Explained: NHS Structure and CCGs

In the inaugural post of ‘Explained’, Will Stent sets out to analyse specific elements of the Conservative’s policy regarding the restructuring of the NHS – beginning with Clinical Commissioning Groups (CCGs).


In the run-up to the 2010 General Election, David Cameron pledged that under a Conservative government there would be no more top-down reorganisations of the NHS, stating that previous changes under New Labour had been tiresome and meddlesome. What followed soon after was a complete contradiction of this. Guided by Andrew Lansley, the Conservatives instigated the largest overhaul of NHS structure and management in its history through the 2012 Health and Social Care Act.

We are approaching the fourth anniversary of the Act. Key structural changes have been in place for significant periods of time. What this means is that the practical results of these alterations can now be evaluated against the what they were set out to achieve.

Clinical Commissioning Groups (CCGs)

CCGs represent the single largest change to the existing structure of the NHS. Prior to the 2012 Health and Social Care Act, the planning and commissioning of healthcare was done by primary care trusts, or PCTs on the behalf of regional or local populations. The budgets of PCTs were set by strategic health authorities (SHA), who subsequently answered directly to the Department of Health. However, since April 2013, these have been replaced by Clinical Commissioning Groups, or CCGs. This new structure was argued to streamline and cut down bureaucracy that was limiting practical provisions of care. CCGs were advocated as being more localised in nature, and as having permanent links and representation from GPs, two points the Conservatives argued would lead to a better understanding and a more accurate provision of what care the community required.

So how have CCGs faired in practice in living up these stated aspirations? In short, not very well. CCGs have not and do not reach this status of being ‘local’ for a number of reasons. CCGs in theory are led by GPs; however in practice the daily demands on GPs means that they are simply unable to properly fulfil this role as commissioning administrators. The functioning and operation of CCGs is subsequently left to small, self-elected executive boards, who in reality rarely engage the wider community of GPs and health practitioners before making extensive and broad decisions.

The reason detailed above gives rise to legitimate concerns about accountability over decision-making. However, this concern is dwarfed by a much larger issue. As part of the Conservative’s new NHS structure, CCGs were made accountable to the newly-organised NHS Commissioning Board, labelled as NHS England. Outlined as an independent authority, this NHS Commission effectively polices the actions taken by CCGs.

NHS England has powers to do the following:

  • Vet the constitution of every CCG;
  • Intervene in a CCG’s activities, which can include making changes to CCG executives if the group does not fall in line;
  • Impose financial limits on a CCG;
  • Set guidelines on how a CCG must operate;
  • Define the scope a CCG possesses in making basic decisions, such as, fundamentally, who should provide clinical services – effectively, the exact and central duty CCGs were set up to have.

It’s also worth noting here that the freedom of a CCG to make decisions on its specific services is further restricted by wider provisions in the Health and Social Care Act itself. Section 75 of the Act specifies that CCGs must open health services to tender, or open them up to ‘Any Qualified Provider’. A service provider may include publically-funded NHS departments, or private companies or specialists. What this means in practice is that, from the outset, CCGs have been pressured to open as many of their health services as possible, and to as many providers as possible – even if the existing provider of a service, usually being the NHS itself, is fulfilling these services adequately. Since this is a stated requirement and a provision effectively built into their structure, the NHS Commission thereby has the authority to intervene and rearrange the executive and running of a CCG if it deems that a group is not following a strategy it sees as correct.

Now, let’s remember here: CCGs were designed and implemented as superior to existing NHS structures because they were to have a genuine and clear accountable link to the health needs of local populations, and that they were free to make decisions based on these needs.

In practice, CCGs are unable to meet these touted aims. There are a few reasons for this. The first revolves around the wider structure CCGs form a part of. The emphasis on ‘local’ is ultimately stifled from the outset because of the authority and oversight given to the NHS Commission. Decisions that were once in the hands of doctors in local areas, that were then transferred into the hands of broader CCGs, are in actuality controlled by the NHS Commission. This commissioning executive neither public nor local, and, as defined in the Health and Social Care Act, is no longer accountable to the Department of Health and subsequently Parliament.

