Business
“Wish I Was Rich Enough To Eat Like A 17thC Flemish Peasant” Thinks Man Staring In Artisanal Bakery Window
A Sydney man staring idly at the pricey wares on offer in an Eastern Suburbs artisanal bakery is currently wishing that he was wealthy enough to afford to eat like a subsistence farmer from the Renaissance.
“You must have had to have made a fortune in the tulip craze to find room in your budget for a boulot sourdough loaf and a raisin snail,” mused Gymea electrician Phil Walker as he tossed up whether to enter the establishment to pick up a few things for dinner. “I’m guessing it must cost a shitload to put an unnecessary dusting of flour on everything and display them all in small wicker baskets.”
“I never knew that grim faced serfs who only got one half a day off every year for Easter cared so much about fine crumb structure and single origin grain,” pondered Walker as he read the hand written label on a basket of New York rye. “That guy behind the counter in the apron with the beard, tribal tatts and nose rings looks like he just stepped straight out of a painting by Pieter Brueghel the Elder.”
Unable to justify parting with $11.50 for a loaf of harvest grain lovingly crafted from a gritty mixture of millet, rat’s teeth, bark and plague germs, Phil has opted to get a six pack of Tip Top white hamburger buns from Woolies.
Peter Green
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Councils Could be Paying £530 Million a Year to House Vulnerable Children in Unsafe Homes
Local authorities could be paying more than £530 million a year to place vulnerable children in unsafe homes, including those that have failed to stop child sexual exploitation.
A Byline Times investigation found that a quarter of the UK’s worst children’s homes run by companies are now owned by private equity or serial investors, including the Qatari Government. They include homes found with “blood and faeces” smeared on the walls and those that have illegally used restraints.
Former Children's Commissioner Anne Longfield branded the figure "extraordinary" and told Byline Times that the system in place to care for the UK's most vulnerable children is “completely dysfunctional" and "broken".
Councils have allowed problematic homes to continue operating by handing over taxpayers’ money.
Secure homes for vulnerable children have historically been run by local councils, but an increase in demand – as well as funding cuts – means that local authorities increasingly rely on private companies.
The number of privately-owned homes has increased by 21% since 2021.
According to Ofsted, 85% of facilities are now run by profit-making companies. Almost half are run by chains, each with 10 or more separate children’s homes, and many are owned by private equity firms – including eight of the UK’s 10 biggest.
Ofsted told Byline Times that, under current legislation, it has "no powers in relation to large providers" and can only report on "individual homes, rather than larger children's home groups or owners".
Analysis by Byline Times of more than 3,000 individual Ofsted reports reveals that 588, or 19.6%, were branded as “inadequate” or “requires improvement” at their last full inspection.
Of these, 109 were run by private equity firms or serial investors.
A media report on children's homes last July suggested that providers are paid at least £200,000 a year for each youngster. Based on the national total of 13,528 children’s home places, this newspaper calculated that the average taxpayer cost for funding 2,651 failing homes is around £530 million a year – or £1.4 million daily. More than £1.1 million of that estimated daily cost would be paid to private providers.
While noting that the figures were alarming, Longfield told Byline Times that they are likely to be even higher because the £200,000 per child figure has increased, and could be “driving councils to bankruptcy, or adding to a lot of financial pressures they’re under”.
Another concern, Longfield added, was that private equity-owned chains are not often local so children are “sent far away from their support networks”.
“Some children have said to us in the past 'we actually don't know where we are on a map'," Longfield said. "And 'we're so used to being moved, we don't even unpack our bags'.
“We’re letting these investment companies get away with providing really poor quality responses to really vulnerable children while they make an eye-watering amount of money. “It’s just a completely dysfunctional, broken approach to providing specialist care for our most vulnerable children.”
The Ofsted reports on failing homes paint a disturbing picture, and tracing the ownership of the homes is complex, with huge chains of shell companies existing between the companies running them and their owners, with some subsidiaries based in tax havens such as Jersey and others mentioned in the Paradise Papers.
One of the chains analysed – the Senad Group – was owned by the Qatar Investment Authority, the global investment arm of the Gulf autocracy’s Government.
Hundreds of children’s homes have been shuttered in the past five years – many after facing enforcement action or receiving scathing Ofsted inspections.
