How much is leaking out in profit from the NHS in your local area?
Estimating how much profit is being made out of the NHS
Each year the NHS spends billions of pounds of taxpayers money on private companies.
This money is meant to treat patients, pay staff and run hospitals. But because private companies are allowed to make a profit, not all of it reaches patient care. A large amount of this money goes to offshore owners and some leaks out as profits and interest on debt.
For this research we analysed £12 billion of expenditure by NHS England and local NHS bodies – Integrated Care Boards (ICBs) over 2 years. To note, this is not all of the money spent by the NHS on private companies. Out of this £12 billion we estimate that £1.6 billion leaked out in profit to private companies over this 2 year period
To find out more about this study click here.
What could the profits leaking out of the NHS have been used to pay for?
As part of our research study we calculated how many doctors and nurses could be employed over a two year period using the £1.6 billion leaking out of the NHS in the form of profit. We found that over 2 years this money could pay for 19,428 nurses or 9,178 doctors.
Jump to find out how many nurses and doctors this leakage could pay for in your area.
Excess profits
Across the economy, most companies made a profit margin of between 8 and 9% over this period. The government has said that any company which makes more than 20% profit out of children’s social care is making excessive profits. It intends to cap profits in this area.
Our research shows that 131 companies made a profit out of the NHS in England which was in excess of 20%.
The NHS could have saved £656 million over 2 years if the profits of the companies had been capped by the government at 8%.
Paying interest on debt rather than treating patients
Our research found that out of the £12 billion paid by the NHS to private companies over 2 years, £352 million went towards paying interest on debt rather than on patient care.
It is sometimes the case that private equity funds load debt on to the companies they buy as another way of generating returns for their investors. This can also help reduce the amount of tax that they pay.
The more a company spends on interest on its loans the less they are spending on staff and frontline services for the benefit of local NHS patients.
Jump to find out how much NHS money is leaking out in interest on debt in your area.
Money for the NHS flowing offshore
Some companies providing services to the NHS are owned by companies based outside the UK and some of these owners are based in tax havens – this makes it difficult to know who ultimately owns them and whether they are paying the right amount of tax.
Our research found that over 2 years, £2 billion of NHS money was spent on whose ultimate owners are registered outside the UK and £533 million was spent on companies whose owners are registered in tax havens.
What needs to happen?
Decision makers in government and the NHS often do not know how much leaks out of their budgets in the form of profits to private companies nor who owns the companies.
To protect the NHS long term the government needs to introduce:
A cap on the profits of companies providing NHS services
A cap on the amount of debt companies providing NHS services can take on.
Full transparency about where money going to private companies ends up
A requirement for all companies providing NHS services to be tax registered in the UK
How much profit is leaking from your local NHS?
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