24 Hr Politics People; Why Laffer Curves and Universal Basic Income have become 2 of the most influential daft ideas of the modern age.

fullsizeoutput_1f8aIn case anyone had missed it we live in a 24/7 media culture.  Politicians rise and fall based on their ability to shape or react to a continuous churn of news.

This has created a bias for action not ideas.  Tough new measures rather than well thought out policies. Clampdowns on pretty much everything.  An endless parade of action oriented political virility.   More tough new measures.  A raft of tough new measures. 

Sometimes it doesn’t even matter if the new measures mean anything.  When David Cameron was PM he would regularly announce radical new measures with no intention of actually implementing them.  Renting out surplus Government Offices to entrepreneurs was one such phantom policy, allowing start ups to trade share options for workers rights was another.  Both were announced with a fanfare and then totally forgotten.   Blair would announce the same policy multiple times to create the impression of action.

In such an environment complexity and compromise are treason and treachery.   In all the noise across traditional and social media simple ideas and slogans shouted loudly cut through more easily than thoughtfulness and nuance. Take back control! Build the Wall! For the Many, Not the Few!

All of this has created a bias in favour of the rapid implementation of rubbish ideas.

Some ideas in politics and economics are better if they are never implemented.  Sometimes ideas work best as concepts – something to help people think through complex problems, but which aren’t really meant to be acted on.   Maybe Cameron instinctively knew this, or maybe he was just shallow and lazy and couldn’t be bothered seeing things through. 

You can decide which for yourselves. 

If that seems a bit philosophical think about the Laffer curve.   This is one of the most influential ideas in modern economics – the idea that if tax rates rise too high it will disincentivise wealth creation and lead to a lower tax take.   

The concept was explained by Arthur Laffer to Donald Rumsfeld and Dick Cheney by drawing a simple graph on a napkin at a dinner party.   It was meant to be a simple way of understanding the concept of the elasticity of taxable income in response to changes in tax rates. It was soon taken up by right wing politicians to justify the idea of the self funding tax cut.  Most recently George Osborne claimed that his reduction in the top rate of tax had increased the tax take:

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It is worth noting that although Osborne was claiming in March to have brought in an extra £8bn in revenue thanks to the Laffer curve only 4 months later he abandoned his plan to eliminate the deficit by 2020 due an unexpected deterioration in public finances. 

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In fact every time a claim has been made for self-funding tax cuts based on the Laffer curve there was an unexpected deterioration in public finances shortly afterwards.

Laffer himself was surprised that politicians thought this was a policy to be implemented, and would have been baffled that anyone might think that it was possible to recalibrate the income tax rate of a major economy using this simplistic device.  The way the individual interacts with the state is too complicated for such crude policy measures to work. 

Often these simplistic concepts are the hardest to pin down and disprove precisely because of their simplicity.  They sounds truish, and because they were never meant to be taken that seriously there is little there to disprove.  The Laffer curve was popular among a particular group of politicians and economists because it gave an easy to understand and simplistic solution to a complex problem.  Laffer curves fit a right wing world view that believes in cutting taxes and shrinking the state, things that are popular with a core group of voters and political donors.   

One of the biggest ideas right now in political economy is the concept of the Universal Basic Income (UBI).  The basic principles of UBI are that it is an unconditional payment made to everyone, regardless of current income, to allow them to live at a basic level, whether they are in work or not.

UBI is an idea which has proponents on both sides of the political divide.   Left wingers like it because it looks like a simple solution to problems of poverty and inequality.  Right wingers like it because it provides a way of managing social welfare systems without intrusion into peoples lives – in fact it started off as an idea on the Libertarian Right.   It is also one of the pet projects of Tech billionaire Elon Musk, and has lots of support among the very rich.

Recently it has jumped from being a right wing idea to being a left wing idea.  It appeared in the 2015 Green Party Manifesto, is being trialled in Scandinavia, and has a planned trial in Scotland.  Bernie Sanders flirted with putting it in his manifesto, and it will be a key policy aim of Yanis Varoufakis’s new political party when he can decide what it is called. The Guardian even claimed that failure to embrace UBI cost Hilary Clinton the Presidential election.  Even the Labour Party, who are normally anxious of any policy ideas more modern than 1979 have started to think about it.

The attraction of UBI as a left wing policy isn’t hard to work out.  While the National Minimum Wage has revolutionised the wages of people at the lowest skills level in the Labour Market it has also led to a group of workers being pushed into unwilling self employment, where income is often well below NMW levels.   UBI would be as transformative for self employed workers as NMW would be to employed workers.

UBI is also being promoted as a solution to the potential labour market problems arising from new technology – what happens if large numbers of manual or even white collar jobs vanish over the next decade?  How could our current democratic system cope with lots of structurally unemployable people?

This fear of technological change is really a restatement of an age old fear that the middle classes have about angry unemployed working class people coming to get them, combined with the dreams of lots of burnt out middle aged middle class people who would like do something more rewarding like retrain as yoga instructors, grow organic parsnips, or become boutique Gin producers.    

I like UBI it because it offers the opportunity to reduce the costs of administering benefits, in particular it reduces the costs of administering conditionality.  It is the increasingly complex and irrational rules around conditionality that are at the heart of much of the cruelty in the modern benefit system. 

I also like that UBI might be a way to give economic value to caring for people, but this is such a huge issue that it needs is own blog.

There is however a massive reactionary problem at the heart of UBI, which explains why it started out as a right wing idea. 

To illustrate this lets start by looking at the proportion of GDP taken up by Government Expenditure:

When the Attlee Government came into power in 1945 Government Expenditure was over 60% of GDP. This isn’t surprising as the UK was a wartime siege economy.  While Attlee is famous for nationalising lots of things in reality most of the industries nationalised by the post-war Labour Government were already controlled by the state, and had been for some time; coal and steel for examples.   Rail had come under increasing state control from WW1 onwards.   

Attlee shrunk the size of the state from 65% to 35%, where it remained for about 20 years.   From Wilson onwards Government spending as a % of GDP starts rises due to the extension of the Welfare State, for example the introduction of universal child benefit, and the costs of the oil price crisis, hitting 45% by 1979.    

Thatcher had an ideological desire to bring down Government Spending, but struggled to achieve her target of 35% due to the high costs of unemployment.  Major achieves little of note.

