North East London Council of Action demonstration in Enfield demanding that Chase Farm Hospital be kept open
North East London Council of Action demonstration in Enfield demanding that Chase Farm Hospital be kept open

THE McKinsey and Co report proposes cutting £20bn off the NHS budget and reducing the staff by 10% or 137,000 jobs.

The government commissioned this 100 page report at great expense, but members of the public and trade unions cannot see it as it is ‘confidential’.

This is a disgrace.

The Department of Health (DH ) circulated it to leading managers in the Strategic Health Authorities with an NHS Logo on it, and David Nicholson, the NHS Chief Executive, quoted from it earlier in the year, so clearly the government plans to implement it.

When it was leaked to the Health Service Journal (HSJ) at the the beginning of September, Health Minister Michael O’Brian said that the government had no intention of cutting staff and this was just one of many ideas. By 19th September Andy Burnham, Secretary of State for Health, was quoted as saying he would ‘begin the process of showing how we realise the challenge of finding £15 to £20bn of savings’ up until 2014.

HSJ itself is clear that managers must get on with ‘leading through it.’

We can glean, from reading that journal, some idea of what the report contains:

Cutting £8.8bn on annual spending – mainly pay

(i) £3bn by increasing staff productivity in NHS hospitals

(ii) £1.9bn in non-acute staff productivity (i.e. in staff outside hospitals?)

(iii) £1.9bn from Supplies

(iv) £1.4bn from drug spending

(v) £400m in Estates maintenance

(vi) £200m in reducing PFI interest rates.

£4.9bn, the largest chunk of this £8.8bn, would therefore come from sacking staff.

Cutting 10% of the staff would reduce the paybill between nine and 14%. The redundancy costs would be £530m over three years.

Cutting £8.3bn by selling assets

Land and buildings would be freed up and sold off.

Acute NHS hospital staff to bear the brunt

A third of savings is to come from making staff redundant in acute NHS hospitals.

HSJ says: ‘The report is clear that the bulk of savings would need to come from the acute sector. It says a third of the total savings will come from ‘acute staff productivity.’ (Page 11. HSJ 10.9.09 )


The word productivity is used to mean fewer staff to do the same work.

Productivity for them, means speed-up – seeing more patients, per nurse /doctor, per hour. Their approach is entirely quantitative. They evaluate the work of district nurses, GPs and hospital doctors in outpatient clinics and operating theatres entirely in these terms.

They completely omit the question of quality.

Patients are not baked bean tins on a production line. They are all individual and different, having varying conditions. Some patients require more time than others if their condition is to be diagnosed and investigated and treated properly. The McKinsey approach is that the quicker the better.

So, more McKinsey productivity = more redundancies.

Frontline clinical and admin support staff are the main targets

The report proposes cutting as many clinical staff as administrators. But by administrators it means those with an average wage of £20,000 per year. The latter are the salt of the earth, low-paid clerical workers so important in supporting frontline clinical care; secretaries, receptionists, staff in medical records, admissions, registration, ward clerks etc. 38,000 of these are to go. But for every eight of these 10 nurses and 10 healthcare assistants must also go, and at least three doctors.

In primary and community care they say that 3,500 GPs and 1,600 district nurses are surplus to requirements.

All this is in the face of a national shortage of midwives, health visitors and paramedics, such as radiographers and physiotherapists.

Other ways they propose to slash the work of NHS acute hospitals are by:

• Stopping GPs referring patients to hospitals and reducing the numbers of new referrals to outpatient clinics.

• Cutting follow up outpatients appointments

• Stopping patients having certain operations by saying these are not necessary. They list up to 30 surgical operations, including inguinal, femoral and umbilical hernias, hysterectomies for bleeding, hip replacements and knee joint surgery, which they say are not needed.

• Reducing the time that the patient stays in hospital by driving up day surgery rates.

The mechanisms by which these goals will be achieved is by instructing the commissioners, (Primary Care Trusts PCTs) to cut the purchasing of these operations, and to cut the tariff (the payments by results tariff which is the price of every procedure).

These market mechanisms will be used to simply cut the funding to the hospitals and prevent certain procedures being carried out. The PCTs will refuse to pay for them.

Hospitals would be rendered bankrupt, and the McKinseys report is clear that there must be a ‘clear “failure regime” for providers who are consistently failing. That would supplement the failure regime already announced last autumn.’

Hospitals would be closed, merged or taken over by private management and their work parcelled out to competing providers.

