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Tories just handed £55m NHS contract to tax haven firm who ‘never paid a penny’ in corp tax

The Tories have just handed over a huge £55m NHS contract to Care UK - a company who use tax havens and had not paid a penny in corporation tax since it was bought by the private equity firm Bridgepoint Capital in 2010.

The march towards a privatised NHS has recently switched its gait from tiny steps to full-on strides.  Few people now would argue that one of the main unspoken ambitions of the Tory government is to have a fully privatised healthcare system as soon as possible, with only marginal involvement from the state.

Whilst it’s claimed that introducing private companies in the NHS will benefit patients whilst making the service more efficient, there’s little evidence to back up such claims, and plenty suggesting the opposite. The bottom line is that private companies answer first to their shareholders, with the welfare of patients and staff as a much lower priority.

In Oxfordshire, physiotherapy patients have recently been left struggling to see the positive aspects of privatisation. The local clinical commissioning group (CCG) fragments services between a number of private providers whilst refusing to say how much will be saved through the new contract.  With doctors, patients and local health campaigners all expressing concern over the decisions being taken, one can only wonder what hidden agendas are perhaps the driving forces involved.

It’s true that there are countries where a halfway house in terms of private and public health services is well-established and works reasonably well. But the UK’s system of socialised health care, launched by the 1946 Labour government, was for decades the gold standard, envied by many countries around the world.

Not least amongst these covetous nations is the USA – a place where a doctor’s visit can leave you with eye-watering bills, and a serious illness can completely bankrupt you.  If you have insurance you’ll be mostly assured of having your bills covered, but this is not always the case. If you can’t afford insurance you have to fall back onto what little state aid is available. With Trump vowing to sweep away the small improvements made by his predecessor, the situation is deteriorating further.

Keeping Favour

So it’s odd that the Conservatives remain fixated on the US system as something of a model for how they would like to see our services run.  We’ve seen several visits by health ministers to The States amidst barely concealed salivation from US health providers eager to carve out their slice of a highly tasty and virtually uneaten private healthcare pie.

But then again, perhaps it’s not so odd when we see just as many home-grown private health companies looking to do the same and making sure they keep in favour with the Tories to ensure their place at the table.

Prior to the coalition government, Care UK chairman John Nash made a contribution of £21,000 to the private office of Andrew Lansley. After becoming Health Secretary, Lansley brought in the Health and Social Care Act of 2012, which forced the NHS to put health service contracts out to tender on the private market. Nash’s company Care UK took full advantage of this and are now the UK’s largest independent provider of health and social care services. 

Care UK Controversies

In 2014, Care UK took over services for people with severe learning disabilities in Doncaster, where they promptly cut the wages of previous NHS staff by up to 35%. Fifty carers began strike action in protest. The strike lasted 90 days, one of the longest strikes in the history of the NHS.

In 2015, ITV’s Exposure programme highlighted some shocking practices at an urgent care centre run by Care UK at Ealing Hospital.  They reported seeing:

  • Pregnant women with ectopic pregnancies waiting 3 hours before being seen by a GP.
  • Empty medicine cabinets, with doctors admitting they frequently ran out of painkillers and antibiotics.
  • Work experience students being left to check on patients because doctors and nurses were too busy.
  • GPs who admitted they couldn’t understand X-rays ‘for s***’ and may miss fractures.
  • Clinics dealing with 50 per cent more patients than they can manage with patients being told to take their own temperature.

It was also alleged that staff registered the discharge of patients before they had been treated to avoid breaching the NHS 4 hour waiting target.

“Tax-Efficient” financial structures

Care UK reported in 2013 that public funds accounted for 88% of the company’s revenues and admitted to using “tax-efficient” financial structures involving the Channel Islands.  Its sister company, Silver Sea, is domiciled in low-tax Luxembourg.  In 2014 the Guardian published a story claiming that Care UK had not paid a penny in corporation tax since it was bought by the private equity firm Bridgepoint Capital in 2010.

They are not the only private healthcare company to arrange their tax affairs “efficiently”.  In recent years many CCGs have tried to block tenders from companies if they use exotic tax structures, but in 2016 these rules were scrapped for fear of litigation from such companies claiming that they were being discriminated against.

£55m Contract

With such a track record, one might baulk at the idea of putting a company like Care UK in charge of even emptying the bins at a medical facility, let alone running the whole show. Yet it was announced last week that Care UK had secured a £55m contract to provide elective healthcare services at the North East London Treatment Centre, Redbridge.

The company had previously been running the centre but the contract was re-tendered in 2015 with Barking and Dagenham’s NHS hospital trust becoming the preferred bidder. After losing the contract, Care UK appealed to the NHS regulator Monitor who, in a further stroke of irony, have since changed their name to NHS Improvement. They forced the local commissioning groups to re-run the tendering process, after which they awarded the contract to Care UK.

A spokesman for Barking and Dagenham, Havering and Redbridge CCG confirmed Care UK has now been awarded the contract after what he claimed was “a robust procurement exercise for the service which was carried out in the best interests of patients”, but in view of Care UK’s history I’ll leave you to decide if they seem like the kind of company you’d want to hand a major contract to.

Playing The Long Game

Claims that the Tories are selling off the NHS and other public services to their city banker mates have been rubbished as apocryphal by their supporters. But you only have to look at cases like this to see the truth of the matter.

These companies are simply in it for the profit, and the only way for them to make a profit is by charging more than the service costs to provide. In the public sector that difference would be ploughed back into the service for the benefit of all. For private companies, it goes out of the NHS and usually out of the UK, squirrelled away from the tax authorities in offshore havens. If they don’t make a profit they don’t stick around for long.

There’s also a theory that private health providers are playing a long game to squeeze out the NHS providers. First they outbid NHS trusts with contract promises which on paper provide little or no return; then they put in place so-called ‘tax efficiencies’ that balance out tax liabilities and make the business barely viable. Health worker’s union Unison commissioned a study of the accounts of companies such as Care UK and concluded that they are simply trying to squeeze out NHS providers.  Richard Murphy, a chartered accountant and anti-poverty campaigner employed by Unison, surmised:

Once they have squeezed out the state sector, and the third sector, we will then see prices rise; then we will see profits; then we will see these tax-efficient structures working.

Does Lord Nash benefit while patients suffer?

John Nash is now Baron Nash and sits as Parliamentary Under-Secretary of State for the School System.  It seems then that donations to the Conservatives pay dividends many times over.

Of course no one could unequivocally say that making contributions to the coffers of the ruling political party would have had any effect on Lord Nash’s fortunes. But I think it’s pretty safe to say they haven’t done him or his health company any harm. I’m not sure the same could be said for patients and staff under Care UK’s apparently less than caring eye.

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