Blair and Brown increased the size of the state to 47.5% – the highest ever peace time share of GDP. This increase was largely driven by spending on the NHS and a big expansion of the benefits system through the introduction of tax credits.  Oh, and they spend a fair bit nationalising the banks. 

Cameron and Osborne tried but failed to get spending back down to 40% of GDP, while the current Labour leadership are committed to push up Government spending very modestly to roughly 43% of GDP, a bit short of New Labour or Harold Wilson. 

Using 2016 data (we don’t have all of 2017 data in yet) state spending was £747bn or 41% of GDP.   Government income was slightly lower than this which is why we are still running a small budget deficit. 

Of this £258bn was social protection, the largest component of which was pensions at £108bn.   This means that the state spends about 15% of GDP on supporting the incomes, mostly of older people, and people on lower incomes.   

This is where  universal incomes, average incomes and Government spending start and collide.

If the UK scrapped all social protection spending, pensions, benefits, everything but set a UBI at 25% of average income Government Spending would increase to over 50% of GDP – it’s highest peacetime level, but this would give a UBI of less than £6k per year, which would do little for the poorest in society.   

To achieve a UBI of £10,000 a year Government Spending would have to increase to 60%+ GDP, which is roughly the kind of siege economy we ran in WW2, an era of food rationing. 

This looks like a massive burden to taxpayers, however this is a big mistake – the Universality bit of UBI means that is transfers wealth away from people who are currently in receipt of means tested benefits and gives the money to people currently too rich to access them.    UBI would in fact be hugely regressive, which is probably why it started off life on the right of politics, not the left.   

For anyone interested in progressive politics this should be a fatal flaw.

The same problem occurs with proposals to make tech companies to pay for it.  A recent proposal in the Guardian suggested levying Amazon, Google and Apple to pay for a UBI of £10,000.  The article rightly points out that at the moment high tech companies with substantial development costs who operate in multiple tax regimes find it too easy not to pay tax.  But same problem exists with this proposal.   

Google’s turnover in the UK is £1bn, Amazon is the same.   I tried to find out Apple turnover for the UK, but all I got was recipes for fruit based pastry treats. 

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Lets assume that we were able to squeeze £1bn extra tax pa from tech multinationals operating in the UK, this is several 100 times what they currently pay. 

That £1bn would be enough to pay £10,000pa to 100,000 people.    As there are 52m people in the UK aged over 16 this is nowhere near Universal.

Anyway you cut budget the Universality bit is unaffordable and helps the rich more than the poor, but his doesn’t mean that UBI is a bad idea.   It just means that it is a helpful way of thinking about whether the current benefits system needs means testing, or conditionality, and how we give an economic value to caring, particularly for people caring for other family members. 

I don’t have a particular problem with means testing benefits, believing that without means testing we can never achieve a welfare system that meets the criteria of:.

“from each according to their ability to each according to their need”

I do however have a massive problem with the huge industry which has grown up around conditionality, making people jump through daft hoops to access small sums of money.  The cost of running the massive bureaucracy of DWP is disproportionate to the work they do in managing public funds.    We could scrap all of Job Centre Plus, make basic payments unconditionally and use some of the savings to set up a government wide counter fraud service that would tackle the relatively small numbers of benefits fraudsters across Government.   The limited range of support to job seekers that DWP do offer could be delivered locally by charities, small businesses and Local Authorities. 

UBI is a brilliant though experiment, a way of thinking differently about how the state spends money and what it values.   If for example we took the £1bn levy and used it to pay 100,000 young people to set up new businesses how would this change the economy?   What if the state funded ecology activists to work on challenging new projects to tackle climate change? What if the state funded talented young writers and musicians from working class backgrounds to make the pop charts less awful and TV more interesting?  What if we recognised the economic value of caring and the state paid for it directly?

These are all the kinds of solutions which a limited form of non-universal basic income might unlock.   Just don’t actually try to implement UBI in it’s crude form because it doesn’t work!

I do have one final problem with UBI which I wanted to highlight.  I think it is popular because it avoids having to answer the really difficult question – how to create meaningful jobs for people.   

People writing policy on left and right are so far divorced from the actual world of work that they are unable to meaningfully conceive of what work looks like for most people.   Even the Trade Unions are really just white collar civil service staff associations ruled by a small clique of left wing bureaucrats. 

The problems in the UK Labour market are about the decline of the dignity and security of Labour.  It is easy to blame this on Government policies, cruel and heartless Neo-liberals. In fact individuals rights in the workplace have increased not decreased over the last 20 years, largely due to the legislation passed in the late 90s and early 2000s.  The increased Labour market flexibility that has led to low employment isn’t due to taking away peoples rights as a small group of right wing politicians and economists have claimed, but by enticing them into the workplace with greater protections, more support.

Blaming the awfulness of politicians is just as daft as blaming immigrants for the problem.

What we are experiencing is a huge fall in demand for manual labour, disguised by the National Minimum Wage, mass underemployment, bogus self employment and zero hours contracts.   All of this is taking place at a time when employment and business investment are both very low.   This would indicate that far from technology displacing low income employees we have an artificially high demand created by lack of investment in high tech.

If things are this bad now think how bad they will be if Business investment starts to increase?

It seems to me that people, particularly on the left, are talking about UBI because they don’t know how to create meaningful jobs for people in the future, nor have they thought about the extent to which people get a huge amount of their identity from work, a sense of purpose in life.   

UBI dodges these questions and instead dumps people with some money and tells them to make the best of it.  If you have built up enough capital in life to afford gym membership, or travel, or have a wide social network, and are engaged in clubs and hobbies having the time to persue them paid for by the state sounds great.   Being able to devote your energies to charity work, or helping to save the environment

But this isn’t the reality of life for lots of people on low incomes.  And for people who are already lonely UBI looks like a way of making life even more isolated.   I wrote a while ago about the way that obesity, prescription opiates and guns were killing white Americans in rural areas at a prodigious rate.   This growth in despair and the decline of jobs which support an American lifestyle go hand in hand, and we are starting to see the same decline in life expectancy in parts of the UK with high levels of manual employment.

So, at the end, why does this matter?

Because the way ideas in economics are portrayed in the media dumbs things down, and simplify things which means that good but subtle ideas don’t get airtime and simple but daft ideas thrive.   That’s why austerity, which was a deeply stupid idea, prevailed for years, even when it was palpably failing.   Good ideas and bad ideas get jumbled together in a way that discredits the good with the bad.

