Austerity, Just Another Word for Privatization

The sheer obscenity of this is beyond belief. From The Guardian:

A government efficiency drive aimed at slashing spending in town halls and boosting productivity in the health service is likely to deliver billions of pounds of new business for private companies, the Guardian has learned.

Outsourcing firms are preparing for a bonanza of local authority contracts to provide everything from bin men to back office bureaucrats and have reported a doubling in the number of deals on offer this year. Private health companies are also expecting to earn billions of pounds from the planned overhaul of the NHS in which GPs would take over responsibility for spending £70bn.

Executives at Capita, the UK's largest outsourcing firm, said the number of opportunities for local authority contracts has already doubled this year and they see the healthcare market as "vast and potentially lucrative".

Richard Marchant, head of local government strategic partnerships at Capita, an FTSE-100 company which already works for councils in Harrow, Swindon, Southampton and Sheffield, said: "A major problem for the public sector is, we feel, a significant opportunity for us. Opportunities are at their highest level in two to three years. This year we have probably seen a 100% increase in opportunities [compared with 2009] and I suspect we will see another 50% increase in the following year."

Such an increase could deliver a £60m boost to Capita's revenues while councils are anticipating a 30% budget cut over the next four years. Other firms vying for town hall contracts include Serco and Mouchel.

The private sector boom comes amid the toughest financial climate for public services in a generation, and despite continued assurances from ministers that reforms to public services are aimed at achieving greater value for money and improving efficiency. Councils are braced for the biggest cuts to their budgets since 1945 and the growth in the market for privatised services has provoked anger that private shareholders, rather than taxpayers, are likely to benefit from efficiency savings that come from cuts.

Nor is it just British firms that are hoping to cash in on the chipping away of the British state. American firms want a slice of the NHS pie.

The US health giants Humana, UnitedHealth, Aetna and MCCI are all understood to be interested in healthcare contracts that could flow from a new commissioning system in which GPs may be given the power to buy in services from any health group or hospital that is properly accredited.

Minnesota-based UnitedHealth has already become a key adviser to primary care trusts and is running two GP practices in Derbyshire and three in London.

"There could be a bonanza for private companies if these changes go according to plan," said Jonathan Jackson at the stockbroker Killik & Co.

Privatisation of healthcare is being opposed by the unions.

"Private health already has a small role in the NHS [providing 4% of services], but we don't want it to grow," said Karen Jennings a spokeswoman for Unison, the public services union.

"The danger is that private companies will become so powerful that they will be able to determine what services are provided and how much they charge."

How Nick Clegg sleeps at night is beyond me. "If the coalition succeeds, by 2015 Britain will be a more liberal nation, a nation of stronger citizens living in a fairer society," Deputy Prime Minister Clegg said in a speech on Friday at the Demos think-tank. Clegg went on to say that his party, the Liberal Democrats, was united behind the spending cuts and tax rises in the budget. "This was a coalition budget, not a Conservative budget. The Liberal Democrats stand full-square behind the budget judgement," he said.

Meanwhile, opinion polls show support for Clegg's Lib Dems falling to as low as 15 percent compared with 24 percent in the May 6th election. Just to note that tax rise was an increase in the VAT to 20 percent from 17.5 percent, a rather regressive tax that affects the poor more. Since 1839 the Liberals have been battling Conservatism in Britain but Nick Clegg opts to enable David Cameron's budget that hits the poor hardest and emasculates the state. 

Even The Economist noted that "whatever the coalition’s intentions, the coming years will be painful for the poor." In his budget, Chancellor of the Exchequer George Osborne set out plans to entirely eliminate the UK’s record £155 billion deficit within the five-year lifetime of this parliament. Achieving this target will mean five years of austerity involving cuts in welfare benefits, public services, jobs, pay and pensions. While the VAT increase is expected to raise £13 billion, Osborne also announced a total of £11 billion in cuts to welfare spending.

“This is an unavoidable budget,” Osborne said in the run-up to the announcement. In June, the credit rating agency Fitch warned that Britain needed to speed up its deficit reduction strategy to avoid the risk of a sovereign debt downgrade. “[B]oth the size of the deficit currently projected for 2011 and the failure to reduce the deficit to 3 percent of GDP within five years are striking,” Fitch commented.

As Ann Talbot noted "Osborne and his Liberal Democrat coalition partners have responded to the demands of the financial elite with a budget that will transfer money from the majority of the population to the wealthy elite." “I want a sign to go up over the British economy saying ‘open for business’“, Osborne told Parliament.

The Corporation Tax is to be cut from its present level of 28 percent to 24 percent giving the UK the lowest level of corporate taxation rate of any country in the OECD. National Insurance contributions paid by employers will be cut for lower paid workers. This, too, will shift more of the cost of the welfare state onto workers. Small companies will receive extra tax benefits. “Manufacturing as a whole will pay less tax”, Osborne assured business.

While the banking sector will have to pay a bank levy on financial transactions, this will easily be offset by the cut in corporation tax.

But most egregious is the privatization of government functions heretofore carried out by Britain's Town Councils. The potential volume of work is so great that firms from India and Germany have entered the market, which could ultimately mean some town hall functions being carried out abroad. And so it goes.

Tags: UK Politics, Free Market Ideology, Privatization, neoliberalism (all tags)


1 Comment

Nick Clegg opportunist

He sold a bill of goods to UK voters who wanted Labour out, but weren't
willing to embrace the Tories.  So we find out he's really a Tory.  It was all about getting some power (or not).

No wonder his party is slipping.  I think it's going to be a while before
Labour has a chance at power again, so I expect the Tories to have a majority after the next election.  So long, Nick Clegg.

by esconded 2010-07-17 10:12AM | 0 recs


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