At one private-equity owned home, inspectors found “blood and faeces smeared in the bedroom and the en-suite bathroom”, broken toilets and one room that “smelled strongly of urine”, while a lack of proper safeguarding from staff led to an increase in children “going missing, allegations of inappropriate sexualised behaviours and heightened behaviours which necessitate restraint”. Despite the findings, most of the homes remained open.
Children were “physically assaulted and threatened” by other children without staff support and were repeatedly denied food and “left hungry” by staff, another report noted.
At another home, Ofsted identified that staff , including duty managers, had subjected children to “the inappropriate use of physical restraint and single separation” – the term for isolating and locking children in rooms – when the “legal criteria” for doing so had not been met.
Inspectors at an ‘inadequate’ home in Warrington previously found that its residents were being sexually exploited by men in the local community but nothing was done by staff to support them.
A Department for Education spokesperson told Byline Times that “we recognise some of the concerns associated with profiteering, particularly with regard to large providers with complex, and sometimes opaque, ownership structures”.
The spokesperson added the department is “working with Ofsted and the sector” to establish a new oversight regime that would increase transparency on “ownership, debt structures and profit making across both independent fostering agencies and residential children’s homes”.
"Our focus remains on ensuring our most vulnerable children are receiving the excellent care and education that they deserve,” they added.
Gina Rinehart Says Government Should Get Out of People’s Lives Except When It’s a $840 Million Handout for Her Mine
A woman who has for decades called for smaller government and reduced welfare says she is willing to make an exception for her Northern Territory rare earths mine.
In a speech today, Ms Rinehart said the perception of her as heartless when it came to Government welfare was misguided. “While in general I disagree with the concept of government handouts, there are some extreme circumstances where I now recognise they may be necessary, to act as a safety net for those battling to maintain their position on the Forbes 100 rich list.
“Without these handouts I would be forced to survive on the revenue from just ten iron-ore mines. So I think it’s appropriate in these cases for the Government to step in and lend a hand”.
She said her views on the role of government had been misconstrued. “When I’ve called for the government to get out of people’s lives, to reduce spending, to reduce welfare, I was talking about unemployed people or those on lower incomes, not billionaire minors who clearly need society’s help. That’s the compassionate side of me that a lot of people don’t see”.
The post Gina Rinehart Says Government Should Get Out of People’s Lives Except When It’s a $840 Million Handout for Her Mine appeared first on The Shovel.
The Big Con: How the Consulting Industry Weakens Our Businesses, Infantilizes Our Governments, and Warps Our Economies – review
In The Big Con, Mariana Mazzucato and Rosie Collington claim that our overreliance on the consulting industry has negative consequences for society, inhibiting knowledge transfer and corporate and political accountability. The authors expose how consultancies’ goal of “creating value” may not align with addressing major issues such as climate change, arguing convincingly for greater transparency and a revitalised public sector, writes Ivan Radanović.
In their book The Big Con, Mariana Mazzucato and Rosie Collington warn that relying on consultancies harms the public interest. Asking what happens to the brain of an organisation when it is not learning by doing because someone else is doing the doing, they conclude that societies must return public purpose in centre of attention.
The authors’ thesis is that overreliance on consultancies harms public interest, disables governments, and threatens democracy.
In 2021, the consulting industry was valued at over 900 billion dollars. Its ninefold rise since 1999 is the result of rising reliance of states on consulting agencies. The authors’ thesis is that overreliance on consultancies harms public interest, disables governments, and threatens democracy. They investigate this trend and how to reverse it.
The “Big Con” is the term Mazzucato and Collington use to mark the biggest auditing, accounting, and consulting agencies such as Ernst & Young (EY), KPMG, PwC, Deloitte, McKinsey, Boston Consulting Group (BCG), Accenture and others. The consulting market emerged during early industrialisation, when engineers, periodically recruited by major industrial firms, formalised their work. In the 1920s many consultants, among them James McKinsey, cooperated with American businesses. The popularity of management consultancy rose in 1970 when BCG introduced the matrix for mapping the profitability of business portfolio. After two years, this tool was used (and paid for) by more than 100 enterprises. American firms, on the wings of the Marshall plan and later IT management projects, have spread throughout Europe.
Golden years
The election of the right-wing populists Margaret Thatcher in the UK (1979) and Ronald Reagan in the US (1981) occurred after a decade of economic turmoil, led by the end of the Bretton Woods system and two major oil crises. The opinion that the responsibility for the turmoil lay in how states were run mushroomed. The neoliberal credo was that the only value creators in society are markets, and with Thatcher and Reagan, favour was refocused from the worker to the citizen-taxpayer.
