NHS privatisation controversy set to continue

The private sector has been given an unprecedented chance to run NHS services, winning over £10bn worth of NHS contracts in the last five years.

However, after a catalogue of controversial failures, NHS leaders have said that they want a change in policy direction, but the politics of this are not simple; legislation is unlikely and private sector's roots now run deep.

Campaigners remain unconvinced simply because major NHS contracts keep being awarded to the private sector and NHS leaders are forced to lean on private firms's capacity due to underinvestment in the NHS.


7 reasons why this is not the end of the NHS privatisation story

1. NHS contracts are still going to the private sector 

In 2019, a plan to privatise PET-CT scanning for cancer patients in Oxford and other parts of the country, resulted in vigorous local campaigning, pulling in MPs and councillors to back the opposition to the plan. This privatisation plan took place despite earlier in the year NHS England announcing that it is trying to persuade the government to scrap rules which have fuelled outsourcing. It said it wanted an end to competition, but its determination to push ahead with the outsourcing of the PET scanning has raised speculation that private sector involvement in major NHS projects is set to continue. In July 2019, the accounts of the Department of Health and Social Care (DHSC) reported that £9.2 billion had been handed to private firms in the financial year 2018/19, up 14% on the 2014/15 figure of £8.1 billion. This level of investment also throws into doubt the health secretary Matt Hancock's pledge to reduce the outsourcing of patient care.

2. The competition rules are still live

Although NHS England has asked for them to be removed, the rules that enforce competition between the NHS, private companies and charities are still in place. They give companies like Virgin Care greater access to NHS contracts. Speculation about a policy change appears to have led to NHS commissioners to slacken off the advertising of NHS contracts, partly by temporarily rolling over the arrangements with current providers.

However NHS leaders acknowledge that the current rules mean that commissioners can easily end up on the wrong side of the law if they don't give firms the chance to bid for contracts. Companies like Circle and Virgin are prepared to go to the courts to reinforce their rights.

Total value of contracts awarded through tendering since the Health and Social Care Act came into force in April 2013.

Total value of contracts awarded through tendering since the Health and Social Care Act came into force in April 2013.

3. Firms believe that there is a big role for them in the NHS and think the public support them 

A small number of companies have won NHS contracts that are worth hundreds of millions of pounds. Virgin Care is top with around £2bn worth of wins. Despite the speculation about a change in policy away from the tendering that has dominated the NHS since 2013, firms remain in the market for NHS contracts.

Virgin provides community health care, Care UK focuses on urgent care and GP services and Circle is active in providing surgery and care between hospital and home.

NHS England is trying to leave the competition era behind.  Their new agenda centres around the theme of integration. However the shift does not appear to have disrupted the business strategies of the prominent privateers.

In fact the private sector lobby believes that there is majority public support for their role in looking after NHS patients. David Hare, the CEO of the Independent Healthcare Providers Network said in comments to the HSJ, that “credible research organisations such as ComRes and Ipsos MORI has shown time and time again that a representative sample of the public are entirely comfortable with independent organisations delivering NHS care”. (we analyse this claim in an article for The Lowdown).

of NHS hip replacements are carried out by the private sector

of NHS knee replacements are performed by private providers 

4. The NHS has become more reliant on the private sector capacity and the NHS isn't expanding its own

The NHS is becoming more dependent on the private providers as its own capacity comes under greater strain. The most recent figures available show that a third of all hip operations and a quarter of all knee replacements are performed by the private sector. The NHS would need to invest in people and resources to bring these procedures back in house.

According to NHS Partners network, which represents non-NHS health organisations, in 2018, 21% of all gastroenterology, trauma and orthopaedic NHS patients are treated by independent providers (both private and not-for-profit). The organisation says that over 500,000 non-urgent operations and surgical procedures were carried out by private clinicians for the NHS in 2018, about 6% of the total.

Waiting times are rising to the point that those that can afford it are seeking help from private providers. Spire, one such firm reports an 8% rise in self pay revenue since January. However most patients cannot afford these fees. NHS leaders have instructed local managers to make greater use of the private sector, buying operations for NHS patients.

