Saturday, October 20, 2007

Two privatisation scandals

Two privatisation scandals caught my attention this week. One from an article in Thursday's Guardian by Seamus Milne. Primary care trusts are to be encouraged by the government "to buy in advice" from 14 selected companies "on health needs, contracts and local provision". This will "pave the way for private companies to decide the range of services provided and use their access to information to pick the most profitable services to bid for in other areas". Allyson Pollock - who has written extensively on the PFI fraud - says it is "the last piece in the jigsaw" that opens the door to "a US-style health mantainance model". The companies selected include United Heath, the biggest healthcare organisation in the USA which makes billions of dollars each year by "cherry-picking patients and treatments"; in 2004 its chief executive resigned after a share option scandal (after paying himself $125 million). Each year 18,000 Americans die because they do not have medical insurance. Yet this is the model which bedazzles PFI enthusiasts. Already PFI has landed the NHS with a total bill of £50 billion for new hospital buildings, and each year the NHS pays £700 million to the PFI profiteers. Meanwhile it is clear that privatisation plays its part in the MRSA infection scandal (if you have part-time temporary badly paid cleaning staff what the hell do you expect?). But such is the power of the sub-Thatcherite dogma driving PFI that nothing will shake New Labour's attachment to it.

Then, in Private Eye it is reported that the previously government owned Commonwealth Development Corporation (CDC) - which invests UK aid in firms in developing countries - has been sold off to a company called Actis (created by former CDC managers!). They picked up the deal for £373,000 (which, says Private Eye, was "a bargain price for managing, without facing any competition, £1 billion of state funds"). In the following year Actis reported profits of £14 million ("..and that was after the firms 192 employees had been paid an average of $220,000; the senior partner Paul Fletcher "trousered" $1.8 million). This is taxpayers money. And that's just the tip of the iceberg. The company is worth more than £200 million and possibly as much as £800 million: "In two years the 20 or so partners in Actis have seen their money grow by at least 5000%...". Surely this is something the Serious fraud Office should be investigating? It strikes me as a lot more serious than "cash-for-peerages". The Minister responsible was nice guy Hilary Benn. Well done to the Eye for reporting this.


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