Privatisation in the English NHS: fact or fiction?

With general election campaigning so far having a heavy focus on ‘privatisation’ and the NHS, Helen Buckingham and Mark Dayan take a closer look at this often thorny issue.

Blog post

Published: 15/11/2019

The general election campaign so far has been marked by a stream of claims about privatisation in the English NHS – mostly referring to the health service contracting out care to private companies. But many of these have been met by counter-claims of inaccuracy. So what are the facts?

How much does the NHS buy from the private sector?

Around 22% of the English health spending goes to organisations that are not NHS trusts or other statutory bodies.

But this includes many services that the general public would regard as being within the health service. For example, almost all the GPs, dentists, pharmacists and opticians who treat NHS patients are private businesses, and have been since the inception of the NHS in 1948.

In some parts of the country, community-based services such as district nursing and health visiting are now provided by the independent sector – either organisations such as Virgin Care that people would recognise as private companies, or not-for-profit social enterprise organisations like Central Surrey Health.

In addition, some community-based mental health services like ‘talking therapies’ are provided by the private or voluntary sector. The NHS also commissions charities like the Red Cross to provide additional support when people are discharged from hospital, as it does hospices, which are mostly run by charities.

Turning to hospital care, when patients are referred to a consultant or other specialist they have a right to choose where they are treated. In most if not all parts of the country, the choices available to them since reforms in the 2000s include private hospitals, which then invoice the NHS for the treatment. In some cases, particularly where patients have been waiting a long time for treatment, an NHS trust will arrange for a patient to be treated privately.

Much of the inpatient provision for people with a learning disability or mental health problems and high levels of need is privately run.

Some patient transport services are delivered by the independent sector. In addition, some ambulance trusts have sub-contracting arrangements with private ambulance services to support them at periods of high demand.

Clinical commissioning groups, the bodies that plan and fund care at a local level, work closely with local authorities. Where individuals have both health and social care needs, the CCG may provide funding for their care via the local authority. Councils today largely contract out social care to private providers.

How has this changed over the years?

How privatisation has changed under recent governments has been a subject of especially heated election debate. Labour leader Jeremy Corbyn says privatisation has doubled since 2010. At the other end of the spectrum, Conservative Health Secretary Matt Hancock recently announced that the NHS was “not for sale” under the current government.

Data from Department of Health and Social Care publications makes both claims look dubious. Adding together all non-NHS providers, looked at as a proportion of spend to adjust for the generally increasing budget, the purchase of private health care has been both significant and relatively stable, at between 20 and 22% for the last nine years. Regardless of whether we include charities or not, private spending is actually proportionately lower in 2018/19 than it was in 2015/16.

From the figures he quotes, Corbyn seems to be talking specifically about areas such as hospital and mental health care, shown in blue below, rather than ‘primary care’ areas like GPs and opticians shown in purple. This is not uncommon, with media and the Nuffield Trust having often cited the resulting narrower figure of 7% or 8%, although firm arguments have also been made for the wider view.

Here, his claim that it has doubled is correct in cash terms, although the context is that health spending overall has risen by a third. But even in terms of proportion, we do see a notable expansion in private spending in these areas.

This expansion mostly happened up to 2015/16. Even on the narrow measure, private spending has flatlined for the last three years. This may reflect that while the 2010 to 2015 coalition government had several initiatives to increase competition and private provision, there have been no more major moves in this direction since.

The available evidence suggests the increase originally began under Labour governments before 2010, who, like the coalition, had multiple health policies orientated around competition. Figures obtained by Full Fact show that spending on private providers rose at a constant rate from 2006/07 to 2015/16.

Do the changes happening in the NHS now make privatisation more likely?

The NHS in England is currently undergoing reform towards uniting commissioning groups, NHS trusts and GPs in 'integrated care systems' (ICSs) that plan care together. Our fellow independent think tank, The King’s Fund, has published a very clear and helpful explainer that sets out to make sense of this often confusing landscape. These changes have been criticised for “dismantling the NHS” and increasing the role of private providers.

NHS England has already published two versions of proposals for legislative change to support these changes. These include removing the presumption of automatic tendering of NHS health care services over a specific value. This approach explicitly reverses the models adopted by the Labour and coalition governments to encourage an ‘internal market’ where private firms could bid against NHS trusts.

ICSs are partnerships involving many different local bodies. Any proposals to hand over the running of them to private companies would therefore face a difficult task in getting universal consent. Indeed, David Hare, the chief executive of the main lobby group for private providers working with the NHS, has said that he does not expect his members to take on contracts like this. 

In short, these reforms appear if anything to reduce the scope for private firms to compete for contracts.

Will any US trade deal increase privatisation?

Rhetoric around the threat of privatisation in the NHS has also focused on the terms of any potential trade deal with the US after Brexit. We do not believe that a trade deal could stop the NHS being publicly funded and free at the point of use. There is also limited scope to increase the rights of private companies to bid for English health care contracts, because these rights have already been granted by successive UK governments.

However, concerns about the US trying to weaken the health service’s ability to control drug costs are much more firmly rooted: this has been a recurrent objective of the US Trade Representative. It is also possible that an over-generous trade deal could hamper a future British government from reducing the current level of private provision.

The higher involvement of private companies and charities in the English NHS has been a significant shift in the last 20 years. Working out its impact on the things we care about is important. But claiming it didn’t happen, that it only happened recently, or that irrelevant developments are about to increase it won’t help.

Suggested citation

Buckingham H and Dayan M (2019) “Privatisation in the English NHS: fact or fiction?” Nuffield Trust comment.