Brexit and the NHS privatisation myth

No election in the UK can pass without the NHS being used as a political football: the current election campaign is no different. For those not attuned to the hustle and bustle of UK politics the NHS (National Health Service), established in 1948, is the system of public health care that provides medical assistance free at the point of entry for the entire UK population. As such the NHS has found itself a place in the hearts of the public and to underline its popularity a recent YouGov poll revealed that 87% of Brits are proud of the institution. In fact the NHS even took centre stage at the London 2012 opening Olympic ceremony where its achievements and Britishness were celebrated for the world to see.

From the above it becomes clear exactly why the health service provides a fertile ground for battle between the political parties. Indeed as it stands today Labour is positioning itself as a champion of the NHS, while accusing the Conservatives of planning to sell off this very British institution to US corporations in a post Brexit trade deal. The current Labour strategy accusing the Tories of seeking to privatise is a tried and tested one and one which brought the party success in 1997 allowing for Blair to break the Conservative grip on power.

The charge as it stands, predominately rests on a few fundamental facets. All of which we will seek to address in the course of this article.

  1. The Conservatives are planning to sell of the NHS to USA firms in a post Brexit deal.
  2. We will then have an American private style health service with no universal cover and too expensive for vast swathes of the public.
  3. US pharmaceuticals will charge the NHS $500 million a week more on drugs.
  4. This is unavoidable because the UK will have no leverage in a trade deal with a far more powerful economy if they leave the protective shell of the EU.

Of course this all creates an indictment the conservatives profusely reject. Nonetheless the Labour position has proven adept at embedding itself in the mainstream consciousness, with the strategy seemingly designed to counterbalance the perennial conservative claim that Labour are economically irresponsible. Due to the effectiveness of the claim we find ourselves in a position where many voters consider that remaining in the EU is the only method by which to protect the NHS.

A Labour party campaign post featuring of a doctored picture of the famous NHS bus.

The greatest irony of all, however, is that the NHS by stealth has slowly been undergoing privatisation over the last four decades: there are currently 109 private firms operating within the NHS, although far from all are providing front line health service. Judging by popular reaction this appears to be unbeknown to the vast majority of British citizens.

What is more, both parties are responsible for this process. Key to this creeping privatisation has been both domestic and supranational legislation. The basis is found in the following: The 2012 Health and Social Care Act that sought to bring the UK in line with EU regulation (competition, legal tender), the establishment of foundations trusts under Labour, the purchaser-provider split arrangements of the Thatcher years, the spirit of the EUs Maastrict treaty (non-discriminatory right to provide services, competition rules, state aid rules, monopoly, all the principals of a “common market”), plus the EU directive of 2014 (procurement).

This legislative cornucopia is mutually reinforcing, meaning that EU law enshrines the right of private firms to provide services within the NHS with no domestic right to repeal the legislation which protects this right.

Therefore Brexit provides an unprecedented opportunity to renationalise the NHS and end the process of privatisation, it allows for the removal of the EU supremacy in terms of jurisdiction, that is to say remove the EU laws by which procurement and competition are enforced. However Brexit alone is not enough: renationalisation would require that domestic laws such as the 2012 Health and Social care act be repealed domestically.

In simple terms Brexit offers the only viable means by which to reject privatisation, by providing the conditions under which current regulation can be repealed. Nonetheless, the Labour claim of a post-Brexit Free Trade Agreement with the United States in which the NHS is on the table, is in legal terms a possibility. The question here is, does it represent a political reality? And what would the nature of such a deal include? It is also a question of balance.

As opposed to the EU, where privatisation is locked in with no real right to repeal, a post Brexit FTA could take place. Here it is imperative that we emphasise the word “could”. Certainly, as stated above there remains a legal possibility for such a scenario. In real terms however this is unlikely, then democratic accountability means that the Conservative party would almost certainly have to concede defeat at any following general election. Therefore opening up to US firms on a large scale would fail to serve the party interest. This position also ignores the Conservative pledge to review the workings of the “internal market” outlined in the 2017 party manifesto in which Simon Stevens surmised that the opening of the NHS via procurement or legal tender has “not been working properly”.

Nonetheless let’s take the worst case scenario as fact. Lets presume the UK enters into a bilateral trade arrangement with the USA in which American corporation’s are given access on an unprecedented scale to the NHS. In this case a bilateral trade deal still offers the legal opportunity for amendment, as opposed to the EU where only exiting from the bloc provides an opportunity to overturn the legal framework that assures privatisation.

The argument has been muted that Brexit means the UK is consigned to accept any deal the US has to offer and that the UK will lack leverage against the world largest economy. US trade deals with Canada and Mexico have been cited to bolster this argument, however this argument has been presented in a subjective light refusing to cite cases where incredibly small nations such as Switzerland or Iceland have rejected deals deemed unpalatable domestically. Again whatever pressures the international environment may produce, these are hedged against by domestic concerns.

Brexit also provides an opportunity to deny the private medical providers of 27 states access to apply for legal tender within the NHS internal market. It seems ludicrous on one hand to enable all EU member states an opportunity to compete for EU contracts while lamenting possible US access to provide the very same services.

EU/CETA deal as a back door for US conglomerates

EU trade deals are notoriously negotiated by European representatives, leaving the nation states to watch on from the sidelines: this reality leaves the member states susceptible to the block’s internal dynamics. If we cite the possible pressures of facing an economic superpower in the framework of a bilateral trade negotiation then we should consider the case of Wallonia in its attempts to block the CETA (Comprehensive Economic Trade Agreement) trade deal. When the EU sought to ratify the CETA trade agreement with Canada the regional Belgian parliament of Wallonia blocked the deal out of fears relating to labour, health, public services and social protections and for two weeks Wallonia held firm before caving in to external pressures. The case presents an example in which one regional parliament was suddenly confronted by the full weight of the unions 28 member states. And while acknowledging this to be a rare case, it nonetheless seems disingenuous mathematically to excoriate the dangers of a head-to-head trade negotiation when there is the potential to find oneself in opposition to 27 member states and a whole host of institutions.

