How Private Enterprise Takes Other People’s Money

Among the most frightening developments in Government policy is the creeping privatisation of tax-funded services — for the sake of lowering tax. Let’s take a look at the emerging trends in two of our most cherished institutions: schools and hospitals.

Education: when profit trumps best practice

Private education provider Pearson is behind the Common Core tests used in many states in America. They are involved in the Charter School movement and own a string of virtual schools throughout the USA. It’s important to note that the main ideological driver behind all this is the neoliberal/anarcho-capitalist notion that “Government” is like a reverse Midas: everything it touches turns to rot because “Government” is much more interested in expanding bureaucracy for its own sake than in serving the people. If this is true, what can be done? Why, know ye not that the market shall provide?

Whether we like it or not private enterprise can and does do a better job than the state can, but usually when the state is failing due to corruption or dysfunction. Like the Girl With The Curl, when it is good it is very, very good, but when it is bad… you get the idea. In the Philippines, Pearson is rolling out its latest plan to bring affordable education to the masses. So far, this offers hope to those who can pay the modest fees required but if it ends up supplanting state-funded education, the consequences for the very poor will be grim, to say the least.

If Pearson achieves its vision, only the most destitute would remain in public schools …Or those schools would close down altogether, as governments increasingly outsource education… to a Western corporation. Teaching would become a low-paid, transient occupation requiring little training.

Private educational establisments tend to do best where competition from state schools exists to keep them honest. Where there is none, profit trumps all and standards plummet. The effects are usually seen in the quality and calibre of staff, which in turn affects the outcome of their work. It’s impossible to attract high-calibre staff to jobs that don’t pay well — unless they are the only jobs available. This is a stated aim of our Government in its Big Society agenda, the idea being to “empower individuals and groups by giving them choice.” What it actually means in practice is “empower wealthy individuals and groups by giving them choice.”

Here in Britain, the Government plans to academise all schools whether we want this or not. This will not shift power to the parents as the schools vie for their children, but to Whitehall under the control of the Secretary of State for Education. While the schools are not supposed to be run for profit, money is sometimes channeled into companies associated with the directors. There is no evidence that academies perform any better than schools under the control of local authorities; sometimes they’re a lot worse. If the Trojan Horse scandal doesn’t make people think twice about allowing special interest groups to take over schools, what will? Under the watchful eye of a vigilant local authority, things like that are less likely to happen.

Healthcare – coming soon: Universal Private Health Insurance

In 2005 Secretary of State for Health Jeremy Hunt co-authored a book called Direct Democracy: An Agenda for a New Model Party, which called for the denationalisation of the NHS, the idea being that private health insurance could be made available to people who can afford it and subsidised for those who can’t.

Our ambition should be to break down the barriers between private and public provision, in  effect  denationalising  the  provision of health care in Britain, so extending to all the choices currently available only to the minority who opt for private provision.

Mr. Hunt has since denied that he holds these views but if you look at how he has run his department it’s hard to believe that he doesn’t. And like all neoliberal ideas this is based on a lie.

The UK is better at keeping spending under control, but at least part of the reason for this is that SHI countries allow patients to upgrade and top up statutory healthcare privately, which is not permitted on the NHS.

That is disingenuous, to say the least. I use the NHS to meet my needs but could access private services if I wanted to without being penalised in any way. The idea that you lose your entitlement to free healthcare if you go private is ludicrous. This applies even if the private practitioner screws up and you need to go to hospital for corrective treatment.

The NHS …was, and remains, a child of its time, conceived on the principle that the beneficent state should be a monopoly provider.

That has never been true. In fact, private healthcare has always been available in Britain.

It is also crucial to understand that the NHS and the private sector share the consultant, or specialist, workforce. For nursing, and other health care workers, the private sector operates in a more diversified market, with staff moving between the public and private sectors and back again.

