Royal Mail is in a hole and the government is trying to dig it out. Now questions are being raised as to whether this effort is legal, and before long they could find echoes in a very different context - the NHS. For the health service is on the cusp of being subjected to European competition law and, should that happen, hospital bail-outs might cease to be legal. The liberalised health service would then resemble Pandora's box - something which, once opened up, could not again be closed.
Last week, after complaints from competitors - and just a fortnight after a £1bn public investment into the struggling Royal Mail - Brussels announced a probe to establish whether illegal state aid was being provided. This is a reminder of how tough the EU can be in enforcing competition in liberalised markets, but would it ever extend such zealotry to core public services? Traditionally it has not done so. Member states have enjoyed autonomy over health, and the European court continues to accept that countries have a right to organise healthcare on non-market lines. However, the court has recently been stressing that if countries decide to run their healthcare as a market then they must play by market rules. And, as new research from the Centre for Health Economics concludes, a host of government reforms in the English NHS - from business-style bankruptcy rules to official classification of hospitals as commercial bodies - effectively invite the court to deem the service a market.
The implications could be profound. Ken Anderson, who recently left the top commercial liaison job in the Department of Health, has said the NHS could soon lose its right to decide which services to deliver itself. If that is correct, neither politicians nor NHS managers could punt work towards public hospitals that need it to remain viable. For if a private company wanted to make a bid for that work, it would have a legal right to be properly considered. Attempts to foster "third-sector" provision, for example nursing cooperatives, would also falter, for such providers could not lawfully be privileged against commercial players.
There are hard-headed economic reasons for not treating healthcare as just another market. Gordon Brown has argued that untrammelled choice can work against rather than for efficiency, given the risk of providers cherry-picking the easier cases, the need for cross-fertilisation between specialisms and the impracticality of patients making decisions about where to receive emergency treatment. Whether his case is accepted or not, it is surely better that it falls to elected politicians - rather than to judges or bureaucrats - to determine where the balance of public and private provision lies.
