Labour Research August 2020


Tories use crisis to ramp up privatisation

There is growing concern that the government has been using the coronavirus crisis to accelerate NHS privatisation. Labour Research reports.

Last month, as part of a series of events to mark the 72nd birthday of the NHS on 5 July, health campaigners asked their supporters to bake anti-privatisation birthday cakes calling on prime minister Boris Johnson to stop handing private companies a slice of our health service.

The public ownership campaign We Own It said that when we should be thanking NHS staff, the government is “baking in privatisation”, with a long list of private companies “creaming off a slice of our NHS”.

Labour Unions, which works with the 12 Labour Party-affiliated unions, said the UK government “has turbo charged outsourcing, when we know outsourcing has been shown time and again to be bad for workers, taxpayers and the public”.

Unions and health campaigners have been fighting the various forms of privatisation in the NHS over many years. These include the private finance initiative (PFI), which provided the funds to build new hospitals but left them with crippling long-term debts, and the outsourcing of hospital services including catering and cleaning to private companies like Compass, ISS and Mitie.

According to John Lister, editor of the Health Campaigns Together coalition, the private provision of NHS England services has increased sharply since 2010. The Tory-led coalition government built on New Labour’s experimentation in working with private hospitals to increase capacity.

Last year, NHS England spent around 18% of its total expenditure — a massive £21 billion — on the independent sector, excluding GPs. Private contractors now control almost all cleaning, catering, portering and other ancillary services in NHS hospitals, according to Helen O’Connor, an organiser for the GMB general union.

And, as O’Connor explained, privatisation drives down pay and conditions as well as standards, making it bad for workers, as well as patients and public health. “There’s no occupational sick pay; statutory sick pay doesn’t start until day three, and is only around £96 a week,” she pointed out.

“Workers are on very low pay, living hand-to-mouth with no guarantee they will get paid even for the hours they have worked, and they are forced to come in to work when they are sick, resulting in a public health hazard.”

Government contracting out COVID-19 response

There is now growing concern the government is using its emergency powers to fight the COVID-19 coronavirus to speed up privatisation in the NHS. Campaigners say it is handing out contracts to private companies, some with little expertise, others with long track records of failure that have once again failed to deliver during this crisis (see box).

“The coronavirus crisis has been used by the government to hand out billions of pounds to its friends in private companies without scrutiny,” Cat Hobbs, director of We Own It, told Labour Research.

Profiting from the coronavirus crisis

A joint “rescue plan” by Keep our NHS Public and Health Campaigns Together tells of “widespread concern at the eagerness of ministers to bring in management consultants to run services and outsourcing to private companies ... to take on vital jobs that should properly be done by the NHS, public health and local government”.

This is often without even a competitive tender, with contracts going to firms lacking any relevant experience.

A rescue plan — 2020 vision for a post-COVID NHS highlights:

• the decision in April 2020 to award a multi-million pound contract for procurement of personal protective equipment to PestFix, a family-run pest control firm with just 16 employees and assets of £18,000. This contract is now the subject of a legal challenge;

The Times report on a £2 million contract to Double Dragon, a small company with a phone number that does not work and business premises on a residential street in Ilford, east London.

It describes itself as a wholesaler of coffee, tea, cocoa and spices, but is now claiming to be a certified supplier to the NHS of medical-grade equipment;

• contracts to set up COVID-19 testing sites awarded to city analysts Deloitte, and sub-contracted to others, including facilities management firm Mitie and multinationals Serco, Sodexo and G4S.

Cat Hobbs, director of public ownership campaign We Own It, pointed to reports that Epsom hospital asked to take over management of the flagship testing centre at Chessington, Greater London, after Deloitte’s failings led to NHS staff test results being mixed up and lost;

• the £90 million contract for setting up and running the vital track and trace system to Serco. This won’t be fully operational until autumn, but CEO Rupert Soames said it would “cement the position of the private sector in the NHS supply chain”.

Ninety per cent of those contacted up to 22 June were traced by local health protection teams rather than national Serco services; and

• contracts handed out to develop the unproven track and trace app abandoned on 18 June, and “even more questionable contracts” that “have handed over, or opened up, NHS data to other tech companies including Amazon, Google and Microsoft”.


“This hasn’t helped the crisis and has made it harder to save lives.” She highlighted the failure to get personal protective equipment (PPE) to nurses and other workers treating and caring for COVID patients as an example of this.

