The NHS as an unassailable Public-Private Wealth Transfer Mechanism

Marcus Baw
6 min readJul 9, 2020

An unusually political blog article from me this time. It’s still healthcare-relevant, but it’s concerned with some of the bigger-picture stuff that I’ve been observing. It also cuts across some of my other views — particularly those around open source in healthcare — because open source, sharing, and collaboration are pretty much antithetical to the current governmental zeitgeist, making it hard to move forward with those ideas while this thinking prevails.

Our governments are not on our side. They haven’t been for some time. They are complicit with big business and wealthy elites to funnel money from the public sector into private hands, and a short history of the last few years shows how this has become the main function of the government.

‘Wealth Transfer Mechanism’

I’m sure I haven’t invented the term, neither am I the first to give a name to this concept, but I just like that term as it’s simple and accessible. It describes a way of sending public taxpayer money (often in fact taxpayer’s crippling debt) to private companies, for private profit and private wealth.

Why are these a thing?

Governments cannot run out of money. On the behalf of the people they purport to represent, they can borrow quite staggering sums of money. They can raise cash via taxation too, and if the privately wealthy beneficiaries of WTMs paid tax in the UK then this would almost redress the balance. ….But they generally aren’t paying UK Corporation Tax or UK Income Tax.

Governments buy quite enormous things. This is why they are such attractive customers to have for big business. The right amount of lobbying in the right ears can deliver a huge contract announcement, for the kinds of things that only governments buy — vast rail infrastructure, monstrous stunts of civil engineering like bridges and tunnels, secretive (and therefore not externally transparent or auditable) defence contracts, nuclear power stations, and more. Even if the country’s children are starving, corrupt leaders will still be commissioning white elephant projects.

Contractors can easily become part of government. There’s a special kind of lobbying where the hopeful contractor lands its own senior employee a flagship job in the government department or arms-length-body best placed to create their dream future contract. It’s known as the public-private revolving door. Over the next few years their ‘government plant’ can quietly develop opportunities and siphon intelligence out to their former employer. When the Big Contract is announced, the contractor is all ready with the perfect bid. NHS England’s Global Digital Exemplar programme was a perfect example of this.

The initial tender and the final cost need not be mathematically related in any way. Initially, contractors can bid low enough to win the contract (while high enough to be plausible). Later, increases in the contract value are reported but never result in the cancellation of the contract. Governments always pay up. HS2 is the par-excellence example of this.

Delivery is completely optional. Whereas failure to deliver the goods for a private-private contract would result in legal redress and compensation, failure to deliver on a public project is inversely proportional to the size of the contract. There is always a way to divert blame for failure to deliver away from the contractor and onto any other delivery stakeholder. Government is complicit in hiding the extent of incompetence because it’s in neither the contractor’s or the commissioner’s interest to disclose that a contract was awarded to a company fundamentally incapable of delivering it. And the government never sues for failure. Or if it does, it loses.

Reputations are at stake, so U-turns cannot happen, and failure is hidden. At this level of the political game, projects are often deeply linked to individual politicians or other leaders. This fact explains all of the above — the ready availability of new funds, the failure to investigate and prosecute for failure to deliver, the complicit hiding of inconvenient failure.

How this is happening now

It’s increasingly apparent through some of the COVID-19 procurements and finance announcements that they are not even afraid of being found out any more. Estimates of the worldwide market for personal protective equipment (PPE) last year put it at about £40 billion. Yet, in the latest Chancellor’s Summer Statement, the UK has announced it will spend £15 billion (37% of the worldwide market) on PPE, which represents about £14,000 for each and every NHS staff member — it just seems implausible. (Note that only a minority of NHS staff need to wear full PPE, and not necessarily for all their work)

£10 billion is earmarked for the NHS Test and Trace scheme. It seems extraordinary that any efficient system to contact people who may have been exposed to COVID-19 could cost £150 per head of UK population over the limited time during which contact tracing will be necessary. For context, we spend about £2900 per head of population for people’s entire healthcare — general practice, hospital care, cancer treatments, surgery. How can contact tracing cost 5% of someone’s entire healthcare? Answer: it doesn’t — not if you commission it from public organisations like PHE or from small ‘self-employed’ private NHS providers like GPs. It only costs this comedy money if you are strip-mining the NHS for cash to send to huge private organisations like Serco.

Why the NHS is the perfect WTM vehicle

The NHS makes a particularly good Wealth Transfer Mechanism vehicle because it’s so very close to people’s hearts in the UK. Whereas government spending in most other areas is always subject to criticism, spending on the NHS has an almost inverted effect — the larger the number that you are spending, the better you look as a government.

All NHS spending is ‘good spending’ from a tabloid newspaper editor’s point of view.

Other areas of government spending — defence, infrastructure, welfare, even Education — can and will be criticised, and the larger the number being spent the more it looks like the government’s spending is out of control.

But spending on the NHS, especially in a pandemic crisis, is subject to very much lower levels of criticism.

I’m not saying that this same pouring of cash into private sector hands doesn’t happen elsewhere in government. We have great examples in HS2 (£106bn), and no-deal Brexit planning measures (£4.2bn).

Why this means the NHS will never be privatised

This section originally discussed how the backlash to this profligate public spending would eventually cause a ‘tabloid revolt’ and the destruction of the NHS, with it being replaced by an insurance-based private model. But after I published this story I had some great feedback from Andy Cowper of the HSJ via Twitter, which made some great points and I re-thought through the whole thing.

Essentially I realised that once this very plausible mechanism is in motion for funnelling public cash straight out of the Exchequer into private companies at scale, then it makes no sense at all to privatise the whole NHS.

In fact, the wealth transfer mechanism somewhat relies on the NHS remaining public, since that is what allows governments to justify ongoing spending.

In this scenario the NHS would remain public forever, but internally there would be increasing use of private companies to provide its services. Already this process is well underway and has proceeded over the past 20 years under both red and blue governments (and that weird period when we got a blue one with a faint yellow streak). Services such as portering, catering, cleaning, and laundry are all provided by private companies, although this is at a scale which is barely perceptible compared to the big money contracts that this article talks about.

“But GPs are private companies aren’t they? Aren’t you against that kind of private provision?”

Correct — however I think what I’ve outlined in the preceding article is a completely different type of private company, actually manipulating the levers of government from within, to create spectacular money-making opportunities, and to deliver very little in return.

General Practitioners’ businesses are mostly an ‘un-limited liability’ partnership, and generally operate at small, local scale. Even if they acted as a cartel using their trade union (the BMA), they aren’t capable of participating in this kind of scale of operation. Most GPs now don’t actually own a stake in the practice they work in and are ‘salaried GPs’.

(Declaration of interest: I am a GP, I don’t own a practice though, I’m a locum.)

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Marcus Baw

#HIT100 NHS GP | Clinical Informatician | Ruby & Python dev | co-founder NHSbuntu & openGPSoC | Freelance Health IT