Ultimately Laffer curves and UBI share 2 qualities – the are both regressive fiscal measures that transfer funds from the poor to the rich, and they are both popular polices because they avoid the need to think about really difficult issues – how do you stop the erosion of the tax base while cutting taxes (Laffer curve), and how do you deal with a structural over supply of manual labour, and the decline in jobs which give a sense of meaning to peoples lives (UBI).









What if all Government Data is wrong?

fullsizeoutput_1efa.jpegThis is short update in advance of next weeks full blog.  I am trying to stick to one longer piece a month, with some shorter blogs in between

Last year I wrote about the way that Unemployment Statistics are collected:


In particular I highlighted problems with the way the Labour Force Survey captures data about the UK Labour Market.  In a world of zero hours contracts, part time working and high levels of self employment the LFS is no longer an accurate tool to measure unemployment, which could be a lot higher than we think it is.   This was based on my own experiences as part of the LFS survey cohort.

One of the big questions that troubles economists looking at the British economy has been the decline in productivity.  Despite apparently everyone working harder we are much less productive than neighbouring nations. The French have a shorter working week, longer holidays, longer lunches, and more wine and yet still manage to have higher productivity than us Brits.   

Partly this could be the function of changes in consumption.  Barrista coffee is more labour intensive than Mellow Birds, my Distillery makes less Gin per employee than Gordons – but that is the point – people want more human input into the products and services they buy, and the more human input the more they value it.  We want to spend time with our GP, and our hairdresser.


We are moving from an economy which is highly resource intensive to one that is more service oriented. This isn’t a bad thing – our resource consumption has fallen dramatically over the last few years, which is great for the environment.

This explains part of the output gap, but  I just don’t think we are drinking that much expensive coffee, artisanal cheese and craft gin. 

If the unemployment data is wrong then the productivity gap might be smaller than we think.  But what if the UK output data was rubbish too?

For the last few years we have been part of the Small Business Output cohort for the Manufacturing Output Survey.   While in theory all small businesses are registered with Central and Local Government in reality the state, locally and nationally knows less than it should about the small business manufacturing sector.  Lots of small businesses are reluctant to send their details to Government bodies, and the state doesn’t have the resources to track them down.   

When Durham County Council set up their Manufacturing and Engineering Taskforce one of the task forces first tasks was to find out what manufacturing businesses actually operated in County Durham.  One of the businesses they found built wind tunnels.  Hard to imagine how no-one had spotted that before.

I’m not great at filling in forms, and only actually filled the form in at all because it has lots of scary warnings on.   Eventually I got fed up and this week I rang the ONS and told them we weren’t filling their forms in any more.   

It turns out that a business should only be in the survey sample for 12-15months, after which they are meant to refresh the sample to make sure it is up to date and randomised.    We had been in the cohort for over 3 years, because they don’t have the resources to keep the sample up to date.  Instead of using a proper randomised sample they have just been collecting the same date from the same businesses.   LFS has the same problem – the sample size they use is much smaller than they really need to be statistically valid.  

Which means that all of the output data we have been looking at to measure productivity is as rubbish as the unemployment data.  It’s not hard to imagine a scenario where new, and highly productive manufacturing industries enter the market are under represented in the survey, while older established businesses with less productive technologies are over represented. 

Looking at LFS the Unemployment data has been wrong since 1997, although in the early years the mistake was small.   After the credit crunch the data got worse, and from 2010 onwards has become increasingly divorced from reality.   

It is harder to tell how long the Manufacturing Output Survey has been rubbish, or how far out it is.

But if Ministers no longer care whether what they say in Parliament is true or not then it no longer matters whether the data being collected is right either.  If the Minister doesn’t care about the truth then why should the Senior Civil Servants who brief them care if they are giving the right data?   If the SCS don’t care if the data is right why should the less well paid Civil Servants who manage performance care either?

It’s not just our news that’s fake.  Our facts are too.



Saturday’s Kids: The decline of Schoolkids with jobs, and the increase in Exam Results.

Welcome to my first blog of 2018. 

I plan to write one blog a month, but look at each issue in a bit more depth.  Over the last year I found that I wanted to go into some subjects in more detail than a fortnightly blog allowed.


I had started writing a blog for January about the UK Labour market part when a friend of mine posted an article on Facebook about the increased numbers of University students graduating with a First.  This feeds into a narrative about the younger millennial generation, a rather unflattering narrative.   Given that my own daughter is going through the University applications process 30 years after I did I thought it would be good to bring forward something that I had planned for February.

For a long time I have been wondering about the sharp decline in the number of children with Saturday jobs.   When I say Saturday jobs I mean any kind of employment while studying including paper rounds, shop work, bar work, etc..   I started working when I was 13 or 14 asa pot collector at Ramside Hall, working my way up to waiter and then barman, running the bar for weddings at the Pemberton suite.    My guess would be that more than half of my year at Belmont had regular or irregular paid work.   

My money went into building a large collection of LPs and singles, buying mod clothes, and running a Vespa scooter.  Even by the 1990s 40% of school children were “earning while learning”. 


Today only 18% of children have Saturday jobs.   Looked at from the employers perspective the decline is even more dramatic.   Employers who want to hire people who are still in education need to register with the Local Authority.   In 2011 Middlesbrough Council issued 101 permits for children aged 13-15 to work – by 2015 this had fallen to 7.  

As a small business this shift is very notable.   The younger the employee the less likely they have been exposed to the world of work, and the more they have to be shown how to behave in the workplace.  The basics of how business works, how to deal with customers, how to solve problems when the boss isn’t around, how to fill the time in on a boring shift are alien experiences for lots of young people.

Some of these changes are due to a fall in demand.  The most popular Saturday job in my era was delivering newspapers.   The reduction in the number of people getting papers delivered everyday was the main reason for the fall in employment permits in Middlesbrough.

The changes in the UK high street have also impacted.  The companies who offered the most opportunities for Saturday jobs were people like Woolworths and BHS, companies who just don’t exist anymore.  Where companies are still trading they are automating jobs like check out assistants reducing opportunities further.   

