Why NHS privatisation is bad for your health


The Health and Social Care Act (HSCA) 2012 opened the NHS to privatisation. It will mean the return of fear of catastrophic illness, a fear banished by Beveridge with the establishment of the NHS in 1948 by the NHS Act 1946.

Is the HSCA really that bad?
Allyson Pollock and David Price write the following about the HSCA: ‘A constitutional outrage’ as the Bill passed into law without an electoral mandate; ‘One of the most regressive pieces of UK legislation of the last 60 years’. ‘This wanton destruction . . . is a public health catastrophe. It is an act of tyranny. The NHS in England must be re-established.’ (1)

(Allyson Pollock is professor of public health and policy at Queen Mary, University of London)

And the government is removed from blame when it all goes wrong.

HSCA abolished the duty on the Secretary of State for Health to secure or provide comprehensive health services. HSCA opened the NHS to EU competition law; it prepared the way for ‘regulatory harmonisation’ under TTIP.

In 2004, Oliver Letwin reportedly told constituents that “the NHS will not exist any more” within five years of a Conservative victory, but would be just a “funding stream handing out money to pay people where they want to go for healthcare”. (2)

He was right: the NHS is now a logo and a funding stream which is being diverted to the private sector at an ever-increasing pace.

HSCA brought in CCGs, responsible only for patients registered with GP practices. Section 75 of HSCA makes it hard for CCGs to refuse to put health services out to tender for fear of being sued. CCGs are structured as state health-insurance entities. Transnational health-insurers will take over from them, and Personal Healthcare Budgets are a mechanism to facilitate this. (2)

So it’s no surprise that the government won’t exempt the NHS from TTIP. Reply to letter from KONP:

‘The government does not believe that excluding health from TTIP negotiations would serve the UK’s interests.The negotiations offer an opportunity to bring significant economic benefits, jobs and growth, and for our medical devices sector to benefit from improved access to the US market and ensure the NHS gets best value for money.’

It’s also no surprise that, when asked how the NHS ‘reforms’ in the HSC Bill would make life better for patients, Andrew Lansley was unable to answer. (3) According to Calum Paton, Professor of Public Policy at Keele University: ‘There was no evidence-base for the NHS market, let alone cost-benefit projection’ (4), and improving quality of care was not its purpose; it was largely formulated by private insurance companies, private healthcare transnational corporations and management consultants, notably McKinseys, to serve their interests. McKinsey’s mission is to help private corporations to gain access to public sectors across the globe. The transnationals had been desperate to get their hands on the NHS since the mid-nineties as they were no longer making big money in the US or Latin America, and the NHS, being taxpayer-funded, offered a guaranteed income stream.


a) We don’t choose to get ill; we don’t know when catastrophic illness might strike, and most of us don’t have the means to pay for treatment. Privatisation means the return of the fear of the financial consequences of serious illness.

b) Consumers need perfect information about a product they’re buying, but patients don’t have this: they need expert diagnosis and treatment by a doctor who they know will act in their interest – asymmetric relationship. Such trust is only possible if there’s no profit-motive and if GPs are not in charge of budgets – conflicts of interest.

c) Where healthcare is provided through a market, providers have a direct financial incentive to over-treat and overcharge (‘supplier-induced demand’)

d) Excess capacity needed in private sector to enable patient-choice; but this hits provider revenue, so incentive again for supplier-induced demand to sweat assets.

e) Markets don’t provide universal coverage, only what’s profitable. Cherry-picking is therefore enshrined in HSCA. NHS hospitals left with unprofitable, complex cases, but these no longer cross-subsidised by routine cases. FT hospitals fall into debt, Monitor steps in as ‘failing’.

f) Loss of accountability results from ‘commercial confidentiality’, and for-profits are exempt from Freedom of Information requests; all commissioning by CCGs and NHS England uses taxpayers’ money, but identities of bidders and details of tendering processes and contracts are confidential.

g) Mid-Staffs happened and the NSFT crisis is happening because of the market model, which tends to put the bottom line before clinical or staff needs: Mid-Staffs management were striving to achieve FT status, which became their sole concern to the detriment of patients. NSFT focusing on bottom line and denying there’s a crisis. it’s so desperate to cut spending, it closed crisis beds before any provision was made for ‘care in the community’.

h) Markets can fail: Care UK in Broadland, Serco in Cornwall, The Practice GP surgery in Camden etc. There is therefore no guarantee of continuity of service, and potentially the cost of re- procuring it. The government have no strategy for dealing with market failure – they’re no longer responsible!

i) Personal Health Budgets (PHBs): sound wonderful: Simon Stevens, Chief Exec of NHS England, said ‘”north of five million patients” could each have a PHB by 2018, in a dramatic extension of patient power’. (5) BUT – Dutch experience: substantial fraud and abuse led to abandonment of PHBs. As Lucy Reynolds says,’ the switch to individual patient accounts destroys the national system of universal risk-pooling and exposes each of us to financial risk from ill-health if the PHB turns out to be finite, as “budgets” tend to’. (2)
What are PHBs? ‘PHBs are transferable government subsidies from the NHS budget to the private healthcare and health insurance industries.’ (2) Yet Age UK’s charity director Caroline Abrahams supports them: ‘For older people these personal budgets could mean getting the support tailored to suit their needs and improve their quality of life.'( 5)

