What the NHS can learn from Bob Crow

Nobody remembers good forecasts; nobody forgets or forgives bad ones. I well remember one forecast that appeared in The Economist at the time of the privatisation of Britain's railways. The paper confidently opined that the occasionally malign influence of the railway unions would be a thing of the past; with the railway broken up into several separate companies, the unions would never again be able to hold the country to ransom by calling a national strike.

The flaw in this analysis was that the unions were never actually aiming to bring the country to a halt in the first place. They were aiming to improve their members' wages and working conditions. Strikes were just the means, and when there was only one employer (British Rail), they were just about the only means available. In econospeak, BR was a monopsonist, a sole buyer. If you were a train driver, there was nobody else you could work for. That gave BR a lot of bargaining power, which the unions could only combat by occasionally unleashing the strike threat.

As The Economist might have realised, replacing the monopsonist BR with a group of smaller companies did not weaken the unions' hand -- it strengthened it. It's true that there are fewer train strikes than there used to be, but that's because the unions now have a new bargaining chip. Drivers who are not satisfied with pay or conditions at one company can just go down the line to work for another. Any examination of union demands in railway pay disputes these days will show that demands for wage parity with workers at another company feature regularly, and the companies have little power to resist, so wages have been steadily ratcheted higher. It's the structure of the industry, just as much as the pugnacity of RMT leader Bob Crow and his ilk, that have resulted in London Tube train drivers earning upwards of £40,000 a year.

The experience of the railways casts serious doubt on the Government's assertion that decentralising control of the National Health Service budget to groups of local GPs will help to restrain costs. Goodness knows, the NHS is not much of a monopsonist anyway: data for the "primary care trusts" reveal that they pay suppliers wildly differening amounts for the same goods and services. (Last year's review of public sector waste by Sir Philp Green showed that this was an issue all across central government).

Any well-designed reform of the NHS -- which does not include the one currently under review -- should look to take much more advantage of its scale as a buyer, even if that implies more rather than less centralisation. It's very hard to see how groups of clinicians, with limited business experience and even less spare time, will be better at negotiating prices and terms with multinational drug companies than the NHS or the primary care trusts have been. Just ask Bob Crow.