If the NHS was a monopoly, that wouldn’t be the case. In any case, despite the convenience and speed provided by private healthcare services, demand for individual health insurance policies has fallen. The truth is, it can and does compete perfectly well with the private providers, otherwise people would vote with their feet, and they’re not doing that. It seems to me that in the Government’s drive to “break down the artificial barrier between public and private, which is sometimes compared to apartheid,” they’re trading our futures for ideological considerations and are utterly refusing to take our needs into consideration. Let’s take a look at what happens when they give our money to their friends.

In 2012 private healthcare provider Circle Health won a ten year £1bn contract to run Hinchingbrooke Hospital in Cambridgeshire. Less than three years later, dogged by scandal, it unilaterally decided to end it. Wikipedia and The Independent have all the details. Suffice it to say, running an essential service for profit and funding this via taxation can’t work because there are too many variables. If there is an unexpected rise in demand or a series of major incidents, a hospital can very quickly burn through its budget. Circle left a £14m deficit. The private healthcare providers the hospital trusts often subcontract to sometimes foul up so badly people are affected for life — if they survive. This happens because they are obliged to make efficiencies, which usually means spending as little on staffing as they can get away with. I think we can agree, then, that the idea that private enterprise is automatically more efficient than a tax-funded service has been thoroughly debunked.

Few Western governments leave their citizens entirely without some kind of provision. In America, the insurance-led healthcare service (AKA Obamacare) has proved to be a clunky compromise in which people are obliged to purchase health insurance for themselves and their families or be fined. The states are supposed to roll out Medicaid to provide for those who can’t afford to pay for insurance. In practice, many people fall between the cracks and many states refuse to extend Medicaid on principle. In some parts of Europe, including my native Ireland, there is a Universal Private Health Insurance scheme that provides for the poor by paying their premiums for them. A brief read through the papers will show that during times of economic crisis, when there’s less disposable income in the household, people prioritise their spending and health insurance doesn’t tend to make the list. This in turn affects the system. This quote from The Week says it all:

In a study of 11 high-income nations carried out by the Commonwealth Fund, a private American foundation, the NHS was deemed the second cheapest and the best performing overall. It ranked first for access, safety, coordinated care, patient-centred care and efficiency – although it came in third for timeliness of care, beaten by Switzerland and the Netherlands. It also ranked among the lowest for “healthy lives”, which took into account life expectancy, infant mortality and deaths that might have been prevented by medical care.

At the other end of the scale, the United States, where healthcare facilities are largely operated by private sector businesses, was deemed the most expensive and was ranked last in the study. Around 37 per cent of people in the US said they would avoid seeking medical help because of cost, while patients in the UK and Sweden, which also has a tax-payer funded system, were the least likely to report having these cost-related access concerns.

Our NHS, though somewhat threadbare at the moment, is still a better system than that of many other countries. There is no need to dismantle or “reform” it.


The commodification of essential services due to excessive zeal for promoting an attitude of self-reliance on our population is causing more problems than it solves. Our state-run services have but one agenda: to serve the community for free at the point of delivery, and while I have generally got no problem with private enterprise running schools or hospitals per se, I’d rather not be reliant on people who may not have my best interests at heart, particularly when I’m not in a position to question the decisions they are making.

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Comments (2)

  1. Richard


    “Whether we like it or not private enterprise can and does do a better job than the state can, but usually when the state is failing due to corruption or dysfunction. ”

    There is one flaw with that theory. If the good in question is essential then the state will inevitably have to take a role in allocating the work to the private enterprise. Unfortunately if there is one thing that the state does worse than running stuff itself it is allocating work to private enterprise.

  2. Reply

    That is actually happening now, to my dismay. In my post I demonstrated how it is happening to our beloved NHS.

    I don’t think there’s a flaw in the theory if you’re coming from a mixed-solution perspective, as I am. I do believe that private enterprise ought to be able to provide services, even essential ones, but ALONGSIDE tax-funded solutions, not instead of them. To leave essential service provision entirely to private enterprise is a grave error and we’re already seeing that.

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