“We need to hold the government to account over its failures to provide PPE to NHS and social care staff, but the story behind the failure is privatisation,” she added.

She said that health secretary Matt Hancock “often didn’t seem to know what was happening with the supply of PPE, and it’s quite possible that he didn’t because it’s been outsourced to lots of different companies including [parcel delivery company] DHL.

“It is now responsible for £4 billion of NHS budget for ‘ward consumables’, including PPE.” (See box).

Privatising the supply chain fails to deliver

Privatisation is at the centre of the “fiasco” of personal protective equipment (PPE) shortages during the coronavirus pandemic, according to a joint report from the University of Greenwich and the public ownership campaign group We Own It.

The report, Privatised and unprepared: the NHS supply chain, says the privatisation of the NHS supply chain, and its break-up into 11 outsourced contracts, contributed to the failure of the NHS to buy and distribute sufficient PPE to medical staff.

The procurement process has been entirely outsourced.

Companies like parcel delivery firm DHL are in charge of selecting suppliers for the NHS. These suppliers in turn select other private companies to make specific items of PPE and hand them to yet another private logistics company to deliver them.

NHS trusts are instructed to use this centralised system.

The report points out that in doing so, every piece of equipment goes through four separate layers of profit-taking.

This has created a “fundamentally dysfunctional system” that has “severely undermined the national effort to protect NHS and care staff” and “helped turn the pandemic into an utter disaster”. We Own It says dozens of private companies are involved, but highlights the poor performance of the worst five.

These include DHL, which has been directly controlling at least £4 billion of NHS spending, and multinational accountancy firm Deloitte. It won a series of major NHS contracts for designing the procurement system and managing logistics for PPE and testing centres.

Multinational logistics firm Unipart is responsible for delivering PPE through its £730 million NHS logistics contract. But its “just in time” approach goes against the need to stockpile medical goods such as PPE.

Healthcare logistics company Movianto won a £55 million contract in 2018 to provide a stockpile of equipment, mostly PPE, in case of a pandemic.

According to delivery drivers, says We Own It, it was not ready to get the deliveries out to hospitals, due to “bad management” of the stock and short staffing, with much of the stock out of date.

Clipper Logistics was contracted to run a separate PPE channel for NHS trusts, GPs and care homes. Its chair, Steven Parkin, has donated £725,000 to the Conservative Party over the last five years.

The company is accused of threatening workers with disciplinary action over concerns about coming into work during the pandemic.


Lister also points to the creation of the Nightingale field hospitals which “we now know cost up to £346 million for the first three mnths in addition to clinical staff, but actually treated very few patients — partly because of a shortage of the skilled staff needed to run them”.

He also pointed to Hancock’s proposal to extend a three-month contract block-booking around 8,000 private hospital beds. This would reportedly cost a whopping £5 billion, while thousands of NHS beds remain closed.

“The rationale is that private hospitals are COVID-free sites,” said Lister. “But they are of limited value. They are often small and remote, with none of the usual facilities you would find in an NHS hospital, and NHS staff have to travel a long way to get to them. Even using all 8,000 private hospital beds would open less than a quarter of the capacity of the beds still empty and unused in NHS hospitals.”

Test, track and trace

He said the government is setting up parallel systems where services are already established in the public sector. For example, it created a network of four Lighthouse “super labs” for COVID testing, when there are already 44 NHS labs capable of doing this work.

Last month, the Institute for Biomedical Sciences responded to reports of government plans to extend the Lighthouse lab scheme, as part of another massive £5 billion contract, saying the creation of the lighthouse laboratories is “a parallel but disconnected testing stream for COVID-19”.

It said: “The lighthouse laboratories in England have failed to deliver robust data and, although links with NHS laboratories have started to emerge, the data flow is still stilted with many manual checks and conversions required.

“Links with clinical systems are still poor and the data generated raises more questions than it answers.

“In contrast, IT connectivity has always been a strength of the NHS laboratories where biomedical scientists have decades of experience with data integration ensuring the entire pathway of every sample is recorded and making sure results are immediately communicated to the responsible clinicians.”

Lister said: “It’s not just the sums of money being spent, but worse, privatisation leads to a fragmented and disorganised system. “It’s an ideological exercise rather than one based on common sense.”

A good example of the damaging impact of this fragmentation, said Hobbs, is the failure to get “Pillar 2” testing data — from swab testing for the wider population collected by “commercial partners” — to local public health teams.

“We are calling for test, track and trace to be brought in house and run by public health teams and local authorities,” she said.

