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Business drools at Blair’s plans

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Issue 1756

New Labour ‘reform’ means privatisation

Business drools at Blair’s plans

TONY BLAIR insisted in parliament last week that his plans for the public sector, particularly the National Health Service, were totally different to Tory privatisation schemes.

He knows that trade unions are in revolt, and that opinion polls show three quarters of people in Britain are bitterly hostile to the idea of companies making money in areas like the health service.

He speaks of “partnership” and “alliances” with the private sector. But nobody should be fooled. New Labour’s public sector “reform” equals privatisation. Finance company Investec Henderson Crosthwaite says, “The whole world is looking. The Labour government is offering larger contracts than anyone else in the world.”

From hospitals to your local council to London Underground, Blair wants to hand services to private management so they can make a profit. New Labour wants to set up new surgical units doing operations like hip replacements.

The Financial Times reported last week, “The obvious candidates to provide some of the privately managed fast-track surgery and diagnostic centres include: BUPA, the biggest private hospital provider; General Healthcare, which runs a string of private hospitals including nine that operate on NHS hospital sites; Nuffield Hospitals; and Community Hospitals.”

These firms will be out for a profit. There may be no charges at first for the patient, but there will certainly be the cost-paring, worker-driving mentality of the private sector with all the private companies doing core NHS work for profit.

In the longer term there may well be pressure to start charging for anyone who “overstays” in one of the privately managed units. The Health and Social Care Act, which New Labour pushed through just before the general election, clears the way for new ways of screwing money from patients. The government introduced guidance on time-limiting NHS care: “Based on current practice, an NHS intermediate care episode treatment should typically last no more than six weeks. Many episodes will be much shorter than this-for example, one to two weeks following acute treatment for pneumonia or two to three weeks for hip fracture.”

After these limits NHS care (nursing and medical care) will be provided free of charge. But means tests and user charges will apply to housing and living costs, and “personal care”.

New Labour also introduced into the act mechanisms for “topping up” services for those prepared to pay for extras. This is a terrible first step on the road to an NHS where what you can pay determines what you get.

It will mean a replay of the suffering and inequality already seen in residential care for the elderly.

Blair says that letting the private sector run NHS facilities is necessary to transform the health service for the better. Yet the NHS crisis has been made much worse by privatisation itself. Last week a group of social policy experts produced a detailed new report on the effects of Public-Private Partnerships and PFI Private Finance Initiative schemes.

The report, published by the Catalyst Trust, says, “The first 14 hospital PFI schemes led to bed reductions averaging 33 percent. Some saw bed cuts of 50 percent.

“The effect of PFI has been to downsize the NHS by: (1) raiding NHS capital budgets to create subsidies for the private sector; (2) reducing hospital beds and requiring hospital closures; (3) raiding the budgets for clinical care.” 

  • A Response to the IPPR Commission on Public-Private Partnerships, The Catalyst Trust report, is available from PO Box 7477, London SW9 8WT. Phone 020 7733 2111 or go to

Already in their hands

THE PRIVATE sector has already gobbled up large sections of our services. An article in the Financial Times last week enthused that “private sector delivery of health, education and local government services is already big business”.

  • Local government contracts with private firms are already worth nearly 6 billion a year. The top contractors are Serviceteam (which provoked workers into a strike in Hackney last week), SITA group (recently unseated in Brighton by a bin workers’ strike), Glendale Grounds Management, Onyx, Brophy, Serco, Biffa and Initial. The government’s “Best Value” regime is now hitting hard. From April last year local authorities in England and Wales had to show their services met the “four Cs”-challenging, comparing, competing and consulting. And the greatest of these is, of course, competing-matching the private sector or being sold off.
  • Education contracts are already worth around 2.5 billion a year. They frequently involve wholesale privatisation. In Islington, north London, CEA is responsible for running the education service for seven years at 11.5 million a year. CEA has instituted a programme of selling off schools, including Angel School, in an area of rocketing property prices.
  • Privatisation has already caused huge job losses. Government advisers Newchurch and Company estimated that “every 200 million spent on PFI might require productivity improvements leading to perhaps 1,000 job losses, which might be significantly greater than 25 percent of the workforce.” When private contractors undercut the public sector, the difference comes from making fewer workers do more work for less pay, not from greater efficiency. A review commissioned for the South and East Economic Development Strategy found that “the shift from in-house to independent provision has been inextricably linked to reductions in pay and conditions for people delivering care”.
  • There is an alternative. Accoring to the Catalyst report, “Between 1997 and 2001 PFI capital investment deals signed with the private sector amounted to 14 billion. “Yet Gordon Brown had a surplus of 23 billion in 2000-1 alone. The public sector could have funded much more capital investment than PFI without borrowing a penny.”

Profiting from people’s need

THE CATALYST report gives details on several of the private companies looking to grab public services. They include:

  • GENERAL HEALTHCARE: Under the BMI Healthcare brand, this firm is the largest private provider in Britain. It has over 40 hospitals with 115 operating theatres. Its involvement with the NHS includes management of NHS private facilities, leasing facilities within NHS trusts and hospitals on NHS sites. In parts of mental illness care General Healthcare Group (GHG) has 14 percent of the total market, including the NHS. Until August last year GHG was controlled by investment funds managed by Cinven, a company described as “the leading provider of private equity for larger European buyouts”. Cinven then bought GHG as part of a 1.1 billion acquisition of Compagnie Generale Des Eaux, a French-based multinational. “UNISON reports that GHG has traditionally been anti-union with poor working conditions for nursing and clerical staff. It has attracted a number of allegations concerning poor standards of nursing care and dubious psychiatric practice.”
  • SERCO: Turnover last year 967 million, profit 38 million. British operations include work at the Atomic Weapons Establishment, maintenance contracts for Railtrack, Manchester Trams and the Docklands Light Railway, private prisons and NHS hospitals. International contracts include management of a US naval base, the bus service in Adelaide, Australia, and training flight controllers for Russia. “Employees are routinely refused any form of collective bargaining while numbers are often cut by 40 percent.” Serco UK has a stake in Partnerships UK, the quasi-governmental body set up to stimulate PFI. Its forerunner, the Private Finance Panel, was chaired by the ex-corporate development director at Serco.

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