There has been an attitude shift towards suitable employment for young people.  A friend of mine had a Saturday job at Cheveley Park shops where their main task was selling cigarettes. People don’t buy as many fags as they used to, and allowing children to sell fags and booze is no longer acceptable.

As well as the demand side change there has been a supply side change among young people – the pressure to do well at school is much greater, and there is a lot of anxiety that time spent working and earning should be spent studying.  The pressure to get good grades and succeed at school is radically different to my era, where slacking was pretty commonplace.

As an employer however there is another rather obvious reason not to hire school kids to work on a Saturday.  Under the Modern Apprentice scheme we could hire a school leaver full time on £3.50 per hour. We would even get a grant from the Council in case that pay rate was too much of a burden for us.   It is hard to see why I would hire a nice middle class kid one day a week for £5 per hour, when I can have a permanent employee for less.   Wage rates for under 21s have been deliberately driven down by the Government to such an extent that it is not attractive for kids to take Saturday jobs. 

If this sounds a lot like a 1980s YTS scheme it is because it is a lot like a 1980s YTS scheme.  The terrible pay rates for under 21 Apprentices aren’t particularly well known, and would be a shock to lots of people.

A while ago I wore about trends in drug use.  Not only are young people working less they are doing drugs less too.


In the mid-90s 30% of 16-25 year olds had taken illegal drugs in the last year.  This has fallen to 18%.  We need to be a bit careful because the definition of young people in the drugs survey is different to the definition of young people in the labour market, but there is enough of an overlap to make a comparison. 

The fall in the quantity of drugs is mirrored in the decline in alcohol consumption.  The total number of units of alcohol consumed in the UK has fallen in most years since 2000.  This will come as a surprise to people given the number of headlines about the impact of alcohol on A&E attendances, but we are all drinking less.   Under age drinking has fallen hugely.   Back in the 80s, 62% of children aged 11-15 had drunk alcohol.  Today that has fallen to 38%.    The same is true when we compare the youngest category of drinkers (16-24 year olds) to my generation; Less than half (48%) of those aged 16 to 24 reported drinking alcohol in the previous week, compared with 66% of those aged 45 to 64.   The number of young people who are teetotal is much higher than my generation, increasing the rate of non-drinkers in the UK to roughly 20% of the adult population. 

There is evidence that young people are having their first sexual experiences at an older age however I am reluctant to research this due to the rather obvious problems of using the internet to look for information about young people and sex.   An easier area of statistics to look at is the teenage pregnancy rate, which has fallen from 55 per 1000 population in the early 70s to 23 today.  They have fewer fillings and better teeth too.

As a final statistic about how sensible young people are DVLA records show a decline in the number of young people with driving licenses.  In 1995/97, 43% of those aged 17-20 held a full licence, compared with a low of 27% in 2004 and 35% in 2010.   

Whether these numbers confirm or confound your view of young people depends on what your preconceptions are.   There is however another popular media stereotype about young people that I thought would be worth testing.  In this year’s General Election a large number of young people registered to vote and voted for the first time, boosting support for the Labour Party.  A tiresome number of press articles have been written about the popularity of “oooh Jeremy Corbyn” among young people.   

These stories are rather at odds with most of the research on the subject.  Young people have much harsher attitudes towards welfare, crime and income redistribution than my generation, who have much more typical left wing attitudes. In particular their views towards “benefit scroungers” are very much harsher.  In fact the Labour Party’s shift to the left has coincided with an influx of older members, not younger.  Typical old Labour policies like re-nationalisation of utilities are less popular with my daughters generation than mine.   While partisan pro-Corby websites claim that the average Tory is in their 70s and the average Labour members decades younger the reality is that there is only 4 years between the average age of a Conservative party member and their Labour equivalent (53 to 57).   The rise of Corbyn has made the Labour Party membership older, richer and whiter.

There are 2 key areas where younger voters are different to the older generations; they are much more socially liberal and far more pro-European. 

While all of these generational changes have been going on educational attainment has been increasing markedly, which has caused a huge amount of debate about the dumbing down of British education particularly in newspapers like the Times and the Telegraph.  Every increase in GCSE or A Level results has been greeted by wild claims of dumbing down.

I am instinctively sceptical about these claims.   All of my experience as a student and then a Dad leads me to believe that young people spend more time studying, are more sensible, drink less, and do fewer drugs, and that this is likely to be a very significant factor in improving grades.  

Bloody millenials eh?  Walking round like they rent the place.

There may be a special case around University degree classifications as we went to University at a time when a large number of former Polytechnics and Technical Colleges were gaining degree awarding status or converting to become Universities.   Liverpool now has 4 universities, Liverpool, John Moores and Edge Hill and Hope.   It looks to me the increase in the percentage of students getting a first coincides with the expansion of the number of organisations awarding degrees.

For those who disbelieve me, and who think that education has been dumbed down here are a selection of O Level and GCSE History papers.  Assessing which paper is easier is always a bit subjective, but I found the 1980s paper the hardest, then the GCSE papers, and the older papers by far the easiest. 

If you don’t believe me try them for yourself….

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Hunt vs Hawking. Both are wrong, and things are worse than we thought

For the first time in weeks I have no work this weekend, so I wanted to catch up with a couple of topics that I had written about previously, and which were finding their way back into the news.

For those who follow such things my old pal the Jim Reaper has left Whitehall and returned to Northumbria Healthcare to resume his roles as CEO.   When he left Whitehall he let rip at the oversized centralised bureaucracy that has sprung up since the Lansley reforms.  

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The Conservatives made a big noise about reducing the size of the NHS management cost, but have instead created a dysfunctional centralised system, which adds nothing to patient care. 


It is axiomatic that when an ambitious right wing politician announces a change programme that will reduce bureaucracy there will be more paperwork and more centralised administration afterwards.  The more ambitious and right wing the politician, the bigger the pile of paperwork.   

The Trust that Jim is returning to is part of one of the first Accountable Health Organisation pilots:


I am optimistic about ACO’s because they start and unpick the expensive management structures which sprung up around the internal market, and which have been a feature of the NHS from the Thatcher era onwards.   I don’t for one minute think that this is something that Jeremy Hunt would have chosen ideologically, but the shortage of cash in the NHS is driving change in directions that the Government might not have chosen.   The changes to drugs policy I wrote about last week is another example.   

