NHS privatisation – it’s been a long time coming











This graphic is from: http://www.radicalemu.org/images/nhs-plc/ (where a full version can be downloaded)


NHS in the UK, funded from general taxation and directly managed by government, had offered little in the way of investment opportunities in the 1980s. The scope for growth in the independent sector was very limited because of the high quality of the national system. New ideas were needed to open gaps through which corporates, even multinational companies with private equity or venture capital investment, could enter. This is in sharp contrast to the situation now unfortunately. Sexton (2003) has previously suggested that, “the US could take Britain to the World Trade Organisation disputes panel if the British government or any other body refused a US multinational permission to buy a British NHS hospital that had been financed through the Private Finance Initiative”. Currently, only a small proportion of the total NHS budget is paid to the corporate sector, with, for example, 4.3 percent of the elective surgery budget being paid to non–public sector providers in 2009–2010. The Act is devoted to introducing competition into almost every NHS activity, as explicitly stated by the current secretary of state for health, who has emphasised that “competition” is an essential element of his NHS reform.


There is no doubt that all government health spokesmen have gained confidence, despite not actually having won the 2010 general election. At a conference that covered ‘Income generation – new markets for the NHS and the private sector’, Earl Howe, the minister for health in the House of Lords, assured the attendees of ‘big opportunities for the private sector here’ for both corporate providers and those hoping to sell commissioning support services to clinical commissioning groups. This agenda has indeed been rumbling on for ages. In 1988, the pro-market Centre for Policy Studies (CPS) published a series of short studies exploring this agenda. One study was published as a pamphlet entitled  “Britain’s biggest enterprise” by Conservative members of parliament Oliver Letwin and John Redwood. Around this time, both of these MPs headed NM Rothschild bank’s international privatisation unit. In 1988 Oliver Letwin published a book, “Privatising the world: a study of international privatisation in theory and in practice”, with a foreword by John Redwood. A useful formulation of how this privatisation could be effected is given by Lucy Reynolds and Martin McKee in an article entitled, “Opening the oyster: the 2010–11 NHS reforms in England” in Clinical Medicine 2012, Vol 12, No 2: 128–32.

The English Health and Social Care Act is effectively a tribute to the foundations laid by Letwin and Redwood, in anything but actual name. Contrary to the protests of David Cameron (based on his personal, and quite unique, definition of “privatisation,” which focuses on“care being free at the point of use” rather than on the entitlement to draw incomefrom an activity), it provides for the privatisation of the National Health Service (NHS) as defined by one of his own ministers and leading party thinkers, Oliver Letwin, privatisation, accordingly, includes “contracting out of government [and] deregulation of activities previously dominated by the public sector” (Letwin, O. Bringing about the phenomenon. In Privatising the World: A Study of International Privatisation in Theory and Practice, p. 74. Cassell, London, 1988). The Act indeed represents the final stage in a process already evident by 2003, described then as “ad hoc, fragmented, gradual and covert”.


This final stage is noted by Lucy Reynolds, Amir Attaran, Tamara Hervey, and Martin McKee in the International Journal of Health Services, Volume 42, Number 2, Pages 213–217, 2012, in an article on ‘competition-based reform’ as being reminiscent of the “Big Bang” liberalisation of the U.K. financial sector in 1986. The existing NHS Primary Care trusts, responsible for purchasing care for residents of a geographically defined area, will be replaced by clinical commissioning groups. Initially portrayed by the government as consortia of general practitioners, it has only recently been made explicit that most of their functions are to be provided by private organisations. The commissioning groups will be purchasing from an increasingly privatised market in which providers will be able to bid to provide any NHS-funded services that they consider profitable. All that they must do is satisfy basic criteria to qualify as “Any Qualified Provider”.


According to Lucy Reynolds and colleagues, consistent with the government’s desire to facilitate widespread market entry by new providers, it is likely that the threshold for meeting these criteria will be extremely low. The government has, again misleadingly, portrayed this process as a means for small-scale not-for-profit organisations to provide innovative models of care in selected niches, yet the commissioning process will effectively exclude them, instead favouring large corporations. It is very easy to understand how this situation will arise using the traditional competition theory; the bargaining power of large corporates as suppliers is high because the large amount of resources and ability for economies of scale, the bargaining power of patients (rebranded ‘customers’ for this analysis) is small, and the barriers-to-entry, making it as easy as possible for new corporates to complete the paperwork and not pass elaborate hurdles, will be necessarily very low, one envisages.


That is the one of core problems of the Health and Social Care Act. As it stands, it is a law devoted to bringing the whole National Health Service into a U.S.-style health care market in which many of the same U.S. corporations will operate, their right to continue to do so protected by U.K. and E.U. competition law, and by the “most-favoured nation provisions” of GATS. There are so many brand new problems which have been thrown up by this new legislation. How do you stop a Virgin Healthcare Circle referring to a Circle Healthcare Trust when it might be a concerted practice, in breach of both UK and European competition law, when both parties concerned might argue that this is for ‘patient need’? Such private companies have been using, already, to maximum advantage ‘patient choice’ to woo the competition authorities. This Virgin/Circle scenario is as ridiculous as Sky TV doing the paper reviews of the Murdoch written press, one might argue. This is not at all what the British public voted for, but how long they will need to put up with it is currently uncertain.



Thank you enormously to Dr Lucy Reynolds who originally made the vast majority of the academic points contained in this short article, with her co-authors. Dr Lucy Reynolds BSc AKC ACA ATII MSc DrPH DLSHTM is a Research Fellow at the London School of Hygiene and Tropical Medicine, and the original sources of the work are referenced as above. All the evidence in this article is fully referenced in these articles.

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