WHILE the NHS is being brought to its knees financially through austerity cuts, with hospitals and entire health authorities facing bankruptcy, NHS privateers are raking it in, making full use of off-shore tax avoidance schemes to boost their profits.
A new report by Tax Research UK has thrown a spotlight on the way these private health care companies operate, specifically how they are deliberately structured through a complex web of interlocking companies some of which are based in tax havens.
This report, commissioned by the Unite union, analysed the tax affairs of ten private health care companies who are actively bidding to take on lucrative NHS contracts.
Of those companies – Bio Product Laboratories (BPL), Care UK, Circle, General Healthcare Group (GHG), HCA International (Hospital Corporation of America), Ramsay, Spire Healthcare, The Practice PLC, UnitedHealth (Optum) and Virgin – only two (Ramsay and HCA) pay any significant corporation tax in the UK, and all make use of tax havens in their corporate structures.
In the case of Virgin Care, part of the Virgin empire, it has been handed contracts to run more than 230 NHS and social care services – estimated to be worth hundreds of millions of pounds.
Tax Research UK found that standing between Virgin Care and its parent company were 13 ‘holding companies’ some of them based off-shore while the parent company is based in the British Virgin Islands.
Currently Virgin Care does not record making any profit from its UK NHS contracts and therefore pays no corporation tax. It appears on paper to survive simply on ‘loans’ from other parts of the Virgin empire.
If these private contracts are not making any profit for the privateers why are they scrambling like mad to secure them?
Why did Virgin Care’s latest accounts refer to the Tory led coalition’s Health and Social Care Act, which opened up the NHS to privatisation, as an ‘opportunity’?
Alongside Virgin in the tax haven stakes stands Optum UK, currently bidding to take over Staffordshire’s NHS cancer and palliative care contract worth £1.2 billion, which the report says has links to tax havens in the Cayman Islands through its parent company.
Circle Holdings – who ditched its contract to run the country’s first fully privatised hospital, Hinchingbrooke, on the grounds that it couldn’t make a profit and leaving the NHS to pick up the bill – is itself a Jersey registered company.
All the companies insisted that they do not use tax havens to avoid tax and that if they ever made a profit they would be only too willing to pay tax on it. The author of the report, Richard Murphy, observed that there is a ‘low commitment’ among these companies to pay tax in the UK.
The privateers might have a ‘low commitment’ to paying tax but they have a very strong commitment to the complete privatisation of the NHS where they can make really massive profits out of the sick.
This was explicitly stated by a spokesman for Virgin Care who said: ‘we have not yet reached a state of profitability. The shareholders are still investing in the growth of the business.’
They are investing for the real bonanza – when the NHS is completely smashed up and privatised. In the meantime, by utilising all the convoluted tricks of the accountancy trade, these companies on paper make no profit and ‘legally’ avoid paying any tax at all, a situation that in no way bars them from bidding for even more contracts.
Seven of the companies, including Virgin, have US subsidiaries or investors, meaning that under the new EU-US trade deal (TTIP) being rushed through they could use the courts to stop the government from blocking their bids or terminating any existing contracts.
The only way to stop these vultures is by demanding that the union leaders cease merely complaining about privatisation and TTIP and immediately take action by calling a general strike to bring down the government and replace it with a workers government which will end privatisation and kick out the privateers once and for all.