Reconfiguration is the goal

McKinsey’s aim is to shift hospital work out of hospitals and into the ‘community’ on the one hand, and eliminate it on the other.

‘The rationale for both the workforce and space reductions is underpinned by McKinsey’s analysis of the volume of acute hospital activity it believes can either be shifted into the community or – more significantly for the overall NHS budget and workforce reductions – cut altogether.’ (HSJ 10.9.09. p13)

Patients will not have the care

McKinsey recommends that annual savings can be slashed by cutting money on the following areas, 38 per cent on the hospital sector, 28 per cent on community care, 13 per cent on primary care, 18 per cent on mental health and learning disability, five per cent on PCT and other overheads, and two per cent on central budgets.

Who are McKinsey and Co?

These proposals are breathtakingly arrogant. Who are McKinsey and Co? They are a wealthy US management consultancy firm, who specialise in advising big corporations how to make profit for shareholders. Their nickname is ‘the Jesuits of capitalism.’

They have no interest in providing high quality universal healthcare for the British population.

They have been closely involved with New Labour’s privatisation reforms of the NHS for many years, producing reports on such topics as foundation trusts, and how to introduce private companies to advise PCTs to give contracts to diverse providers. McKinseys are on the list of FESC companies which specialise in ‘advising’ PCTs on how to ‘stimulate the market’.

The man who chose McKinseys to write the report was Mark Britnell, the erstwhile NHS Head of Commissioning and system management, who set up the ‘cooperation and competition panel’ and invented ‘world class commissioning.’ His latest brainchild is Market Support Units for PCTs costing £20m, but he has now left to join KPMG.

Leading personnel from McKinseys helped Lord Darzi produce his 2007 Framework for Action which proposed that all high volume, non acute, less complex NHS procedures, should be taken out of NHS hospitals and performed by elective centres, polyclinics and walk in centres.

On the back of this, Lord Darzi proclaimed that the day of the District General Hospital( DGH ) is over, and that half to two-thirds of London’s DGHs would be run down or closed.

Some estimate that McKinseys now gains a third of its revenue in the UK by producing management consultancy reports for the NHS!

Introducing a market in healthcare itself wastes billions. At great expense this government introduced, from 2002 onwards, the purchaser-provider split, whereby 300 PCTs commission healthcare from a plurality of competing providers, including independent sector treatment centres (ISTCs) and foundation trusts run on business lines, social enterprises and commercial companies.

The method of funding was changed from block funding to payments-by-results tariffs for all procedures, which has led to an army of clinical coders. The transaction costs for all this contracting, competition, advertising, management bureaucracy, billing, the drawing up of business cases and accounting, has increased from somewhere around 6% of the budget before the internal market, to 12% with it, and heading towards 20%.

Corporate salaries are now paid to higher management in the trusts and PCTs.

The annual payments for PFI newbuilds is half a billion per year and rising. Long term, the PFI debt is £70bn over the 30 year lives of these contracts.

The annual drugs bill for the NHS is £14bn, with the pharmaceutical industry making a healthy profit. Over £350m a year goes on private management consultants.

The policies of the Brown and Blair New Labour governments with regard to the NHS are identical to those of the private management consultants which they so frequently use to draw up their privatisation reforms. They are in bed together.

The McKinsey report is a privateer’s charter, proposing the axing of £20bn of NHS spending on frontline care, while the massive waste on bureaucracy, PFI and the market will continue. The gravy train for the private health campanies is set to expand.

Those who will suffer will be the patients and the staff. Patients will have to travel miles to access a proper hospital with all acute services on site. They will be fobbed off with walk-in centres and polyclinics, run by commercial companies, which will substitute nurse led care for proper GPs. ISTCs cream off the more straightforward surgery, leaving the NHS to do the complex work and train the juniors.

It would become hard for ordinary people to get to see a consultant and get the opinion and operation that they need.

These New Labour/McKinsey plans must be totally rejected by the trade union movement. The report must be made public, so that it can be exposed and torn to pieces.

The TUC voted unanimously against the privatisation of the NHS, and to revamp NHSTogether (The TUC and all the health unions).

Every worker should demand that NHSTogether urgently calls a national march and rally in London to start the action to throw out this plan.

This rotten Brown government must be kicked out by united union action and replaced by a workers government to restore full funding to our xNHS, GPs surgeries, DGHs and publicly provided community care.