• Andrew Laird

In defence of a balanced NHS market, with social enterprise increasingly at its core

Updated: Apr 6

Andrew Laird from Mutual Ventures gives his views on recent events…

A couple of weeks ago Circle, a private company with a substantial staff ownership share, pulled out of running Hinchingbrooke hospital claiming that it was “no longer viable under current terms”. This is at the same time as the hospital being placed in special measures following a recent CQC inspection. Circle had taken on the running of Hinchingbrooke in 2012 when the hospital was facing closure but it was unable to sustain the service after finding cuts and unexpected demand at A&E. With the NHS so high on the agenda, politicians and interest groups were quick to comment with the Labour party questioning the wisdom of appointing Circle in the first place (although they had themselves played a role in the process prior to the current government making a final decision) and the unions claiming that it had been “a disaster waiting to happen when you get the private sector involved in running a hospital”. The reactionary view was well summarised by David Owen writing in the Guardian this week.

My purpose is not to analyse the reasons for Circle’s withdrawal and it certainly isn’t to take political sides. My concern is that, within the pressure cooker of a general election campaign, this situation will be inflated to construct a case against any sort of alternative NHS provision. There is no escaping the fact that this is a body blow for those who advocate a mixed market for NHS services in which social enterprises are increasingly forming a crucial and positive part.

Any retreat would be a huge step backwards for a market that is starting to edge towards a productive balance between different models of provision. It would also demonstrate a very short memory as it wasn’t so long ago that in-house provision of services were under severe attack following the Mid-Staffordshire scandal. This prompted Chris Ham and others to recommend staff-led mutuals model as an alternative model of provision. It also shouldn’t be forgotten that many NHS trusts are in a much worse financial state than Hinchingbrooke but are being artificially propped up by central government which has to borrow heavily to do it – it’s simply not sustainable. Those who argue against a mixed market are instinctively worried about the profit motive that non-public sector providers might have. It’s not hard to see why this concern exists. At present the public services market is dominated by in-house public sector delivery and traditional out-sourcing to the private sector – who usually look to take a profit.

For there to be a genuinely balanced market there needs to be a mix which also includes substantial numbers of social enterprises – especially if they are owned and controlled by the staff who deliver the service. These types of organisations occupy the wonderful middle ground between state and traditional private sector. They have the strong public character and ethos of the public sector but also employ the commercial discipline of the private sector.

Each of the three models has its particular strengths: state delivery tends to be free from external financial motives and as such is generally protected from unplanned financial failure; private provision can create scale, efficiency and system-level innovation; and social enterprises are usually smaller scale and focused on social impact and innovation at a local level. It shouldn’t be the government’s job (national or local) to pick a winning model but it can commission services more wisely to allow a balanced market place to emerge where each model keeps the others “honest” through demonstrating their particular strengths.

In my view, a genuinely mixed and balanced market is the only chance the NHS has but the middle ground (i.e. the realm of social enterprise) needs support to rapidly grow and develop so it can hold its own against the more traditional and established models.

So, the challenge for politicians is to not overreact to Hinchingbrooke and to resist the temptation to make short term political points at the expense of the long term health of the NHS. The challenge for NHS commissioners is to adopt a commissioning strategy which ensures a balanced market and real choice for service users.