“They can recruit, train and manage en masse, they know their local areas and they should be given new funding to do the job rather than giving the contract to private companies with no expertise.”

Resisting privatisation

As the NHS marked its 72nd birthday last month, campaigners and unions stepped up action to oppose privatisation with a series of protests and online rallies. Keep our NHS public (KONP) and Health Campaigns Together launched a new Rescue Plan for the NHS (see box this page).

This includes demands to roll back privatisation and to keep the NHS out of all trade deals to avoid escalating privatisation. Hobbs said the government has been pushing its Trade Bill through Parliament behind the scenes while the pandemic has been going on.

The Tories describe the Bill as “an important element of the independent trade policy the UK will operate when we have left the EU”.

But We Own It says the Bill could lock in current levels of privatisation and prevent future laws to reverse or undo it. Trade deals, with the US particularly, could also drive up the price the NHS pays for drugs.

“We’re pushing for protection for the NHS, we want MPs to be able to scrutinise the Bill, and we don’t want US healthcare companies to be able to get their hands on the NHS more than they have already done,” said Hobbs. “The government will get away with quietly privatising the NHS if we let it.”

Another key focus for We Own It is ending the contract by outsourcing giant Serco for contact tracing and bringing this back into the NHS. Its Save lives, scrap Serco now petition is supported by organisations including the country’s largest union, Unite.

The petition says Serco has already proved itself inadequate. Its contact tracing system is not due to be fully operational until the autumn (see box above).

It also highlights a catalogue of the company’s previous failings. Serco was fined £23 million after admitting responsibility for fraud. It charged the Ministry of Justice for electronically tagging people who were either dead, in jail, or had left the country. 

It was embroiled in a scandal after giving just an hour’s training to staff working on its breast cancer hotline. It admitted to falsifying data in one of its out-of-hours GP services in Cornwall.

It was found guilty after a company it set up overcharged NHS hospitals millions for diagnostic tests in 2014, and it was fined £750,000 for a worker’s death and putting lives at risk.

More generally, the campaign is calling for the NHS to be fully funded and reinstated — put back into public hands — after the crisis with an end to outsourcing. “We want to kick out the privateers starting with Serco,” said Hobbs. “We won’t get out of lockdown safely with them in charge.”

She said there has been “a brilliant response” from a “highly-engaged” public. “People see the threat and they want to be involved,” she added. “We need to fight the giant multinationals who see this crisis as an opportunity and have the power and connections to get contracts, even when they do a terrible job.”

Meanwhile, unions are using their industrial muscle to push back against private companies attacking terms and conditions, and to fight for parity with NHS staff on national pay and conditions. Winning these battles is important, says Lister. The private sector relies for its profits in support services on paying less to staff: it is not interested in delivering NHS services where there is no profit to be made.

Late last year, public services union UNISON backed hundreds of support workers countrywide over issues of fair pay and privatisation.

These included 300 hospital support staff working for the Compass contract catering firm in St Helens and Blackpool who took 14 days’ action and won their fight for better pay.

They were paid around £1,000 less per year than colleagues who do the same jobs but are employed directly by the NHS. The union says they won “significant hourly pay rises to at or above the NHS pay rate of £9.03 per hour, more money for working weekends and bank holidays and an improved sick pay scheme”.

The GMB’s O’Connor said that Mitie proposed cutting the hours of cleaning and catering workers at St George’s hospital in south London.

It also wanted cleaners to serve food to save money, but after the GMB balloted 350 workers for strike action — with huge support from both the Labour Party and the public — the company backed down.

At Lewisham hospital in south east London, the GMB successfully campaigned to increase the pay of cleaning and catering workers outsourced to ISS from the minimum wage rate of £8.21 an hour to the Real Living Wage rate of £10.55 (now £10.75 an hour). The big issue now, she says, is day one sick pay.

“It’s really important that trade unions work with the community so patients and the public know that privatisation is driving down standards in their local hospitals and it can get dangerous,” she emphasised.

“Staff inside hospitals can be very effective. No one wants a strike, but we will do that if we have to protect services. Attacks are going on all the time and we will use every weapon we’ve got.”

Ultimately, she says, workers want to be back in the NHS where they are treated better.

Keep our NHS Public/ Health Campaigns Together, A Rescue Plan: 2020 vision for a post-Covid NHS (

University of Greenwich/ We Own ItPrivatised and Unprepared:The NHS Supply Chain (