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July 28, 2014 / politicsbitesize

The Great Pharmacy Sell-off

imagesAnother swing of the government’s axe has chopped pharmaceutical services off the NHS.  According to the latest reports by Unite the Union and The People’s NHS, the Health and Social Care Act is being used to sell off huge swathes of the services that the NHS has traditionally supplied and this now includes hospital pharmacies.

Unite the Union’s figures show that, ‘at least 31 NHS trusts have already chosen to use private companies to run outpatient pharmacy services and a further 18 are out to tender.’  A myriad of other health care services have also been put out to tender since the Act came into force, and now 70% of all NHS contracts have been awarded to private companies.

In the case of pharmacy services the private sector have the unfair advantage of being able to pass on VAT reductions to the hospital.  A loophole in VAT rules means that pharmaceutical companies like Lloyds and Boots can reclaim the 20% VAT that they pay on goods but NHS providers can’t.  This creates potential savings worth millions of pounds for private firms and allows them to submit far more competitive bids than the NHS.

NHS trusts are being forced to find efficiency savings and reduce costs because the government has under-funded the institution by some £20bn.  The result is that some services must go to the lowest bidder in order to keep the books balanced and the savings that this tax loophole offers is a major incentive for health trust managers to privatise hospital pharmacies.

According to an article in the Independent, Richard Murphy, a policy adviser at the think-tank Tax Research UK, said: ‘For some reason the Government has decided private pharmacies can get VAT relief but have not extended it to the NHS. It is an absurd situation that has become a huge issue due to the new situation where the NHS is now an internal market. The anomaly has to be sorted because it distorts the market in breach of EU rules.’

Unite the Union general secretary Len McCluskey has added to the comments made about the worrying trend of marketising the NHS when he said: ‘To make matters worse an EU-US trade deal called TTIP threatens to lock-in privatisation. It will give US and Wall Street investors the right to sue the UK government if it attempts to reverse privatisation.’

The NHS is indeed on the verge of becoming a fully privatised operation. If you want to stand up against this then please join the People’s March for the NHS (@999CallforNHS) that leaves Jarrow on the 16/8/14 and arrives at Parliament, London on the 6/9/14.  It passes through a number of cities on its way, including Darlington, Sheffield, Nottingham and Bedford.  For full details of all the events being held near you visit:


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