j) Costs are much higher:
– Transaction costs 5% before internal market, 15% now: at today’s prices, £5bn – £10bn could be saved by removing the market from healthcare. As a result of the 1983 Griffiths Report (he was a supermarket manager brought in by Thatcher to introduce private-sector-style management into the NHS), the number of managers in the NHS rose from 1,000 in 1986 to 26,000 in 1995, increasing transaction costs to 12%. (6)
– Profits & bonuses: in 2007, the CEOs at the ten largest publicly-traded health insurance companies in the US collected a combined total $118.6m – an average of $11.9m each. (7)
– Marketing and advertising – expensive: use agencies, buy TV time/press space
– Payment by Results means piecework, inimical to quality
– Billing: every transaction must be billed – a huge cost burden; and fraud is a growing problem example: one GP practice in London found patients choosing one particular PFI-burdened hospital were resulting in PBR bills overall 30% higher than they should have been. (8)
– Corporate lawyers
– CCG tendering and contract monitoring (211 CCGs all incurring massive tendering costs)
– PFI: three fully-operational publicly-funded hospitals could be provided for the cost of one PFI hospital
– Need to buy in management consultants (eg Monitor spend 20% of budget on MCs as they know little about healthcare)

k) The main cost in healthcare is staff, so cuts are made here – redundancies, downbanding, using less-qualified staff, screwing down terms and conditions, cutting corners, ‘race to the bottom’. Providers manage financial risk by controlling workforce costs, to the detriment of patient care and safety.

All the above lead to possibly the most important failing of all:
l) The erosion of the public service culture in the NHS and the demoralisation of staff: several reports into the NHS have been commissioned by governments; their findings are consistent, and ignored by the governments that commissioned them. Examples:
– In 2007, the government commissioned three reports on the regulation of the NHS, all from respected US organisations; all found a culture not conducive to good patient care and harmful to staff, and were suppressed by the government, to be released only through an FOI request in 2010. e.g:
– Institute for Healthcare Improvement report: ‘The NHS has developed a widespread culture more of fear and compliance, than of learning, innovation and enthusiastic participation in improvement.’
‘Virtually everyone in the system is looking up (to satisfy an inspector or manager) rather than looking out (to satisfy patients and families’)
‘managers look up, not out. (9)

The Francis Report of 2013 identified staffing levels as a key concern.

Don Berwick found in 2013 nothing had changed:
‘Place the quality of patient care, especially patient safety, above all other aims.’
‘Engage, empower, and hear patients and carers at all times.’
‘Foster whole-heartedly the growth and development of all staff, including their ability and support to improve the processes in which they work.’
‘Embrace transparency unequivocally and everywhere, in the service of accountability, trust, and the growth of knowledge.’ ‘Fear is toxic to both safety and improvement’
‘Abandon blame as a tool and trust the goodwill and god intentions of the staff’
‘Use quantitative targets with caution. Such goals do have an important role en route to progress, but should never displace the primary goal of better care’ (10)

A large study in 2013 examined the culture and behaviour in the English NHS post-Francis, and reported:
‘Cultures of denial of uncomfortable information’, leading to ‘comfort-seeking behaviours’ (11)

And Clare Gerada, former chair RCGP, in June this year quoted clinicians as saying:
‘The failure to create an empathic environment for staff, and the paradox of values – in which staff care for patients but employers do not care for staff – gives rise to profound bitterness’.
‘Privatisation saps staff morale, causing anxiety and fear’. (12)

Remember, Jeremy Hunt can’t be legally held to account for NHS failings as he is not responsible for it by law.
It is catastrophic for healthcare provision. And all this will be irreversible under TTIP unless the NHS is exempted.


See the Campaign for the NHS Reinstatement Bill 2015, by Allyson Pollock and Peter Roderick (13)

The HSCA set us on the way towards a US-style healthcare system. As two of the leading voices in the study of healthcare in the US, Steffie Woolhandler and David Himmelstein, ask, ‘Why would anyone want to emulate the US healthcare system?’ The appropriate response, they say, is not replication but quarantine. (14)




1. Pollock, A. and D. Price, Duty to care: in defence of universal health care. Centre for Labour and Social Studies, May 2013 (page 32)

2. Reynolds, L.., Personal health care budgets as a transition state to profit-driven care.
http://www.keepournhspublic.com/pdf/ReynoldsPHB.pdf (no date)

3. Mackintosh, M. and others, ‘No economic justification for Lansley’s reforms’, FT, 14 February 2012. http://www.ft.com/cms/s/0/88391d7a-5645-11e1-a328-00144feabdc0.html#axzz37BG53eZy

4. Paton, C., At what cost? Paying the price for the market in the English NHS, Centre for Health and the Public Interest (CHPI), February 2014

5. Campbell, D., ‘Patients handed money from NHS to fund treatments’, The Guardian, 9 July 2014 (page 1)

6. Pollock, A., NHS plc: The privatisation of our health care, Verso, 2004

7. Potter, W., Deadly Spin: An insurance company insider speaks out on how corporate PR is killing health care and deceiving Americans, Bloomsbury Press, 2010 (page 139)

8. Tomlinson, J., abetternhs ,4 April 2012.

9. Jarman, B., ‘When managers rule’, BMJ, 19 December 2012

10. National Advisory Group on the Safety of Patients in England, A promise to learn – a commitment to act, HM Govt, August 2013 (The Berwick Report). https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/226703/Berwick_Report.pdf

11. Dixon-Woods, M., and 12 others, ‘Culture and behaviour in the English National Health Service: Overview of lessons from a large multimethod study’, BMJ, 9 September 2013)

12. Gerada, C., ‘Something is profoundly wrong with the NHS today’, BMJ, 16 June 2014. http://careers.bmj.com/careers/advice/view-article.html?id=20018022

13. http://www.nhsbill2015.org/

14. Woolhandler, S. and D. Himmelstein, quoted in Leys, C. and C. Player, The plot against the NHS, Merlin Press, 2011 (page 87)


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