The neoliberal credo was that the only value creators in society are markets, and with Thatcher and Reagan, favour was refocused from the worker to the citizen-taxpayer.
Contrary to the belief that the essence of neoliberalism is to slash public spending, Mazzucato and Collington suggest “it is more precise to describe it as public spending redirection towards the stronger role of the market” (49). In Thatcher’s era (1979-1990) government expenditure rose in real terms by 7.7 percent (43). In Reagan’s (1981-1989) federal spending rose by almost nine percent annually (43). From the US to Australia, thousands of neoliberal reforms such as privatisation, deregulation or outsourcing states had to be implemented, and advised. The authors show us that the annual public spending for consulting in the UK from 1979 to 1990 rose fortyfold – from 7.1 million to 290 million dollars. The 1980s saw the advent of a new management doctrine. In place of earlier stable forms of organisational life emerged the model of flexible “learning organisations” which view instability as an opportunity. The main goal becomes maximising value for shareholders. In the 1990s, that led to the popularisation of storytelling in politics and business. It is no longer a product or brand that is sold, but the story about value, challenges and business success through positive change, peddled by elite consultants or management gurus.
Creating the impression of value
Today, consultants are seen as experts who transfer know-how and utilise advanced management techniques to improve clients’ businesses. The enormous rise of consulting in the last four decades is explained by the “value” they create for states and companies. However, according to the authors, consultants do not always meet expectations and they seldom transfer knowledge. Created “value” is often unclear and depends on the perception of the client. Consultants hustle to create the impression of value.
Created “value” is often unclear and depends on the perception of the client. Consultants hustle to create the impression of value.
There are many examples where engaging consultancies has backfired for states. In developing countries such as Nigeria, Mexico and Angola, hiring consultancies was a condition of their IMF loan agreements (50). The authors focus on wealthy countries, arguing that even if contracting consultants experienced in the implementation of complex macroeconomic programmes could be justified in developing countries, it is less justifiable in developed countries, which should ostensibly have high competency in these areas.
Unmet deadlines, spiralling costs
Consultancies often fail to deliver on their promises. In 2010, Sweden started the construction project for a new university hospital in Stockholm which would be the most advanced in Europe. Its operations were to be grounded in “value-based healthcare”, a concept designed by management guru Michael Porter. Costs were initially valued at 1.4 billion euro, with the project set to be completed in 2015. City authorities opted for a public-private partnership which contracted consultants from PwC and EY who claimed they would ”maximise the value and keep the costs under control” (145). Representatives from the construction company Skanska stated that this model would “transfer the risk from the state and taxpayers to the private sector” (145). However, the costs immediately surpassed the projections because vital equipment had not been included in the budget The project, beset by problems, was passed to BCG, who had nine consultants working on its implementation while earning a monthly salary of almost 70,000 euros over six years. Another consultancy, Nordic Interim AB was then contracted for an additional 12 million euro, and when the hospital was eventually finished in 2018, costs a billion euros higher than the original estimate.
Absence of accountability
It is not all about money. Consultancies contribute to many undemocratic practices, maintaining what Acemoglu and Robinson named as extractive institutions. Often, they act as a mechanism for public wealth extraction, whereby states recruit consultants when they want to “hedge” the political risk of unpopular economic measures. The states maintain legitimacy, and consultants get their share of political influence. Authors emphasise the example of Puerto Rico, which faced bankruptcy in 2016. Then-President Obama initiated the creation of an Oversight Board to supervise the bankruptcy process. Keeping reputational risk low, Washington ensured that the majority of members of the Board were of Puerto Rican heritage. The Board did not hire a large staff, to avoid looking like it was setting up a parallel government. Instead, it brought in consultants. Instead of the state, McKinsey engaged in the privatisation of public enterprises, healthcare reforms “based on value”, slashing public spending and restructuring debt. Moreover, McKinsey owned $20 million of Puerto Rico’s bonds: consultants were set to profit from the very same debt they were helping to restructure.
Regaining control
Even though consultancies did not cause the maladies of neoliberal capitalism, they have profited from them. Without transparency and democratic permission, they erode the capabilities of states and enterprises. Because knowledge is not cultivated within state workforces and institutions, a dependency on the “expertise” of consultancies spirals.
