someone who has urged the use of natural wastage to control staff numbers and costs in government departments, I have just asked a series of questions to see how Ministers are getting on.

           One of the first to come through are the figures from the Department of Energy and Climate Change.  In May 2010 they employed 1036 people (full time equivalents).  Since May 53 people have left. They now employ  1154 (fte).

               That means they have employed an extra 118 staff, and replaced the 52 (fte) that have left, making a grand total of 170 extra hirings.

              I am pleased to report that at Business totals are down by 449, with 500 leaving over the period. At  DEFRA totals are down by 539, with leavers amounting to 678. (all fte).  The natural wastage rate is running at over 7% per annum at DEFRA and much higher at Business, if all the leavers were voluntary. It shows that there are substantial savings to be had from natural wastage.

          We are about to discover how worthwhile voting is if you are both in the EU and in the Euro.  The Irish election threw out the ruling party, which crashed to third place. A new Coalition is likely, made up of parties who wish to renegotiate the terms of the Irish loan and bail out from the EUand  IMF.

               The mood music from Berlin and the other leading Euro capitals is not favourable to the two main demands of the potential new government. There is a reluctance to concede much if any cut in the interest rate Ireland has to pay for the money she borrowed. There is a frisson against the proposal that bond holders in the main Irish banks should take more of the losses.

                  The other main Euro area  governments do not see why they should subsidise the Irish borrowing rate any more, as the rate agreed was well below the current  market rate for Ireland  to borrow . Nor do they relish the idea of unsettling bank bond markets at a time when the European banks need to borrow large sums to refinance themselves. The Irish crisis was created by the European Central Bank’s insistence that it cut back the amount of money it was lending to Irish commercial banks. They do not wish to go back to a crisis where they might be called upon to lend more to the Irish banks again. They want the bond markets to take more of the strain of refinancing.

              Both sides face a problem. The new Irish government has to achieve something by way of renegotiation. If they do not it looks as if the election was a waste of time, and leaves the new government following more or less the same policy as the old government. If the EU gives too much ground it fears it could undermine the attempts of the European Central Bank and the Eurozone leaders to install some more discipline into public and bank finances, and to wind down the special measures used during the crisis.

              If there is too long and public a spat over this it will be bad news for stability in the Eurozone. Last year there must have been a run of   bad briefings against weaker member states and banks, which created a crisis atmosphere concerning the peripheral Eurozone members. So fat this year there has been more discipline which has helped take it off the front pages and calmed nerves a bit.

                 Now they have to show how the EU responds to a democratic  expression of anger about the consequences of an economic failure made worse by being locked into the single currency, and having to deal with the European Central Bank as the lender of last resort to the Irish banks.

               The implied level of cuts and tax rises to meet the requirements of the loan will be difficult to achieve, especially if there is little growth owing to the stress in the banking system and the deflationary policies being followed.  Ireland, like some other countries, needs to grow its way out of debt and deficits. It cannot devalue to promote exports, nor can it easily create more credit in  its banks owing to the way they are now regulated by the EU authorities.