44% of spending on child and adolescent mental health goes to private providers. Private sector domination is most complete in the provision of controversial ‘locked ward rehabilitation’, in which a massive 97% of a £304m market in 2015 was held by private companies.


5. The amount we are spending on the private sector has been rising

The Department of Health and Social Care spent £9.2bn in 2018/19 on private providers according to its annual report. That's a rise of 14% from the £8.1bn in 2014-15.

Each Clinical Commissioning Group spends on average around 15% of its budget on non NHS providers but in some areas this rises to 30%. One such area is Bristol and North East Somerset where Virgin care have a 10 year contract to run health and social care, the first of its kind.



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6. New trends in private sector involvement 

Spin-off Companies for Support Services

In recent years there has been a rise in the number of spin-off companies within the NHS, which can be described as a form of back-door privatisation. These spin-off companies, wholly owned by the trust, employ non-clinical staff such as porters, cleaners, and maintenance staff. More details of this phenomenon can be found on our dedicated pages on Spin-off Companies.

There have been a growing number of reports of cash-strapped hospital trusts announcing plans to develop private companies to employ non-clinical staff. Some of the most recent being the decisions by the board of the Wrightington, Wigan & Leigh NHS Foundation Trust in June 2018 to approve the setting up of such a company and in August 2018 the board of the Calderdale and Huddersfield NHS Foundation Trust (CHFT) announcement that it is going ahead with a plan to transfer about 380 non-clinical facilities staff into a separate company .


7. Doubts over the direction of the NHS

The long term plan for the NHS in England describes a journey to towards more integrated care, based in the community rather than hospitals, more focused on prevention and using technology to fuel improvement in the standard of care. However although there has been £20bn committed economist agree that it is not enough to expand services. This raises the question as to whether the private sector will provide the additional capacity.

It has not been ruled out by NHS England but they say there will be a new best value test to drive these decisions rather than a tender. However legal opinion suggest some form of procurement process will continue.

Back in 2017 NHS England consulted over a new form of local contract - a lead provider arrangement, under which one organisations controls the budget and organises the providers through sub contracts. Controversially this contracts still gives the private sector the chance to take this lead role, although NHS England says this is unlikely, it has left some campaigners unconvinced.

The background

In January 2019 NHS England requested that NHS competition rules be removed.   These are the rules that force the NHS to advertise its contracts to the private sector. This has been the engine behind much of the recent outsourcing of NHS services.

The Government are yet to agree, but if it happens this would be a major u-turn in policy. Making NHS hospitals and other providers compete for patients was a central pillar of the Health and Social Care Act 2012. The Coalition government sweated to force this legislation through Parliament in the face of unprecedented opposition.

Seven years on and the NHS has reached a consensus that the market approach has caused massive problems. However all the structures and laws which enforce competition and give companies like Virgin Care greater access to NHS contracts are still in place.

5 steps to end privatisation


  1. Make the new local boards truly accountable and transparent. This will mean primary legislation, if the idea is to make councils, hospital and GPs share in decision making then their decisions must be open to scrutiny and challenge. the public don't support NHS privatisation and should be able to object, currently outsourcing is seldom part of a public consultation.

  2. Make the NHS the preferred provider and build NHS capacity. Much controversy has surrounded the new contract which NHS England has prepared for the lead organisation, who will take control of the health budget in each area. It leaves open the possibility for the private sector even though NHS England have said that they don't not envisage this happening. More likely is a continuation of outsourcing as the NHS struggles to find the capacity to treat patients within it own organisations. Investing in the raising the NHS workforce is therefore a key part of preventing future outsourcing.

  3. Remove the obligation upon the NHS to advertise its contracts to the the private sector (section 75 regs). It can be done at the stroke of a ministerial pen and does not need a long Parliamentary process. NHS England have asked for it to be done, so why no action
  4. Act to remove the burden of PFI. The NHS is spending £2bn in inflated PFI payments. The government must explore ways to end these deals to relieve the burden on hospital finances.

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