The CETA agreement however plays a more pivotal role in this debate due to the potential it has for allowing US firms in through the back door. Yes, the EU deal rather than providing protections from North American entry into the market for the National Health Service instead represents a genuine risk. It means that US multinationals providing health services in Canada cannot be prevented from entry into the UK market. This point further provides evidence of the entirely subjective discourse pertaining to NHS privatisation. The risks to the NHS are fundamentally due to a lack of solidarity in the deliverance of services. That is to say the realities of both EU law and domestic law on the back of the already established privatisation merge in such a way that corporations registered within Canada may not be discriminated against when applying for legal tender. This is made clear by the campaign group KONP (Keep Our NHS Public) who in a 2018 report concluded that:

“CETA means that, in the UK, Canadian companies (or companies with Canadian subsidiaries) have to be treated on equal terms as domestic companies. So CETA could restrict the UK government’s ability to give special support to local and not-for-profit UK providers. It could also lead to more NHS jobs being outsourced to private firms, with worse pay and conditions for the same work.”

To clarify once more, since Canada is a member of NAFTA, both US and Mexican firms have the right to register subsidiaries within the Canadian provinces and as such automatically attain access to the European “common market” through the CETA trade agreement, hence rendering the notion of the EU as an umbrella of protection an argumentum ad absurdum.

The KONP report on the CETA deal also stated:

“Price controls on goods such as medicines could be removed if these are seen as barriers to trade or to limit the profits of transnational corporations like drug companies, with serious implications for the public purse”

A point which brings us neatly to the last bone of contention, that is the access for US pharmaceuticals into the UK market. As a starting point we must presume the same argument in relation to CETA applies, this is so matter of fact that I don’t wish to address the issue for fear of insulting anyone’s intelligence. Instead let’s examine other claims. Recently the Labour party suggested once more on the back of Brexit that the UK would succumb to a detrimental US trade deal, in which pharmaceuticals coming from the US would cost the UK an extra 26 billion GBP, that equates to an extra £500 million a week.

It is of course unsure why exactly any prime minister would sign a deal that would cost the UK an extra £26 billion a year in drug pricing. Even if the prime minister were to think this a great idea, we can rest assured that he personally will not be placing the orders. What impresses on the imagination in this argument is that we currently take only 10% of our medicines from the US while our total expenditure on medication from the entire world sits at £18 billion. So why or how in the name of all economic theory are we suddenly going to decide to buy all our drugs at an elevated US asking price? After all the very basis of privatisation is to allow for competition and to drive down costs. While it’s certainly true that US pharmaceuticals are seeking to increase pricing, in no way even under a UK-US trade deal can they force us to solely buy American, this would contravene WTO rules under whose auspices such a deal would fall.  This line of argument also simply decides to ignore the possibility that trade deals with China or India represent an opportunity to actually reduce our drugs bill and fails to take moves on the continent in relation to big pharma into consideration. For a greater examination of this dynamic please see our previous story.

The reason why the threat of US corporations entering our health service resonates so profoundly is ostensible due to fears we will be faced with an American style insurance based system. One in which the poor are excluded from the universal services currently provided. It is a fear that is played upon by unscrupulous politicians. Nonetheless even in this distorted debate US firms are said to be only applying for contracts via tendering. Here we need to distinguish between seeking to provide services under the umbrella of the NHS (Remains free at point of access) and an insurance based system into which citizens must make monthly payments in order to obtain medical assistance. We are not talking about an overhaul of the entire British health care system. Although with increased privatisation there is increased temptation for such an eventuality. At this point I feel compelled to inform the reader that US firms are already gaining access to our services.

A headline from a recent Financial Times edition should help reveal the fake nature of the debate.


How to protect the NHS

There will always be threats to institutions if politicians and oligarchs feel they can make money from them. As such politics in general presents a challenge. The argument that the EU will protect the NHS is folly. We are already undergoing a process of privatisation while in the institution. At best the EU allows for public authorities to compete in contracts with the private sector. Here, however, we must consider that the unions have ensured certain rights for NHS staff meaning pay and benefits far outweigh those provided by private services. In competition terms if a provider can deliver an effective service at a cheaper price, then that service can sue the authority that rejects an application on discriminatory grounds. This is EU competition law, hence even where public providers do compete they are at a disadvantage, leading to privatisation de facto.

Certainly any trade agreement may seek to make provisions for access to the UK health and social services. There is nonetheless a gargantuan difference between locking yourself into such provisions via an institution such as the EU, where trade negotiations take place without the UK government, and bilateral trade arrangements where the UK government is democratically accountable and where in the worst case scenario a change of government could come to power an amend a deal. This is precisely why people argue in favour of sovereignty. But in order to prevent further privatisation or indeed to renationalise, Brexit serves as only the first step, other UK legislation must be repealed. At which point UK citizens should seek to introduce a bill which categorically ensures that the health sector will remain closed to foreign health care providers. At the same time the UK should seek to exploit trade deals with India, China and other countries with a view to reducing the cost of drugs: above all Brexit would exempt the UK from EU intellectual property right regulations and hence would provide a genuine opportunity for the UK to produce the cheap generics as touted at the Labour party conference.

This information is all in the public domain and the legislation can be obtained online. This story predominately deals with Labour general election strategy and might be seen as biased. The author in no way seeks to endorse any party over another.or suggests one is worthy of a vote.

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