Tax avoidance, privatisation and the National Health Service

NHS Clinical Commissioning Groups are preparing to give tax revenues to corporations determined not to pay tax.

Chris Miller
26 February 2016
bristol protest2.png

Image: Protest against Bristol NHS children's services being privatised. Rights: James Beecher

The Bristol Clinical Commissioning Group [CCG], the local body responsible for determining the contracts for a wide range of health care services, is seeking support from the city’s GPs to endorse a change to the CCG constitution that would allow tax-avoiding corporations to bid for NHS contracts. Under the existing constitution, agreed in 2012, they are prohibited from doing so.

The CCG describes this as ‘a minor change’, but as we know from the reaction to the Google tax deal, tax avoidance is an issue of mounting public concern. For health services it is an especially critical matter as it supports the drive toward further privatization.

The Bristol CCG is not the only one to have such a constitutional clause de-baring tax avoiders. Nor is it the only one to be now thinking about having this removed – Hackney is too, The  Independent reported earlier this month. The Bristol CCG says that it is has the support of NHS England and is acting on legal advice following the threat of litigation and its concerns about future legal challenges. However, there is no evidence to support such claims and to date no evidence of a successful challenge against such ‘ethical’ clauses.

According to the Independent, ‘questions were raised’ about the clause during the recent awarding of a one-year contract for the entire range of children’s and community health services across Bristol and South Gloucestershire. The contract was awarded to a consortium of NHS and community interest companies following a broad-based and vigorous campaign against a rival bid from Virgin Care to take over the services. Like other healthcare company's, Virgin's parent company operates through a series of tax havens. Campaigners note that Virgin Care is now preparing to bid for the more lucrative 5-7 year contract commencing 2017.

Had the Bristol CCG been hoping that this would be a non-controversial issue the timing could not have been worse. Their meeting coincided with an announcement by the House of Commons, Treasury Select Committee that it was to investigate the current corporation tax structure. It was also the week in which MPs of all parties came out against the tax deal agreed between the global giant Google and the UK’s HMRC.

Even the Chancellor, George Osborne, was forced to admit that all corporations should pay their ‘fair’ share of tax. Since more details of the Google deal have emerged, an increasing number of Conservative MPs came out against it. Apart from Osborne, it is now difficult to find anyone who thinks it represented a fair agreement. The European Union also announced that it too will investigate complaints from both the Labour Party and Scottish Nationalist Party about the Google payment and will review all European tax arrangements for global corporations.

Bristol CCG appears immune to such reactions as it prepares to condone corporate tax avoidance.  

Bristol’s ‘Protect our NHS’ campaign is urging Bristol CCG to think again. It is writing to all Bristol GPs asking them not to support the constitutional amendment and in collaboration with 38 Degrees has launched a petition against the proposed change.

It is also lobbying the City Council’s Health and Well-Being Board, chaired by the independent mayor, George Ferguson, to exert its influence. This powerful committee, on which the CCG is represented, has to date been ineffective in driving local health and social care policy – an area Ferguson is seen to have neglected. The CCG has given until February 25th for any public comment on the issue.

Bristol CCG says it has a duty to avoid expensive litigation which could waste taxpayers’ money. The PoNHS message to CCG members is that that they should neither bend to corporate bullying tactics nor needlessly accelerate privatisation. In the current climate no tax-avoiding corporation will want the full public exposure of a court case. Litigation threats are for now groundless. If they were to occur in the future then the CCG, supported by the city’s GPs, should be prepared to defend the existing constitution that reflects the only viable ethical stance.

Corporations argue that they are only doing the right thing by the shareholders and that until governments make such practices illegal it is reasonable that corporations minimize the tax bill. Yet corporate tax avoidance is not the same as an individual tax-payer claiming tax allowances or investing in tax incentive schemes, all of which are an integral part of the tax system. Tax avoidance corporations seek to place themselves beyond national tax systems, despite already generously low (18%) rates of corporation tax. Rather they invest heavily in creating complex non-transparent ways to avoid paying tax. They show no regard for the public purse, especially for the tax dependent, under-resourced and heavily indebted NHS.

Corporations employ an army of 'experts' to reduce the tax bill to as close to zero as possible (or indeed to claim back a tax credit). They then demand that they’re allowed to compete for large sums of taxpayers money, to ‘provide’ our healthcare. Or in other words, to take the money, take over the NHS workforce and generate a profit from their labour and our healthcare needs by employing draconian cost-cutting measures impacting on staff and patient care standards.

The view that not paying a fair contribution denies you the right to benefits is becoming a well-established principle and one vigorously pursued in relation to welfare recipients or non-British nationals. But it’s a different story, it seems, when it comes to tax avoiding corporations.

Tax avoidance is not a new device and corporations make long-term plans as to how best to secure new markets. Their tax avoidance shrinks the tax base and renders public services more prone to underfunding and eventual failure – opening the door to further commercialization, with corporates presenting themselves as the saviours of public services.

Private companies are winning an increasing percentage of NHS contracts. To condone tax avoidance will only further accelerate this process.

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