Comment: The conspiracy to privatise the NHS

You can usually dismiss Labour's hype pretty easily. If opposition is conducted in poetry and government in prose, then Ed Miliband's is of the sixth-form variety. But there is one area in which it is not exaggerating: The NHS is genuinely being privatised. Under our noses, it is effectively being dismantled.

The NHS reforms enacted by Andrew Lansley and carried through by his teenage successor, Jeremy Hunt, will soon be fully enshrined in law following a Lords vote in six days time.

The reforms enjoy no democratic legitimacy. They will be financially ruinous, create an atomised health service and embed perverse incentives in the NHS.

They have been implemented in a cloak and dagger way which suggests ministers are well aware they would spark public outrage if they were properly understood. Lansley only announced them after the general election. Then he published the legislation without any of the secondary rules which would give them meaning. The entire two-year debate on NHS reform was a debate over an empty shell, a box with nothing inside.

What the reforms would really mean was only revealed when Section 75 was published earlier this year: GPs would be forced to offer all services to private firms, even if the NHS was performing them perfectly well itself. The prospect of a Commons defeat forced the government to think again, so it rewrote the secondary legislation but changed nothing of substance. Now GPs will be allowed to retain NHS services, but only if they are sure they can only be provided by the current supplier – basically if no private firm applies.

The myth of an efficient private sector

There are certain services which can be tendered out to the private sector in a way which increases efficiency. These tend to be tasks with easily measurable objectives in which you can write a contract. This then encourages an effort to drive down costs and increase productivity. A good example would be the mowing of lawns in public parks.

However, things tend to fall apart when humans become involved, because humans are infinitely complex beings with disparate, difficult-to-measure problems and a multitude of solutions. Their dimensions are harder to measure. Where US schools were encouraged to compete against other government-funded schools, for instance, the institutions started teaching to the test in order to improve their rankings. In the UK, private firms placed vulnerable children in care homes miles away from their family and friends, because property prices were lower there.

Take the UK prison service, where private prisons cost more per place than public prisons. Despite these costs, staff-to-prisoner ratios are usually lower and staff receive lower levels of basic pay than their public sector colleagues. Private prisons are more overcrowded and less safe.

Take our private rail service, which is 40% more expensive than the cleaner, faster publicly-owned alternative on the continent.

And take our health service. In 2010, the World Health Organisation ranked the NHS as the best health care organisation in the world. The American health system, which is a privately-run labyrinth of competing providers and insurers, is administratively the most expensive in the world.

Adding in the extra bureaucracy of bid creation, assessment and contract issuing is not efficiency. It is the precise opposite. The firms that win contracts offer the lowest price: that is always the final factor informing decisions. They replace doctors with nurses and nurses with auxiliaries: it's a great way to cut costs.


In the NHS the dangers of perverse incentives are particularly grave, because privatising services atomises the health care system and acts as a barrier to joined-up care.

Say you need a knee replacement. A privatised service will be able to do this competently, because the profit incentive will be retained in such a straightforward operation. But if there are complications of any sort the situation changes very quickly. If the knee is twisted or deformed, or there is a chronic ailment preventing easy surgery, the profit incentive no longer applies. You will no longer be a nice, tidy little earner for the private firm. So you're rejected and sent back to your GP. But your local area's knee operations are now run by this private firm, so you'll have to travel somewhere else to get it fixed.

Chronic or hard-to-assess ailments where the clinical encounter does not have an easily identifiable end point will all fall victim to the on-off logic of a private health service, as will operations involving high costs with low or medium chances of success. The days when the NHS could adopt a joined-up approach to care – when it could invite in a patient and bring together its resources to figure out what was wrong with them – will be over. It will become a disconnected, fractured, atomised thing.

In addition, private firms will take the easiest, cheapest services and leave the complex, costly stuff to the public sector. In this sense, the reworded Section 75 legislation almost makes things worse.

This is par for the course when it comes to private tenders for public services. The reason free market proponents have such a field day painting the public sector as inefficient is because so many public services involve complex, difficult to measure tasks which market mechanisms cannot handle.

The government doesn't care. In the week it buried Margaret Thatcher, the Tory party remains more ideologically crazed about privatisation than she ever was. They are incapable of seeing that competition may only work in certain cases. To them it is a one-size-fits-all solution.

Department of Health figures show 105 healthcare firms have been granted "any qualified provider" status, ahead of full NHS reform. They will be providing services like physiotherapy, dermatology, hearing aids, MRI scanning and psychological therapy. Corporate finance consultancy Catalyst estimates the opportunities for private healthcare companies in the NHS will be worth £20 billion. Firms like Circle, Virgin Care and Serco will boost the role they already have to continue an upward trend in mergers and acquisitions. It's estimated that 40% of primary and secondary care services will be delivered by these firms by 2020.

And that's just the effect of the Health and Social Care Act. The same is happening across the board. The work programme and Welfare Reform Act commits to similar principles with similar results. Yesterday, the executive in charge of running the medical assessments for benefits claims at Atos Healthcare offered her apology to the long-term sick it incorrectly labelled 'fit for work'.

At least disabled people have a voice in the media. Few pay any attention to what happens to asylum seekers and immigrants. The UK Border Agency has issued contracts worth £1.7 billion. We don't know what the effect is. No-one really cares.

The value of public sector contracts has shot up from £9.6 billion in 2008 to £20.4 billion in 2012. It could hit £101 billion by 2014/15.

The public don't want it. Sixty-six per cent of adults think it is unacceptable for shareholders to run hospitals, children's homes or police services for profit. That's why the NHS reforms weren't presented to the electorate before the general election. That's why they were later published without their beating heart – the secondary Section 75 legislation.

The coalition purposefully created a piece of law which was simultaneously revolutionary and indecipherable. 

This is a coup. It entails the privatisation of the NHS. The Lords votes on it in six days.

The opinions in's Comment and Analysis section are those of the author and are no reflection of the views of the website or its owners.