[Consultancies] erode the capabilities of states and enterprises. Because knowledge is not cultivated within state workforces and institutions, a dependency on the “expertise” of consultancies spirals.
The last section of the book is about “climate consulting”. Omnipresent and long-term, climate change is ideal ground for consultants. Competition is fierce; consultancies’ “websites are replete with beautifully designed free reports on sustainability issues for every sector, from oil and gas to healthcare” (190). They promise solutions, pitching themselves as an avant-garde of change.
The key takeaway, according to Mazzucato and Collington, is that we must challenge the predominance of consultancies. With their ultimate goal of “creating value”, they advise both the fossil polluters and the governments mandated to reduce emissions. Moreover, states are catalysts of technological change for public good, while the private sector only invests in fundamental research when it becomes enticingly profitable.
Putting aside the authors’ techno-optimistic view – which holds that climate change mitigation is mostly a technical issue regarding innovations for green transition, which is being debunked – their final suggestions are valid. A new narrative and vision for the role of the state, recovering public capacities, embedding knowledge transfer into consulting contracts’ evaluation and mandating transparency are, undoubtedly, desirable. The book’s importance lies in how it reveals the political implications of the consulting industry. Whether we choose “green growth” or abandon the growth imperative, one thing is certain: democratically elected governments are key actors. Only they can mobilise the resources required for achieving “moonshot” missions, the most urgent of which is climate change.
Note: This interview gives the views of the author, and not the position of the LSE Review of Books blog, or of the London School of Economics and Political Science.
Image credit: Alena Veasey on Shutterstock.
Locked Out of Development: Insiders and Outsiders in Arab Capitalism – review
In Locked Out of Development: Insiders and Outsiders in Arab Capitalism, Steffen Hertog critiques mainstream development models in the Middle East, focusing on state intervention and segmented market economies. Although Yusuf Murteza suggests the book under-examines neoliberalism’s prevalence, he finds its analysis on the state’s role in establishing the insider-outsider division in the economy nuanced and valuable.
Clusters of economic and political theorists have long been discussing how different actors prioritise and frame their understanding of “development”. Post-development and degrowth scholars such as Arturo Escobar, Gustavo Escobar, Wolfgang Sachs, and Jason Hickel announced the death of the mainstream development model as a project. They argued “the project of development” may not be equally beneficial to all societies, since the project carries ethnocentric and universalist dimensions which contribute to the hegemony of the West.
The ‘one size fits all’ idea of neoliberal development, which utilises finance and corporate capital, has gradually been replaced by alternative forms of development
The “one size fits all” idea of neoliberal development, which utilises finance and corporate capital, has gradually been replaced by alternative forms of development. Growing disillusionment with the Anglo-Saxon economic model increased the importance of examining alternative political and economic configurations both inside and beyond developed Western states. Varieties of Capitalism (VoC) theory’s significance can be grasped with its emphasis on existing similarities and differences within the institutions of developed economies. Recently, scholars have taken these insights seriously and benefited from the VoC framework to explain the reasons why political and economic institutions differ across societies. Discourse on the MENA region in terms of democracy and development may suffer from orientalist explanations that directly link religion and culture to the region’s political and economic stagnation. Steffen Hertog’s Locked Out of Development takes issue with what mainstream development scholars consider the political and economic inability of societies in the Middle East to take the Western route and realise neoliberal reforms in order to ensure economic development, productivity and innovation.
Neoliberal narratives suffer from a partial outlook. They trace the failures of development attempts by focusing on policymakers’ level of adherence to marketisation and privatisation.
Hertog’s main arguments throughout the book are threefold. First, neoliberal narratives suffer from a partial outlook. They trace the failures of development attempts by focusing on policymakers’ level of adherence to marketisation and privatisation. They consider ensuring faith in the market mechanisms of production and distribution systems as paramount. However, non-economic, country-specific problems matter. In the case of the Arab world, the deep dividing line of insider-outsider segmentation across societies has more explanatory power than classical narratives of having too much or too little market (81). Second, Hertog believes a comparative perspective situated within a global context carries crucial insights. The selected countries cannot be examined solely by focusing on within-region differences but should be considered within the global development trajectory and compared with developed countries (7). Third, the role of the state has a somewhat ambiguous position in development theory. The concept of a “developmental state” has added a further twist. The characteristics of the state and its symbiotic relationship with labour and the private sector need to be addressed when explaining factors contributing to the persistence of the Arab world’s development problem (8).