The second reasons stems from the Conservative’s wider ideological commitment to introducing private companies and competition into the NHS service market and, fundamentally, to introduce private interests into the decision-making bodies of the NHS. The requirement and steering of CCGs to put health services out to has resulted in the very-deliberate creation of an internal market, a market where private companies can compete with existing public NHS departments to ‘win’ or be commissioned to fulfil health service contracts. Though David Cameron stated his new structural plan would reduce bureaucracy, the creation of this artificial market has undoubtedly increased bureaucracy, and with it increased costs; estimates of how much it costs to run and maintain this market range from £4.5 billion and £10 billion. The fact that CCGs must operate via this market, and make decisions on providers not based on their own needs but more based on the views of their higher-ups, demonstrates both increased waste and administration and decreased transparency.

Because of wider policy decisions and policy direction, and because of the overarching influence and power of the NHS Commission, CCGs are unable to reach anywhere near expectation. Ideals of CCGs being local and representative healthcare coordinators are rendered void by the power and centralised nature of the NHS Commission. Decision-making and cohesiveness is further limited by this and by the demand for use of the internal market. In practice, CCGs have been used not to increase local accountability and decision-making, but to remove it.




Explained: NHS Structure and CCGs

VAT and the NHS: Assessing the Loophole that Unfairly Advantages Private Companies

Will Stent discusses the longstanding VAT loophole that has allowed private companies an deliberate unfair advantage in bidding for NHS contracts.

Since taking office, the Conservative government has embarked on a commitment to increase the role of private providers and private companies within the NHS. The 2012 Health and Social Care Act broke the door open to private investment. Not only that, but the Act deliberate restructured the management systems of the NHS, and in doing removed these management structures outside the view and scrutiny of parliament. Decisions and information regarding private investment and the processes of competitive bidding have therefore been taken away from the main entity of public accountability and awareness. This has allowed questionable practices and unjust systems, either resulting from deliberate decisions or as inadvertent side-effects, to continue to be exploited and unchecked.

An example of such a fundamentally unfair practice – one that has been allowed to continue, and one that is beneficial to private companies and unfair to public NHS trusts – is the way in which private firms have been able to underbid NHS trusts because of a loophole in VAT. Under current policy, private companies, as businesses, can retrieve the VAT they accumulate whilst buying medicines, effectively eliminating VAT on these purchases. The NHS is not extended this same privilege. This establishes a deliberate competitive advantage for private firms, and means they are able offer services at an apparent ‘cheaper’ price than public providers.

The evidence for this originates from the private healthcare provider Bupa, who posted the following table on their website explaining how they are able to offer chemotherapy treatment at a lower cost than the NHS – though only because of this advantageous arrangement on VAT:

The hypocrisy of having such a clear advantage in favour of private companies embodied in the Conservative’s wider policy of an internal market that is supposedly built on being ‘fair and competitive’ is obvious, and has been called-out by a number of public interest groups. Richard Murphy, policy adviser at the Tax Research UK, said:

 “For some reason the Government has decided private pharmacies can get VAT relief but have not extended it to the NHS. It is an absurd situation that has become a huge issue due to the new situation where the NHS is now an internal market.”

The existence of such unchecked bias in favour of private companies should be a surprise, as should the fact that key government officials knew of its existence and yet did not seek to address it or bring it forward for wider scrutiny. It should be further alarming that, when questioned on the existence of this fact, the Treasury refused to elaborate. But it is not. This is because of the simple reason that, since the passage of the 2012 Health and Social Care Act, government policy has been single-handedly motivated by desire and ideological commitment to privatise the NHS. If achieving this end result means deliberately undermining the NHS and creating a field biased against public providers, then it seems the government are more than willing to exploit opportunities to do so.




‘Revealed: the VAT loophole driving NHS pharmacy services into hands of private sector’, RT (15 May 2015): https://www.rt.com/uk/258909-nhs-privatization-vat-scandal/

Michael Gold, @radicalmic: https://twitter.com/radicalmic/status/598974578531106817/photo/1?ref_src=twsrc%5Etfw

Jim Armitage, ‘Revealed: the VAT loophole driving NHS pharmacy services into hands of private sector’, The Independent (22 July 2014): http://www.independent.co.uk/news/business/news/revealed-the-vat-loophole-driving-nhs-pharmacy-services-into-hands-of-private-sector-9622064.html

VAT and the NHS: Assessing the Loophole that Unfairly Advantages Private Companies