How private firms take unfair advantage over the public sector to get government contracts

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Open and transparent: Grahame Morris, who called for a ‘level playing field’ for both private companies and public organisations when bidding for government contracts.

Did you know that £1 in every £3 spent by the government goes to an independent or private-sector service provider?

If you also recall government ministers bemoaning the fact that £1 in every £4 spent by the government was borrowed, as they said very often during the first year or so of the Coalition, and you bear in mind the fact that all private companies must make a profit, you’ll come to a fairly damning conclusion.

Did you know, also, that private companies – while free to hide behind commercial confidentiality regarding the conditions under which billions of pounds of taxpayers’ money are awarded to them in government contracts – may use Freedom of Information requests to gain detailed information about public sector organisations and then use that knowledge to undercut or outbid those bodies when government contracts are tendered or put up for renewal?

FoI regulations give private providers an unfair competitive advantage when bidding for contracts, due to unequal disclosure requirements.

Both of these were made clear in Grahame Morris’s short speech in support of his 10-minute rule motion to bring in a Bill amending the Freedom of Information Act 2000 to apply to private healthcare companies, and for connected purposes.

He even pointed out that we are living in a society where freedom of information is routinely censored – stating that he attended a demonstration against NHS privatisation in Manchester at the start of the Conservative Party conference there, “but which was barely reported by our public sector broadcaster”.

He said the government should be chastened by recent events. “For example, the tagging scandal — involving Serco and G4S and uncovered by the Serious Fraud Office — showed that these companies had defrauded the taxpayer of more than £50 million.

“Perhaps we need a hard-hitting advertising campaign, with advertising hoardings on vans driven around the City of London, warning off corporate fraudsters from bidding for public contracts?

“The danger for our NHS is that we are inviting convicted fraudsters into our health system.”

He said HCA, the world’s biggest private healthcare company, recently won the contract to provide cancer treatment for NHS brain tumour patients, “stopping patients receiving world-class treatment at London’s University College Hospital”.

Mr Morris continued: “The Competition Commission has already caught HCA overcharging private patients in the United Kingdom. In the United States, HCA has had to pay fines and costs in excess of $2 billion for systematically defrauding federal healthcare programmes.

“The public are right to be concerned about these providers coming into the NHS. If that is to happen, it is essential that their operations and their contracts with the NHS should be open, transparent and subject to public scrutiny.”

Introducing his Freedom of Information (Private Healthcare Companies) Bill, he said its purpose was to strengthen FoI legislation and introduce vital safeguards, so members of the public can see how their money is being spent.

It seems he may even have read Vox Political‘s earlier article on his motion, as he said: “I hope that Members on both sides of the House will support fair competition, a level playing field and the duty of equal disclosure throughout the bidding process for NHS services.

“The public have a right to know the record of public and private providers before contracts are awarded. Those safeguards can work only if the Information Commissioner has the same rights to seek information and carry out investigations, and to make all providers of public services comply with freedom of information legislation.

“I understand that the Information Commissioner expressed concern to the Justice Select Committee that accountability would be undermined if FOI did not apply to private providers of public services.”

He said: “Freedom of information is one of the Labour Government’s greatest achievements, ensuring transparency and accountability in modern government and allowing the public access to information on what is being done in their name and how their money is being spent.

“In recent years, we have witnessed an acceleration in the number of public services being outsourced, and today roughly £1 in every £3 that the Government spend goes to independent or private sector providers.

“Owing to the Government’s policy of opening up public services to the private and voluntary sectors, billions of pounds of NHS contracts are now being made available to the private sector, following the implementation of the Health and Social Care Act 2012.

“Unfortunately, while more and more taxpayer money is being handed to the private sector, especially in the NHS, FOI responsibilities are not following the public pound.

“There is a big issue here about transparency, because the public should know what is happening in their name, as was brought home to me recently in a demonstration against NHS privatisation in Manchester that I attended, along with more than 50,000 other people, but which was barely reported on by our public sector broadcaster.

“Private health care companies should not be permitted to hide behind a cloak of commercial confidentiality. Billions of pounds of taxpayers’ money is being awarded to private sector companies under barely transparent contracts.

“Meanwhile, private companies are free to benefit by gaining detailed knowledge of public sector bodies through their use and submission of FOI requests. The same information is then used by the private sector to undercut or outbid the very same public sector bodies when contracts are tendered or put up for renewal.”

