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By undermining social solidarity, health bill puts NHS at mercy of EU competition law

Cross-subsidies in the NHS help ensure a comprehensive service. Any Qualified Provider will end that.

Social solidarity is used to describe the integration of groups of people. Activities that show social solidarity are provided for the benefit of society. Competition often works against social solidarity because the nature of competition is to divide people rather than to bind them.

EU competition law has been mentioned many times over the last year when referring to the Health and Social Care Bill because some experts argue that the new powers of Monitor to “prevent anti-competitive behaviour” will mean that the NHS will be subject to EU competition law. Lawyers are still arguing over this. Some say that the 2006 NHS Act introduced competition into the NHS and that the new Health Bill does not introduce any more. Others say that the Bill will finally open up the NHS to EU competition law.

While it is true that under the name of “patient choice” the last government introduced private sector involvement, the fact remains that no company has chosen to use EU competition law against an NHS decision. The last government introduced the NHS Co-operation and Competition Panel. The CCP adjudicate on the Department of Health’s ten principles of co-operation and competition (pdf), and these principles insist that there must be competition in the NHS. The CCP is not a court and officially only offers “advice”, but NHS commissioners must follow its rulings. Since the CCP always rules in the favour of greater competition there is no need for any company to submit itself to the expense of an EU court case.

If you are wondering about the use of the word “co-operate” in the title of CCP, the principles make it clear that it has little to do with providers co-operating and collaborating, instead it makes it clear that providers must co-operate in the Panel’s desire to promote competition. Indeed, every complaint handled by the CCP so far has been about competition; there have been none about co-operation.

The European Court ruled in 2003 that an organisation that fulfils a purely social function, on the principle of national solidarity and which is non-profit making, is not subject to competition law. Clearly it is important to maintain these principles, and the worry is that Any Qualified Provider, where profit-making companies will provide NHS care, will break these principles.

The government’s plans are to fragment the NHS by allowing a myriad of new companies to provide individual services. Any surplus from providing a service will be retained by the company involved. This surplus may be a profit distributed as a dividend to shareholders, or members of a mutual; or it may be retained by a social enterprise and re-invested to improve the service.

The government makes a big play on the negative side of this mechanism and says that companies that make a loss on providing a service will have an incentive to be more efficient. But this is simplistic because it may not be possible to provide a service for the money the National Commissioning Board (the new health super-quango) says the service should cost.

For example, an isolated community may not have enough children to make employing a paediatrician “economic”, but clearly there is a social benefit to employ the clinician at a loss. Solidarity with current NHS providers (hospitals and community health services) means that surpluses in providing one service can be used to subsidise services that make a loss. This principle of solidarity will be lost with AQP. It will mean that loss-making services will be cut, and ultimately the European Court will say that the NHS has no social solidarity and the entire service will be subject to EU competition law.

Richard Blogger writes about the NHS and social policy at NHS Vault.


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