The role of the state has a somewhat ambiguous position in development theory
Hertog begins with a detailed examination of academic literature on the political economy of the Middle East, the varieties of capitalism approaches, and his conceptualisation of segmented market economies (SEME). The second chapter adopts a historical perspective and presents the case selected countries’ political and economic transformations after World War II. In the third chapter, Hertog reveals his argumentation of the SEME framework by bringing the state, labour market, business sector and skill composition to light. Detailed analysis of the country case studies follows, accompanied by SEME and future research directions. Lastly, Hertog sums up the reasons for the political and economic inability of the region to take the Western route.
Hertog argues that the VoC approach, with its emphasis on the heterogeneity of existing capitalisms, is useful to explain the unique characteristics of Arab capitalism. Different compositions of firms, the finance sector, networks, and the skill system create ideal-type interactions (those which typify certain characteristics of a phenomena) and lead to diversification within capitalism. The original VoC approach analysed several OECD countries from the developed world. In time, scholars used the explanatory power of VoC to explain the development performances of non-Western countries with specific modifications. Taking insights from recent accounts of VoC literature, Hertog believes the approach fits the Arab world well (8).
In broad terms, the state [in the Arab world] functions as the voice of insiders’ interests to quash any outsider’s attempt to reconfigure access to key resources.
There are two key dynamics in the region. As the second chapter discusses, the state has been a key actor in structuring the playing field between different interests to operate in the region (9). The interventionist and distributive characteristics of the state go hand in hand with the other dynamic, namely the persistence of insider-outsider division in the economy. In broad terms, the state functions as the voice of insiders’ interests to quash any outsider’s attempt to reconfigure access to key resources. Hertog warns that the nuanced structure of the SEME model applies only to the core members of the region, such as Algeria, Egypt, Jordan, Morocco, Tunisia, Syria, and Yemen. The key filter behind this selection of countries is their state-building projects between 1950 and 1970 (4-5).
Strategies of keeping public sector employment high with military jobs, large redistribution policies, food subsidies, and price controls are still prevalent in the region, demonstrating its nationalist and statist legacy.
Hertog finds the roots of his SEME model in Arab nationalism in the post-independence era. The state-building projects of the selected countries fused with nationalist and statist ideologies at the time. Discussion on the region’s long history brings up the question of path-dependence, which is used to describe the limiting power of past decisions over later trajectories. Hertog avoids engaging with these long-term theories, believing them unsuitable for a short book, and the key characteristics of the SEME model originated recently. Nationalisation policies and active intervention in the economy were characteristics of Arab nationalism (15). In state-building projects, Egypt and Syria set the parameters, which were later copied by other states. Strategies of keeping public sector employment high with military jobs, large redistribution policies, food subsidies, and price controls are still prevalent in the region, demonstrating its nationalist and statist legacy (28).
The detailed empirical discussion of the SEME is at the heart of the book. The framework is constituted by the state, labour market, business sector and skill system (9). The distributive character of a state can be located by examining the share of public employment, which remains high from a global perspective. Also, the state extensively regulates labour markets, holding key strongholds to access land and credit (29-30). Hertog argues these factors lead to segmented labour and private sectors, while keeping the skill level low. The presence of the state in the labour market ensures insider-outside division. Since there is little mobility, insiders rarely lose their position. Outsiders cannot reach to the welfare protection schemes by the state. This leads to social exclusion and an unproductive environment (32-48).
Hertog claims state intervention in the private sector creates unique opportunities for crony networks, whereby politically connected companies benefit from credits and licences.
Similar dynamics take place in the business sector, where large firms and clusters of small firms coexist (55). Hertog claims state intervention in the private sector creates unique opportunities for crony networks, whereby politically connected companies benefit from credits and licences. Business actors with outsider status engage in unproductive small-scale activities (58-60). The skill system needs to be thought of in relation to the segmented labour and business sectors. Low skill levels prevent mobility and limit innovation and technological development (69).