ACOs aren’t universally popular and Stephen Hawking has joined a legal action to try and stop the ACO pilots.   They are the latest management vehicle to be accused of being part of a secret agenda to privatise the NHS:



I don’t for one minute agree with the basis of this legal challenge, and I think that Prof Hawking is badly misinformed here.   The ACO structure doesn’t encourage or discourage private sector involvement in the NHS, it just reduces the costs to the system of maintaining a commissioner and a provider management team.  It is just as possible to use ACOs to reduce private sector delivery as increase it, and I don’t agree that private sector involvement in healthcare delivery is always a bad thing…. it has been part of how the NHS has operated since 1947.   The problem is that the companies who are getting the contracts are among the worse private sector providers while some of the really good private sector organisations are being locked out.    This is giving private providers a bad name.

Apologies for writing so much on healthcare topics.   I intend to revamp the blog in January, and return to more business and labour market issues. 

The reason for so much health policy recently is because I am afraid that the NHS is entering into a period of profound crisis, which neither main political party really has a grip on, and which Brexit will make a lot worse.

To illustrate the impact this slow motion crisis is having I want to return to something I wrote about in the Summer about the impact of austerity on life expectancy.   For some groups in society improvements in life expectancy had stalled and were starting to be reversed.


The latest ONS data on life expectancy is much much worse than I expected.


The ONS are remarkably calm about this, but it looks like pretty much all of the increase in life expectancy since 2017 has been reversed.  The predicted average life expectancy for a man is now below 90 years again.


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It is tempting to suggest that maybe there is a limit to how much we can increase life expectancy, and that the rate of increase will slow as we reach that limit.   Japan, and Scandinavia still live much longer lives than us, and the reverses that we are experiencing aren’t happening there.

We do know that life expectancy links close to wealth inequality.  The richer you are, the longer you live.  The gap in life expectancy between the riches and poorest wards in Local Authorities like Westminister or Kensington and Chelsea are as big as the gap in life expectancy between the US and India.


There is no real need to construct elaborate theories about this.  If you take a poor population and you make it poorer, less well fed, less securely housed, and colder you will increase the rate at which they utilise health resources and reduce their life expectancy.   

For anyone interested in actuarial tables this means that the data which was used to raise the state pension age is now wrong, and the justification George Osborne presented no longer holds water.   I doubt that this will change the decision.  

I will be back next week with a longer blog, and a scary story for Christmas…..

How close are we to legalising drugs? Are the Tories more liberal on drugs than Labour? Will Boris Johnson be remembered as the man who decriminalised cocaine?



I found needles and ampules in my neighbourhood this week.   I live very near a big hospital, which means that it was more likely to be medical rather than heroin, but I rang the Police nonetheless, being a concerned citizen.

For those who don’t know Durham runs the most liberal drugs regime in the UK, not so different to Amsterdam but without the cafes.   The Police and Crime Commissioner has recently visited Switzerland and wants Durham to have the UK’s first legal “shooting gallery”.

Wading through the mass of statistics about drugs is a daunting task.  Police, Home Office, Standing Committee on Drug Misuse, Border Agency, NHS National Treatment Agency, London Mayor and each Police Force all have their own statistics.

What we do know is that overall drug use in the UK is falling.   20 years ago when the Conservatives left power drug use was at an all time high.   In 1997 13% of the population, and over 30% of 16-24 year olds had used illegal drugs in the past year.   Today those numbers are 8% and 18% respectively.  I realise that this is a big shock to people who are used to newspaper stories about drugs and inner cities, but actually drugs policy is showing some signs of success.

Young people aren’t getting high the way they used to. 

The New Labour  administration that came to power in 1997 had a different attitude to drugs to the outgoing Conservatives.  Many New Labour luminaries were from the North East and were associated with a left wing book shop in Newcastle called Days of Hope, known colloquially as Haze of Dope.  While Blair always denied taking drugs, Yvette Cooper was the first serving Cabinet Minister to admit smoking dope, and the then Secretary of State for Health John Reid apologised to the Police after his Protection Officer found small amounts of Cannabis at his constituency home.  After Yvette’s admission a number of other New Labour figures came forward; Charles Clarke, Jacqui Smith, Patricia Hewitt, Alister Darling, Andy Burnham, Harriet Harman and John Denham all admitted historical dopery.

New Labour debated significantly amending the The Misuse of Drugs Act 1971, particularly after the Runciman report in 2000 but bottled it due to their neurotic fear of bad press. 

They did however allow a number of pilots which trialled new approaches to drugs.   The most high profile of these was the effective decriminalisation of cannabis in Lambeth by the then Borough Commander and future “I’m a Celebrity…” star Brian Paddick. 

Less well know, but more significant were the RIOTT trials – Randomised Injectable Opiate Treatment Trials.  Chronic street heroin addicts receiving conventional methadone treatment but who continued to inject street heroin were recruited to 3 NHS centres  (London, Brighton and Darlington).    Patients were randomly assigned one of 3 treatment options: supervised injectable methadone, supervised injectable heroin, or optimised oral methadone. For the first time the UK had offered injectable heroin on the NHS, and the first time the NHS had offered offered opiates since the criminalisation of heroin in 1956 after a campaign by the Daily Mail.   

These trials ran parallel to the introduction of Drug Treatment Orders which were created under the 1998 Crime and Disorder Act, replacing the Rehabilitation schemes under Section 1A(6) of the 1991 Act.   These took several years to get going, and continue to operate despite having a relatively poor record.  Few finish the programme, and even fewer stay away from using afterwards.  The outcomes from RIOTT were by far and away better than the DTO regime. 

In 2004 the Home Affairs Select Committee and and Advisory Council on the Misuse of Drugs published a report into cannabis which led to the then Home Secretary David Blunkett reclassifying cannabis from Class B (which it had been since the 1971 act) to Class C.

I was involved tangentially with some of this work.  I worked closely with Teesside Police on a number of programmes which spanned Police and Health, including the Teesside Drugs Action Team  Many of the communities I worked in were experiencing drugs use for the first time, and I spent a lot of time talking to local anti-drugs campaigns.  Later on I worked for the NHS Trust who ran the Darlington RIOTT clinic.   

There were 2 view points that came through very strongly in discussions with the Police in this era.   

