The most foolish NHS privatisation yet?

If private staffing agency fees are damaging the NHS so much, why on earth does the government keep trying to privatise the in-house agency set up to help the NHS avoid the problem?

Michael Thorne
13 July 2017

Image: Flickr/Ralph Berry, some rights reserved

For the third time since 2010, the government is planning to sell off NHS Professionals, the NHS in-house temporary staffing agency. This is the latest in a long series of gradual and covert moves to privatise our NHS. The obscurity in the privatisation process is no surprise. 84% of us want a publicly owned NHS. Those who want to place it in private hands know they can’t do so transparently. 

Plans for the sale of NHS Professionals in 2010 and 2014 were shelved. This time around, the government’s schedule has been disrupted by the election, and now Eleanor Smith, Labour MP for Wolverhampton South West, has tabled an Early Day Motion (number 152) for concerned MPs to sign, calling on the government to halt the sell-off, co sponsored by the SNP health spokeswoman Dr Philippa Whitford MP and Green Party co-leader Caroline Lucas MP.

Lucas has also tabled written questions to the Department of Health in an effort to find out more information about the sale process. Through parliamentary pressure and a wider campaign by We Own It, this move to privatise yet another part of the NHS can be stopped.

NHS recruitment

NHS Professionals was set up in 2001 as a response to the unsustainable costs of recruiting temporary healthcare staff through private agencies. It consists of a bank of 88,000 healthcare professionals and is used by around 60 out of 250 NHS Trusts. The organisation saves the NHS £70 million per year and turned a profit of £6.4 million in 2015-16. It is currently owned entirely by the Department of Health, but the government plans to sell 74.9% of it to the highest bidder.

Despite the success of NHS Professionals, agency staffing poses a significant financial problem for the NHS. The costs of agency staff have have risen each year from 2011 to 2015-16, in which they reached £3.64 billion – £1.4 billion over budget.

Unsurprisingly, a large chunk of this expenditure ends up as profit for recruitment agencies, which is not reinvested in the NHS. Of the £3 billion spent in 2016, between £300 and £600 million went into the pockets of recruitment agencies. While hospitals struggle to function, the heads of recruitment agencies earn salaries of almost £1 million a year.

In October 2015, controls were introduced in an effort to curb extortionate recruitment charges. While this is reported to have saved the NHS £300 million in six months, some trusts have struggled to fill vacancies since the imposition of caps on recruitment charges. Even after the controls were introduced, there were reports of recruitment agencies taking a commission as high as 49%.

NHS privatisation

The staffing problems facing the NHS look set to continue, not least given the net loss of nurses reported earlier this year. But the solution is not to hand NHS Professionals over to private control, which would effectively turn it into the kind of organisation it was meant to allow the NHS to avoid.

Privatisation damages the NHS is an at least three ways, and the current proposal is no exception.

First, privatisation drives up costs. The millions funnelled to recruitment agencies’ shareholders could be reinvested in the NHS under a publicly owned system. The additional bureaucratic costs of running the NHS as a market are also astronomical, estimated to be at least £5bn-£10bn a year.

Second, privatisation has led to lower standards of healthcare. Services outsourced to private companies which have repeatedly failed to provide adequate treatment for patients. For example, the handing over of Nottingham’s dermatology centre to Circle – who won NHS contracts worth nearly £1.5 billion in 2014 – left it on the brink of collapse in 2015. In 2013, it emerged that Serco had been tampering with data and was forced to pull out of a contract to run out-of-hours GP services in Cornwall. A 2014 inquiry led by Debbie Abrahams MP also found evidence on an international scale that privatisation reduces quality of healthcare.

Third, privatisation damages accountability. The ‘Clinical Commissioning Groups’ established by the Health and Social Care Act in 2012 frequently outsource work to organisations. Outsourcing companies can also avoid disclosing information by appealing to “commercial confidentiality” rules.

Next steps

The government has already spent £2 million arranging the sale, half of which went to the consultancy giant Deloitte. The recruitment agency Staffline is one known bidder. The other bidders remain undisclosed, though Caroline Lucas has asked them to disclose the other bidders. Ultimately, though, we know who is responsible for the sale at the Department of Health: Jeremy Hunt, the Health Secretary; Philip Dunne, Minister of State for Health; and Ben Masterson, Head of Companies Management.

These are the actors which the We Own It campaign will target. A petition to stop the sell-off has already reached 15,000 signatures. Given the government’s weakened mandate there is hope that public outrage, together with action in Parliament from Eleanor Smith MP and others, will force the government to abandon the sale.

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