More than 100 healthcare companies are rubbing their hands
at the prospect of a major expansion of private, for-profit service provision
in the National Health Service. They are also plotting to maximise their
profits by sidestepping tax and VAT bills.
The ConDem coalition is encouraging Primary Care Trusts and
Clinical Commissioning Groups to contract with “any qualified provider”, whilst
enforcing the discipline of the market through the regulator Monitor.
Virgin Care, the medical part of Richard Branson’s empire,
has already won £750m of NHS contracts. It provides specialist services, such
as dermatology and retinal scanning, and in many areas has taken over running
GP practices in partnership with doctors.
Competing with NHS services has always been problematic for
companies which have to extract some of the income from the contracts they win
in order to satisfy their shareholders.
The costs of services provided by the private sector
companies are about £14 higher for every £100 relative to an NHS acute
provider. So in order to be able to compete on price, either they pay their
employees less, or the quality of the services they provide deteriorates, or
both, as is more likely.
So now there’s a cunning plan afoot.
Last June the ConDems launched their Fair Playing Field
Review into “matters that may be affecting the ability of different providers
of NHS services to participate fully in improving patient care”. An interim
discussion paper was published in November. It identified the following: “Corporation
tax applies to private and some third sector providers, but not to public
sector providers.”
You can almost see the grin on Branson’s face broadening.
So the companies – who no doubt ensured that this problem
was noticed by Monitor’s reviewers - are now demanding the same status as
tax-funded NHS service providers which pay neither corporation tax nor VAT.
It’s a no-brainer, surely.
Hang on, hang on, hang ON.
Hasn’t here just been a massive upsurge of anger against
global corporations like Amazon and Starbucks that pay little or no tax on
their operations in the UK ?
Do these companies really want to have their cake and eat
it?
Indeed they do. And they must, if the for-profit model of
production is to survive, as Paul Polman, chief executive Officer of Unilever,
the world's third-largest consumer goods company, makes clear in advance of his
visit to the World Economic Forum in Davos.
He and his fellow self-appointed masters of the economic
universe will ensure that the debate at Davos focuses the attention of the
world’s governments on “how the era of Western consumption can be better managed”.
“The structural changes that need to be made for society still
haven’t been made," he
says. "There has been a growing realisation that our present model of
growth, while it has served us well for a long time, certainly has enormous
shortcomings which are increasingly transparent.
“Individuals need to get used to lower pensions and welfare
payments. Government needs to get used to lower spending levels, businesses
need to get used to the costs that come with it and bear their part. Everybody
has to chip in. People are realising in the West that our model is not a
sustainable model.”
So by borrowing and twisting the language of “sustainability”
they’ll be insisting that it isn’t possible to continue with a system where the
state often accounts for well over 50% of economic activity. In the emerging
economies, the government’s share of economic activity is nearer 20-30%, argues
Polman.
Citing France
as an “extreme example” of a state with too great a role in the economy he says: “No system is going to survive if
55-60% of the GDP is [coming from] the government.”
So there we have it. In a contracting economy, either
there’s a 1) massive transfer of public sector services to a private sector freed
from the burden of tax or 2) the system is doomed. We'd better make sure the second option is taken up and the system replaced by an economy that works for the majority.
Gerry Gold
Economics editor
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