Firstly that the way drugs policy was implemented was discriminatory.  If you were affluent, and lived in a quiet neighbourhood you could take drugs with little or no risk of detection.   If you lived in a  poor, high crime area you were much more likely to be stopped and searched, and be arrested for relatively small amounts of possession for personal use.  This meant that drugs arrests were a feature of poor communities, often with large ethnic minority populations

Lots of people on the left are highly suspicious of the Police, based on very real problems at Orgreave and Hillsborough.  But there were a great many Police Officers with different views, who thought a lot about the way the justice system impacts on communities, and the McPherson report into the death of Stephen Laurence gave them a powerful voice.  I remember vividly walking into the back office in Redcar Police station to find that the Divisional Commander had covered the walls with the MacPherson definition of racism in letters a foot high produced on a dot matrix printer.  A proud moment. 

The other view commonly expressed was the failure of drugs enforcement.  Teesside had a relatively quiet heroin trade at the time, with little of the violence associated with the drugs scene on Tyneside where night club doorman were being shot.  This was a result of a large stable market, plenty of users, and a regular supply through Teesport.   The quietness may have kept the politicians happy, but it was not a good sign.

Barry Shaw, Chief Constable Cleveland Constabulary became the first serving senior Police Officer to come out and publicly say that the war on drugs had been lost, and that the current enforcement regime was causing more harm than good.  He openly called for decriminalisation.

These attempts at moving the debate on drugs forward met with a predictable backlash.    The Daily Mail published lurid allegations against Brian Paddick, which while proven false, damaged his career, and he was moved away from front line Policing.   The Mirror ran a sting against Jack Straw’s son Will, after he sold them a quantity of Cannabis so small it wouldn’t get you through Dark Side of the Moon.

The decision to upgrade cannabis back to class B by Jacqui Smith in 2008 following stories in the tabloid press about Skunk was a huge low point, particularly when it emerged that she had never even met her own chief drugs policy advisor Prof David Nutt.   Wacky backy Jacqui Smith is the only Home Secretary whose name became rhyming slang for a spliff. 

In the same year Ken Livingstone lost the London Mayoral election to Boris Johnson, beating Brian Paddick into 3rd place.   Boris was one of the first Conservatives to admit smoking dope and snorting cocaine, and in his early years as Mayor called for a debate on decriminalisation.    I will say nothing about George Osborne.

Boris Johnson diverted Police resources towards tackling problems with Crack Cocaine across the capital.  This wasn’t a bad idea – crack use was increasing, and it was driving a wave of acquisitive crime and gang violence, including use of knives.   The flip side of this is that resources were moved away from other drugs, including cannabis and powder cocaine.

This took place at a time when there was a shift in powder Cocaine use.  Historically cocaine had been a high price, high purity drug, with limited distribution.  An elite vice.   During the latter part of the first decade of the C20th cheaper, more adulterated forms of the drug had begun circulating, and cocaine had become more widely available demographically.  Effectively a 2 tier market had developed based on price and purity.    

With Police resources targeted towards crack cocaine low level infrequent social drug use attracted little risk of Police intervention.  The problems highlighted by the Police years earlier about the potential discriminatory effects of drugs policing became magnified.

Effectively Boris Johnson decriminalised low level cocaine and cannabis use among affluent Londoners who had little or no risk of being caught.

I tried to source the convictions data to support the shift in resources from powder Cocaine to crack, however this data proved remarkably hard to come by:

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The national Police data set has no data older than the last 4 years, and doesn’t break down to different kinds of cocaine.  The new Mayors priorities don’t even feature Drugs as a headline; stop and search; use of tasers; use of force and hate crime are all higher priorities.

Because so few of us take drugs these days the creeping decriminalisation of powder cocaine and cannabis didn’t really hit the headlines, and I only noticed when I encountered middle aged first time cocaine users chewing their cheeks in a Champagne bar in Durham.

The policy of decriminalisation by deprioritisation spread through Police forces as budgets were cut – some by as much as 30%.   Forces began quietly moving resources away from pursuing low level drugs offenders.  This however simply perpetuated the discrimination built into drugs policy.

Durham Chief Constable Mike Barton called for the complete decriminalisation of drugs in an article for the Observer in 2013.  The quiet decriminalisation of drugs for middle class people started to become a movement to publicly decriminalise drugs across all social groups. 

Durham Constabulary no longer takes action against Cannabis users for low level offences, including growing for personal use.  This attracted a lot of media attention, particularly as the rationale was presented as being as much about lack of resources as progressive policy.   Less well know is that Durham Police offer a similar programme, called Checkpoint, for people arrested for Class A drugs.   Offenders who signed up to a 4 month programme of treatment, drug awareness, restorative justice and community work can have their offences expunged from the record.   Of the 68 arrests made by the Police last year for drugs offences in County Durham only 3 ended with a conviction – all of the others were dealt with through treatment routes.

Avon and Somerset and Devon and Cornwall Police are introducing similar schemes.

One of themes of my blog is the way policies sound great in Westminster and in the press and then are a disaster on the ground.  The criminalisation of heron is a great example of that – usage increased hugely in the following decades.  

The last 2 decades has seen a mixed set of attempts to liberalise drugs policy, which have gathered pace under the Conservatives.  These changes have been driven as much by lack of funding as by instinctive liberalism. It would be mighty convenient for this blog if I could show a neat correlation between drugs policy and drugs use, however drug policy has moved forward in a disjointed manner, and falls in drug use has declined with a similar random walk.   Drugs data is imprecise and scattered across different agencies. Key data is missing, maybe on purpose.  There is however enough of a relationship between declining drug use and liberalisation of policies to make the case for the expansion of the Durham model nationally.   

The Liberaliation of drugs policy might turn out to be one of the biggest social changes introduced by the Cameron/May Government, although this is in the context of a rather thin set of legislative achievements.

And the syringes and ampules?  The Police sent someone rom the Council to clean them up.  No statements taken, no crime number.








Apologies for the lack of blogging. I am on duty running the shop this weekend.  If you would like to pop in and debate any of the issues in the blog, or buy Gin it would be great to see you.

Especially if you want to buy Gin

NHS Managers are great! Lets hire loads more of them.

Very very quietly a long era in NHS history might just be ending.    

I started writing a short history of NHS Management.  My original jumping off point was this article from Warwick University Business School

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Warwick University offer a specialist healthcare management MBA which absolutely isn’t a conflict of interest with this research at all.  Not one bit.  And I am an unhappy former Warwick student which means that I haven’t got a conflict of interest either. 

