Gordon Brown’s recent speech on the limits of market mechanisms did not go quite far enough, argues Margaret Cook

When great men make great speeches it has been remarked that the content is often not as impressive in the reading as in the hearing. Often the accolades are proportional to the speech’s length rather than any other quality.

I may be one of the few to have read all 11,000 words of Gordon Brown’s highly regarded Social Market Foundation lecture, delivered last month, in which he examines market-mechanisms and their application to health care, among other areas.

It is good that the chancellor is prepared to discuss the issue at all. At times it has seemed like a no-go area, with the ministerial mantra ‘there is no other way’ preventing democratic discussion on PFI and related issues.

Brown’s agenda, set out in his first and last sentences, is ‘opportunity and security for all’, and how this ideal public interest is best served.

New Labour’s leaders have been eager to distance themselves from left-wing notions of public provision, perceived as politically extreme as well as inefficient and bureaucratic, and to embrace the supposedly more dynamic efficiency and innovation of market enterprise. Even the vocabulary of left-wing economic theory is dangerous, viewed as a risk to election prospects, so the chancellor’s speech was a calculated risk. Mr Brown even goes so far as to admit there are areas where trade transactions should not intrude at all, and concedes that the two mechanisms may have completely different and non-interchangeable roles.

However, after this promising start, the first half of the lecture is spent extolling the pan-potential of markets, with plans to deal with market failures by strengthening them, not abandoning them. Mr Brown pins his colours firmly to the mast of free trade and discusses how protectionism is to be extinguished. For example, fair trading rules are to be expanded in private dentistry, prescription drugs, PFI in Europe.

Yet, paradoxically, facing the ‘mammoth challenge’ of health care delivery, Mr Brown acknowledges the fallacy of viewing healthcare as a commodity, the patient as a consumer. Indeed, he outlines with refreshing insight the reasons why markets cannot be expected to work in a service industry like the NHS.

He explores the difficulty of private provision with policing by an independent regulator, accepting that negligence, bureaucracy, insurance restrictions, government subsidies and injustice are all inevitable. He condemns US-style health insurance systems that cannot give total coverage and are hugely expensive in administrative costs. And he concludes that, as with education, public provision and public funding can best guarantee equality of access.

So far, so very good. But there are more Brownian principles that show his instincts to be irretrievably mercantile. Tossing around themes like ‘patient choice’ and ‘decentralisation’, which can only acquire meaning within a specific context, he also lobs ‘contestability’ into the melting pot.

He squeezes market principles in wherever he can. Next comes a renewed commitment to PFI, with an astonishing assertion that it is the ‘most cost-effective infrastructure for public services’. There are numerous professional bodies, economic sages, real-life examples, not to mention a recent Audit Commission report, which profoundly contradict this statement.

The rest of the speech deals with the importance of radical devolution of healthcare and other services to achieve – hopefully – the best possible balance between national standards and local autonomy. He fixates on target delivery and incentives – more business speak – which one fears will be centrally decided and politically rather than clinically sensitive.

Our chancellor is a man of checks and balances, of political formulas and equations, with seemingly little acquaintance with the subtler ways of human interaction. He fails to take into account the overriding power of the profit motive. Wherever there are financial incentives they risk distorting clinical priorities, as we see again with waiting list initiatives. Wherever there is contestability there will be winners and losers; and that is not appropriate for the NHS.

One of his most serious failures is to lose sight (as Keynes did before him) of the power of persuasion and advertising in markets, which leads to more goods than required by the client, or even the wrong goods. Let’s take the pharmaceutical industry as an example. For any individual patient there is an optimum treatment: the right dose of the right drug for the right duration of time. Yet the pharmaceutical industry is, as a global, highly competitive business, driven by the need to make a profit. And drug companies’ purpose, as any prescribing doctor knows, is relentlessly to ensure that happens with all means at their disposal.

The result is far too many medicines prescribed, in excessive doses, often for an unlimited time, with the choice of drug influenced heavily by the extremely sophisticated advertising power the industry has developed, too often with the active cooperation of the medical profession.

The same no-holds-barred philosophy applies to any business interest, and ruthless competitiveness does not suddenly become benign when linked with a public service.

As long as the chancellor follows the (surprisingly Keynesian) principle that a nation’s economy depends most heavily on business investments, the needs of business will never allow him to get public funding of public services right.

Margaret Cook’s latest book, Lords of Creation: the demented world of men in power is published by Robson Books