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Selling off Britain: Making a healthy profit

British hospitals are not royal palaces, but they're both funded the same person - the UK taxpayer.
Last modified: 10 Oct 2012 16:05

There's a very amusing newspaper columnist in Britain who's been having a go at the royal family, in this historic age of cuts in Britain. As she points out, they live in palaces paid for entirely by the British taxpayer – but the same taxpayer then has to buy a ticket (at £18/$29 per adult) to visit those very same the palaces. Now that’s what you call a double-whammy.

The same principle can now be applied to hospitals, which far more people visit.

Since the end of the second world war, the National Heath Service has been an emblematic expression of what you pay taxes for: so that the state will look after your health, from cradle to grave.

However, things are starting to be done differently. Hospitals are being privatised - at least in England and Wales (the healthcare system north of the border falls under the purview of the Scottish parliament in Edinburgh). The government says, as with all its privatisations, that the state is clunky, bureaucratic, and workers expect annoying things - such as pensions and early retirement. An outsourced service would be cheaper and offer better value to you, not just as a citizen but also as a client.

And so companies most people have never heard of are now running hospitals - hospitals that their children and parents are being taken to when they're ill.

So far, so what. But this is the interesting bit. The taxpayer is still paying for the hospitals. The tax goes to the government, but the budget is organised by the outsourced management.

In eastern England there's a hospital named Hinchingbrooke, which made history when it became the first NHS unit to be run by private management.

The investors and shareholders in that hospital are finance houses and hedge funds. Publicly available records also show that the same finance houses are major donors to the Conservative Party (donations worth £1.4m/$2.2m) and their contract to run the hospital is worth £10 billion ($16bn) over ten years.

Now whether you want to make a link between companies donating to a political party and getting a massive contract in return, it is nonetheless the case that taxpayers are funding a hospital which, if profitable, will see the returns going to hedge funds, and not going back into the tax pot. It's a bit like the royal family getting their palace paid for by tax and then taking the profits from visitors.

Of course, there's an entirely separate conversation about whether in future the NHS will still be free, or whether you'll have to pay for it (and don't be fooled by the diversion story about health tourism and foreigners coming here to use the hospitals – that's not the point).

And so my question is this: if you're a traditional conservative, of the US model, who believes in low taxation and people paying only for what they should use and not propping up state spending, how do you justify taxpayers funding hospitals run by hedge funds?