Although no objection was raised to the Bill going forward, it seems the Coalition has performed an about-face on the issue. Mr Morris said: “I understand that in opposition the Prime Minister was convinced about this matter, having previously promised to increase the range of publicly funded bodies subject to scrutiny using section 5 of the Freedom of Information Act.

“The coalition agreement also promised to extend the scope of the Act to provide greater transparency, but unfortunately it would appear that nothing is being done to address the democratic deficit caused by the outsourcing of public services.”

Sadly, it seems likely that this Bill won’t get very far, for reasons this blog has already mentioned – the Government usually opposes Private Member’s Bills in the later stages and, given their low priority in the schedule, there is often insufficient time for the debate to be completed.

But this may not matter, as the information already provided by Mr Morris makes fascinating reading that is damning for the government.

Why do private companies in the NHS get commercial confidentiality?

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Let us hope Grahame Morris’s 10-minute rule motion – on the unfair advantages enjoyed by private healthcare firms working in the NHS – does not get swamped by the coverage of the Transparency of Lobbying Bill that resumes its unwelcome journey through the Parliamentary process after it.

Vox Political does not have the exact wording of the motion, but it seems likely it will follow a similar line to the Private Members’ Bill that Mr Morris put down last December, winning the support of 111 fellow MPs.

You will notice that it is relevant to the Lobbying Bill in several ways. Here is the wording of the Private Members’ Bill:

That this House notes

• that the most significant development that has followed from the Government’s healthcare reforms has been the £7 billion worth of new contracts being made available to the private health sector;
• further notes that at least five former advisers to the Prime Minister and the Chancellor of the Exchequer are now working for lobbying firms with private healthcare clients;
• recalls the Prime Minister’s own reported remarks prior to the general election when he described lobbying as `the next big scandal waiting to happen’;
• recognises the growing scandal of the procurement model that favours the private health sector over the NHS, by allowing private companies to hide behind commercial confidentiality and which compromises the best practice aspirations of the public sector;
• condemns the practice of revolving doors, whereby Government health advisers move to lucrative contracts in the private healthcare sector, especially at a time when the privatisation of the NHS is proceeding by stealth;
• is deeply concerned at the unfair advantages being handed to private healthcare companies;
• and demands that in future all private healthcare companies be subject to freedom of information requests under the terms of the Freedom of Information Act 2000 in the same way as existing NHS public sector organisations.

The active part is at the end – that private healthcare companies be subject to FoI requests in the same way as existing NHS public sector organisations. That’s why this 10-minute rule motion is entitled Freedom of Information (Private Healthcare Companies).

The aim is to have a level playing field for both private and public organisations providing NHS services. Do you remember the level playing field? The Tories were constantly banging on about having a level playing field, back in the 1980s and 90s when they were privatising left, right and centre, but they don’t seem to be quite as interested in it any more.

The other parts of the original bill are just as interesting in relation to the Transparency of Lobbying Bill. What will it do about people who are employed by the government but who take all available opportunities to push forward a particular private company’s interests (above those of the taxpayer?) and then quit to take a position with that company once their work is done? Nothing, most likely.

The sad part is that this 10-minute motion is unlikely to get very far. Here’s how they work (taken from Wikipedia, which we can use as a reliable source on this subject):

“Whichever MP has reserved the slot presents their bill and is entitled to speak for 10 minutes to convince the house of its merit. After the 10 minutes have passed, another MP may speak for a further 10 minutes to oppose the bill. The Speaker then calls a voice vote to decide whether the bill should be allowed a second reading, which is when the bill is debated at a later date. The Speaker will divide the house for a recorded count of votes if there is some opposition. However, the majority of Ten Minute Rule motions are not objected to,[2] and are allowed to proceed without any debate at this stage. This is because MPs have not yet had time to review the bill’s content.

“When a Ten Minute Rule motion passes, the bill is added to the register of parliamentary business. It is scheduled for debate along with the other Private Member’s Bills, but at a lower priority. The MP presenting the bill must tell the Speaker the date for this second reading debate. The bill is generally printed and published shortly before the second reading.

“Bills introduced under the Ten Minute Rule rarely progress much further, since the Government usually opposes Private Member’s Bills in the later stages and, given their low priority in the schedule, there is often insufficient time for the debate to be completed. Most Ten Minute Rule introductions are instead used to stimulate publicity for a cause, especially as the debate follows the media-popular question time and is usually broadcast live on BBC Parliament, or to gauge the opinion of the house on an issue which may later be introduced in another bill.”

“To stimulate publicity for a cause”. Let us hope that this one does not get swamped by coverage of the Lobbying Bill.