In any other industry the finding that managers improve performance might not be controversial, but in the NHS this claim would be treated with open derision by any clinician.  NHS Managers are universally regarded as at best a necessary evil, at worse some kind of sinister cult undermining patient care.   I have worked with Senior NHS Managers whose nicknames were POD (Prince of Darkness) and The Jim Reaper, both of whom were very good at their jobs. 

As I wrote it I realised that it was difficult to write about NHS management without writing about privatisation.   A history of NHS management is the history of financial transactions, as much as it is a history of management structures, and the history of NHS financial transactions over the last 30 years has been shaped by attempts to create private sector style market structures in the NHS.

The best place to start with NHS management is 1947.   Healthcare was one of several nationalised industries established by the Attlee Labour Government: Coal mining, railways, road haulage, canals, Cable and Wireless, civil aviation, electricity, gas, and steel.   The majority of these industries shared a similar structure – a centralised bureaucracy with homogenised business units with little or no autonomy under tight political control.  Workers in these industries found their terms and conditions improved but they were offered little or not say in how the businesses were run.   Old fashioned Fordist management techniques which actively disempowered workers in their day to day jobs were common to all.   EF Schumacher’s critique of centralised bureaucracies – Small is Beautiful – was based on his dispiriting experiences with the National Coal Board.

The NHS was set up very differently to these other industries.   Rather than a monolithic public corporation with a command and control management style the NHS was set up as a series of small local units, with little overall political control.   Individual units were allowed lee way to set their own processes and patterns of treatments, and were led by their senior Doctors and Nurses.   James Robertson Justice and Hattie Jaques may have been caricatures but the management structures described in the Carry On films were accurate.

Not all healthcare was nationalised.  The Pharmaceutical industry was kept in private hands, GPs were allowed to remain as independent contractors, and some hospitals like Great Ormand Street were charities funded by the NHS rather than part of the formal NHS structure.  Right from its start the NHS had a mixed economy. 

This wasn’t necessarily by choice,  Nye Bevan had wanted the NHS to be structured in the same way as Steel and Coal, a centralised, wholly nationalised, politically controlled bureaucracy.   

If a bed pan drops in St Thomas’ Hospital it reverberates down the corridors of Whitehall”

He lost the argument, largely because the NHS needed the support of Doctors, who demanded a more empowered, less centralised service.   The final version looked more like the kind of mixed economy of Lord Keynes and Stafford Crips than the National Coal Board.

While this was a compromise I believe that this compromised, flexible structure and mixed economy is one of the main reasons why the NHS survived while the rest of Attlee’s nationalised industries fell into inefficiency, crisis and ultimately Privatisation.  It allowed different varieties of administration to change the balance of public, private and 3rd sector provision without upsetting the overall establishment, while decentralised structures put clinicians in the lead.

Not all on the left agreed and there has been a long tradition from Bevan to Benn to Corbyn of left wing politicians who regard the 1947 establishment of the NHS as original sin, and who want return to a centralised, wholly nationalised service in line with the other nationalised industries of the Attlee Government:

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This structure of the NHS lasted in one form or another from 1947 to 1979.  Calculating management and administrative overheads is hard in a decentralised service, with few formal senior management structures.   Some functions shifted from the NHS to Department of Health and back again which complicates matters.

My best estimate is that by 1979 the NHS spent between 5-6% of it’s total budget on non-clinical management.   

And then came Thatcher.  Contrary to what some left wing politicians and commentators might tell you most Tory MPs don’t want to sell off the NHS or get rid of it.   There are a small number of loud mouths like Dan Hannan who don’t share this view, but they are the exception.  There are however a large number of Conservative MPs who want to shift the balance of NHS provision in favour of the private sector, particularly if it means that profits flow through finance companies they sit on the board of.

NHS Management as we know it dates from the Thatcher era, which probably explains why they are so unpopular.    The 1983 Griffiths report led to 2 massive changes in how the NHS was run.

The first of these was the internal market, a split within the NHS between the provision of Healthcare, and the Commissioning or Financing function.   This has had a number of different names… the internal market, the purchaser/provider split, commissioning, fundholding are all variations on the same thing.    This was supposed to spark off a big increase in the amount of NHS funding flowing to the private sector, but in all honesty it was a dud.   The private sector like stable predictable revenue sources, and the chaotic jumble of patients arriving at GP Surgeries and A&E Dpts doesn’t fit that business model

The other change, which is less well known in the public debate was Unit General Management.  NHS services were chunked into Units each of which had a General Manager.  For the first time the most important decision maker wasn’t a Doctor or a Nurse, but a Manager.   From this point on management and organisational structures got bigger and bigger, and the nomenclature got grander and grander.   UGMs became Chief Executives, with Boards of Directors.  Units became Trusts, then Foundation Trusts, each different variation with a different range of freedoms of action. 

The Internal Market and Unit General Management cost a lot of money.   By the time Thatcher was defenestrated Management costs had doubled to 12%, and given how parsimonious she with NHS funding this was a massive chunk of money.   Once again Neo-Liberalism proves to be more expensive and bureaucratic than the expensive bureaucracies that it replaced.

Incredibly John Major managed to make NHS Management even more expensive.   Major combined the clinical leadership model of pre-83 NHS Management with Thatcher era internal market and came up with GP fundholding.    There is no doubt that GP fundholding was popular with lots of GPs who used it innovate services.  It was, however, the most expensive, most bureaucratic system of NHS management ever devised.  NHS management cost increased to 14% of funding, and huge new buildings were commissioned just to house administrators.  Quarry House on the Leeds ring road is the most startling example of Major’s army of bureaucrats:


There is nothing sinister or totalitarian about Quarry House at all.  Nothing.

In 1997 New Labour arrive and appoint Frank “Dobbo” Dobson as Secretary of State for Health.  Dobbo is the most forgotten of all New Labour politicians, and he presides over the biggest reduction in NHS management cost of all time.  The 1997 Act starts dismantling the internal market,  Fundholding is wound up, and savings in management costs are reinvested in cancer screening.   Most of New Labour’s increases in NHS funding happened in the 2000-2008 period, but Dobbo was able to release money into the service by cutting administrative costs.