Overall, Hertog argues that state intervention in the region establishes the insider-outsider division in the economy. Hertog’s emphasis on bringing the state back into the analysis is beneficial. In the field of comparative politics, the idea of the state as an autonomous actor remained on the margins until the 1980s. The book’s limitations come in two forms. First, it doesn’t mention how global capitalist relations fit into the SEME. Hertog’s defence with the limitation of economic globalisation in the region may not offer a solution, since the dynamics of global capitalist accumulation depend on drawing materials from peripheral countries without contributing to them. Second, Hertog’s claim of neoliberalism’s low presence in the Arab world is dubious. Several scholars (Jason Hickel, Philip Mirowski) argue that states with strong capacity can implement the necessary reforms for deregulation and privatisation. Thus, the presence of neoliberalism and strong state capacity is not mutually exclusive. In the Middle East, we see a unique mixture of neoliberal policy reforms with strong state capacity. Even though Hertog constructs his own case, adapting earlier approaches to VoC and development topics and to explain the MENA region, policymakers, development specialists, and academics will find dry economic analysis alone is not enough. More nuanced analyses that consider the symbiotic interactions between the state, the business sector, and labour force are necessary. Only by doing this is it possible to acknowledge how politics mingle with economics, and to design alternative development programmes in response.
This post gives the views of the author, and not the position of the LSE Review of Books blog, or of the London School of Economics and Political Science.
Image Credit: AlexAnton on Shutterstock.
Elon Musk Flees To Billionaires’ New Court
Elon Musk’s lawsuit-plagued SpaceX rocket company is departing Delaware for a new legal home base in Texas just as the Lone Star State rolls out a new, separate court system for businesses that will allow Republican Texas Governor — and longtime Musk ally — Greg Abbott to handpick judges.
Texas’s oil and gas industries, alongside a host of other corporate interests, lobbied hard last year for the state’s new business court system, which will begin hearing cases this September. The fierce support from Big Oil, Texas’s largest industry, was evidence, critics charged, that business interests in Texas were effectively trying to buy their own courts.
Despite pushback, businesses succeeded. After lawmakers brought the bill to his desk, Abbott signed the proposal into law in June. Texas has now created what critics argue is a two-tiered system of justice, where cases involving massive corporations are funneled into separate courts and heard by judges appointed personally by the governor.
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UberEats Achieves Gender Pay Equity by Underpaying All Employees Equally
US gig employer UberEats says it has always been committed to paying its drivers below the minimum wage, regardless of gender.
With new gender pay data released today, the company said it was proud of its track record of ignoring race, gender and other attributes when exploiting its workers. “We want to create a world where anyone, regardless of who they are, can work a four-hour shift in their own car on a Saturday night and earn less than the Australian minimum wage, with no super,” a spokesperson told The Shovel.
He said it was all about flexibility. “Our employees – sorry, our ‘independent contractors’ – have the flexibility to earn below award wages without full benefits, whenever they want”.
The post UberEats Achieves Gender Pay Equity by Underpaying All Employees Equally appeared first on The Shovel.
If you hate Amazon, blame Rishi Sunak | David Mitchell
The online giant’s vast storage unit on the M1 is a logistical miracle – it’s a pity the lax-on-tax PM has spoiled the view
Woolies CEO’s Huge $24 Mil Payout Enough to Buy Week’s Worth of Groceries at Woolworths
Woolworths Group CEO Brad Banducci will leave the company with a hefty $24.4 million pay-cheque, which some analysts believe could be enough to do a weekly shop at Woolies for a family of four.
“It’s an extraordinary amount of money,” finance commentator Zoe Theopolis said. “To think that he’ll be able to afford a 75 pack of dishwasher tablets, possibly even when it’s not on special, goes to show just how much this golden parachute is worth”.
Banducci’s payout includes share entitlements worth up to $8 million, enough to buy two packets of Kettle chips when they’re bundled together on a price promotion. “He’s very fortunate. It’s the kind of money that can set you up for the week,” Theopolis said.
A Woolworth’s spokesperson acknowledged the payout was a lot of money, but said it was important to put things into perspective. “Once you buy a 500g jar of Mocconna and a few punnets of raspberries, there really isn’t much left”.
The post Woolies CEO’s Huge $24 Mil Payout Enough to Buy Week’s Worth of Groceries at Woolworths appeared first on The Shovel.
Revealed: Five Politically-Connected Healthcare Giants Rake in NHS Contracts Worth Billions
five politically-connected healthcare giants have profited from a share of public contracts worth at least £70 billion – despite a murky history of scandals and regulatory violations, a new report reveals.
Corporate Watch, a corporate-critical grassroots research organisation, spent several months delving into government procurement data on Bridgepoint, Bupa, Centene, Spire, UnitedHealth Group (UHG) and their myriad of subsidiaries.
In partnership with Good Jobs First, researchers targeted these companies because all five are members of the Independent Healthcare Providers Network – a lobbying group with close links to Rishi Sunak’s post-pandemic Elective Recovery Taskforce, which has effectively ‘turbo-charged’ private healthcare capacity.
During the past 10 years, these firms won a share of public health and social care contracts with a combined value of £70.59 billion, with serious questions also emerging about the opacity of reported contracts, as well as the integrity and reliability of the data made publicly available.
Between 2013 and mid-2023, £61.87 billion of this overall total was awarded without a breakdown of how much money each of the winning bidders were paid. More than one-fifth of contract award notifications did not even report a total value, meaning that the true figures could be far higher.
Other significant obstacles to reporting included missing details related to the extension of existing contracts, inconsistent figures across datasets, and a lack of uniformity in the way data was presented.
Even so, the length of awarded contracts appears to have been increasing over time, as the Conservative administration has sought to ‘lock in’ privatisation, with some tenders set to run for up to 15 years.
Corporate Watch and Good Jobs First uncovered a plethora of financial scandals and violations of patient and worker safety.
In particular, corporate giants Centene and UHG have faced hefty penalties for defrauding patients and public healthcare systems in the United States, where both are based, including to settle allegations of overcharging for Medicare, a US Government health insurance programme, through duplicated or inflated claims.
Perhaps the most egregious scandal to have engulfed any of the UK-based companies targeted in the report was the case of Ian Paterson – a former breast surgeon currently serving a 20-year prison sentence for performing unnecessary or unapproved procedures on more than 1,000 cancer patients at Bupa and Spire hospitals in the West Midlands, with a further 1,500 victims discovered on an old IT database in February 2023.
After his conviction in April 2017, Spire released a statement saying that “what Mr Paterson did in our hospitals... absolutely should not have happened” and expressing “how truly sorry we are” – only to then sue the NHS four months later for allegedly failing to warn it of his conduct. That action came just weeks after the firm was sued by hundreds of Paterson’s patients, who claimed Spire had allowed the surgeon to continue work well after his 2012 suspension by the General Medical Council.
Meanwhile, Bridgepoint subsidiary Care UK has been repeatedly slammed for cost-cutting at the expense of both staff and patient welfare. In 2022, it was fined more than £1.5 million after a resident choked to death.
Similar criticism has been levelled at Bupa, with its UK care facilities variously described over the years as “disgraceful”, riddled with “systemic failings”, and sources of “serious concern”.
In Australia, the 2019 death of an elderly cancer patient, admitted to hospital with maggots crawling in an open and fungated ear wound, saw the firm's CEO forced to “unreservedly” apologise for “totally unacceptable” shortcomings in its aged care network.
The list of top executives and shareholders at each of these firms are politically-connected figures.
When the Government announced the launch of its Elective Recovery Taskforce in December 2022, it was little surprise that David Hare and Jim Easton had seats at the table. As chief executive of the Independent Healthcare Providers Network, it is Hare’s job to represent the interests of firms including Bupa, Centene, Bridgepoint and UHG at Westminster; while Easton previously held several senior NHS positions before becoming CEO of Practice Plus (a Bridgepoint subsidiary) in 2012.
Care UK co-founder John Nash, and UHG’s former head Simon Stevens, who was chief executive of NHS England between 2014 and 2021, join the ranks of at least 16 members of the House of Lords who have at various times declared interests in the companies featured in the recent report.
The wife of Conservative Health Minister Neil O’Brien also currently acts as GP engagement lead for Centene subsidiary Circle Health, while former Tory MP Mark Simmonds has previously worked as a strategic advisor at the firm.
COVID-19 appeared to provide the context for the Government to accelerate a policy of privatisation stretching back over decades. As demand for private treatments slumped, private healthcare providers were given publicly-funded bail-outs – which available evidence suggests actually did little to benefit the NHS or its patients. Significant financial commitments have now been made, either through the issuance of new awards or the inflation and extension of existing arrangements.
The paucity of publicly-available data on these commitments, alongside the list of scandals and regulatory violations, compiled by Corporate Watch and catalogued on Violation Tracker UK and Violation Tracker, raises serious questions about the Government’s decision to entrust the provision of public healthcare to these five companies – themselves just a small handful among hundreds of other firms being awarded contracts, with little competition.
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