This probably seems contrary to the popular narrative about New Labour and management costs best represented by this Daily Mail headline:

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As you might have spotted I don’t have much time for the Daily Mail but this story really is utterly bonkers.   I am sometimes staggered at people’s willingness to believe daft things, but this story really stretches credulity.   This is a photo of Benton Park View in Newcastle, the largest Public Administration site I have ever visited:

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It houses roughly 10,000 Civil Servants, and you can take it from me that it is massive, a vast fortress of bureacracy.   If the NHS really had 200,000+ managers you would need a building that big in every large City in the UK.  I think you would probably spot them.   At the time the article was written the NHS had about 35,000 senior managers, and about another 60,000 admin staff, including people like clinic clerks and medical records. 

Dobson was pushed into a failed campaign to win the London Mayoralty and was replaced by his former Junior Minister Alan Milburn.  By the time the NHS Plan was published in 2000 attempts to dismantle the internal market had gone, and instead a new, Clinically led, version of the Internal Market was promoted, including Primary Care Groups and Trusts.    From this moment on Labour’s policy was to reform the  internal market and make it more clinically led rather than to replace it.  Milburn’s shift in emphasis was certainly due to lobbying from GPs, who wanted to reclaim the system leadership they had lost when fundholding was abolished.   I am sure that there was also lobbying from the private sector, but I can’t say whether or not this was an influence.

There is a lot of noise about the extent to which Milburn and Blair privatised NHS services most of which is a bit misinformed.  Lots of money was spent in the private sector buying up empty operating theatre slots to treat patients who otherwise would have spent a long time waiting for an NHS operation.  I am not aware of any services which were transferred wholesale to the private sector in this period.

The difference between spending NHS money in the Private Sector to deal with the backlog waiting list and the wholesale transfer of services to the private sector isn’t really explained well in the media, and I suspect it suits some politicians on both sides to blur the distinction.

I will declare an interest here – I was one of the NHS managers who did this- I ran a Primary Care Trust whose local NHS Acute Trust had insufficient operating theatre capacity to achieve the targets for reducing Orthopaedic waiting lists.   We did a deal to offer any patient waiting a long time the chance to go to the then BUPA Hospital in Washington while new theatre capacity was built

It does annoy me rather to hear this shift of NHS activity into the private sector described as some kind of sinister creeping privatisation.  I met some of the patients who had suffered for years on waiting lists and I have no doubt that this was the kind of pragmatic action to ease suffering that Attlee would have approved of. 

There was also quite a bit of creeping nationalisation.  The proportion of GPs employed directly by the NHS increased sharply.   We took over a GP surgery and established our own Dental practice to make it easier for people to access care.   Informing our Non-Executive Directors that I had successfully Nationalised Primary Healthcare in Marske was a particular highlight. 

There was also a shift in the distinction between Private and Public within Pharmaceutical R&D – an area which the 1947 Act kept in the Private Sector.   The NHS and Healthcare Charities took a greater role in R&D, filling the gap left as Pharma Companies shifted priorities to areas like Obesity and Erectile Dysfunction. 

By the time New Labour left office the management and admin over head was rising again, driven the increase in regulation after a series of scandals such as Bristol and Shipman.  By the time I left the NHS there was 1 regulator for every 3 managers, and any kind of flexibility of approach was becoming stifled.

Andrew Landsley arrived in 2010 with a mandate from David Cameron that there would be no top-down reorganisation of the NHS.   

He of course then spent £2bn on a top down reorganisation of the NHS, which weakened the Purchaser and Commissioning function to the extent that it was no longer fit for purpose.  The structures which were established by 2012 Health and Social Care Act are currently being reversed to create bigger, strategic NHS management organisations spookily similar to the Strategic Health Authorities that the Act expensively abolished. 

The rationale behind this was pretty obvious – to make it easier for NHS Services to be transferred wholesale to the Private Sector.   There was also a move to make it easier for the private sector to run the commissioning of services, although this was largely blocked by some sensible and strategic obfuscation by Senior NHS Managers.

The costs of market testing, procurement, and legal challenges associated with Landsley’s new model have driven management costs higher still, although it is becoming harder and harder to track management costs from the data the NHS providers as structures are so opaque.   

If I had written this a year ago I would have had only 2 things to say about Jeremy Hunt.  Firstly that he is an inadequate, thin skinned, neurotic weirdo who has surrounded himself with like minded people, and who collectively have allowed a neurotic, micro-managing culture to seep throughout the service.   Not all of the senior managers who have worked for Hunt are in that mould, but the ones who aren’t don’t stick around for long. 

The second is that he has presided over a long era of relative decline.   In order to achieve the savings targets set by the Government the NHS needs a radical reconfiguration of services.  But the radical reconfiguration of services needs a big majority in the House, which the Government hasn’t had since 2010.  Instead the savings have been achieved by in year measures, a long slow reduction in quality, and an increase in mortality.    

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A year later however, things look a lot different.   Stealthily around the country the NHS internal market is being wound up.    No-one is actually telling the public this, instead it is being presented as a way of reducing costs and simplifying organisational structures.   

The words being used to describe this are Accountable Care Organisations, or Strategic Health and Social Care Partnerships.  These are organisational structures based on large geographical areas without an obvious purchaser/provider split.  One of the key figures in all of this is Andy Burnham, former New Labour Health Minister and now Mayor of Manchester, who is using Devo-Manc to unpick chunks of the 2012 Health and Social Care Act, and along with it parts of the internal market.   Manchester, parts of Cumbria, and Northumberland are all adopting aspects of this model.   If it works I expect other parts of the UK to follow suit, there are “vanguards” exploring similar approaches across the UK.

No-one is going to remember Hunt with the affection that Nye Bevan attracts, even though the NHS that he created wasn’t the one he wanted.  But maybe like Bevan Hunt is having to make compromises against his ideology which end up benefitting the NHS in the long run.

The question is – does Hunt actually know about this?  Is he quietly nodding through a radical shift in healthcare policy? Or is he so utterly wrapped up with his team of Special Political Advisors that he has no idea what he is signing up to?

I had lots of fun working as the Chief Executive of a Primary Care Trust, and I worked hard to make Commissioning and the internal market work for patients.   I was able to use commercial mechanisms to reduce waiting times and waiting lists, and improve the quality of care.   But the current commissioning systems are broken, and the cost of fixing them is too high.

Time for the NHS to move in to a new era