profits
Video: EGM leak reveals RCP ‘refusing to answer patient safety questions’ and more
Clips from 2-hour leaked extraordinary general meeting appear to show Royal College of Physicians avoiding scrutiny – but making damning admission of financial conflict of interests in government’s expansion of ‘non-doctor-doctor’ roles
A leaked video of the entire ‘extraordinary general meeting’ (EGM) of the Royal College of Physicians (RCP), called by doctors to try to force a slow-down in the roll-out of the government’s expansion of the use of non-medically-trained staff in ‘doctor’ roles, has revealed comments and obfuscation that have led medical professionals to call for the resignation of senior RCP officers. One has already resigned.
A number of patients have already died avoidably because of errors by ‘physician associates’ (PA), who have only two years’ training compared the seven-plus years completed by doctors. A Doctors’ Association UK survey has found ‘deeply disturbing’ abuse of the PA role in NHS trusts.
Keele University cardiology Professor Mamas A Mamas wrote of the leaked video:
The ‘PlatinumPizza’ Twitter/X account has posted a number of excerpts from the EGM video highlighting what it feels are the most noteworthy evasions and obfuscations. The first two reveal that, while the RCP claims that PAs must complete national exams, a freedom of information request revealed that this can be bypassed – and that the RCP, which criticised a far more comprehensive survey by the British Medical Association (BMA) as biased, in fact skews the results of its own small survey to present a falsely positive outlook:
Next, Dr Read tries to present the results of the survey. It's important to remember that Dr Read has since resigned from his post following the EGM.
Somehow, they've managed to mess-up even a basic Likert scale survey and clustered the neutrals with the positives! pic.twitter.com/G2DRpdegBx— platinumpizza
(@Xeon4f145d96s1) March 17, 2024
Doctors participating in the EGM also raised the issue of the fact that PAs are paid more than the junior doctors who often have to supervise them (and can be held to blame if a PA screws up) – but the RCP said it was ‘not a union’ and not interested in getting involved in pay issues:
Next, slightly sped-up, @DrOKaneAgain eviscerates the survey and its results. An insinuation about the BMA survey being "biased" and "leading" is raised. This comes after the RCP tries to pawn off its results by aggregating positive with neutral, as @doctor_oxford shared with us. pic.twitter.com/MefdfOmxT4
— platinumpizza
Next, the first of two posts about the RCP’s prioritisation of its finances above what nine out of ten doctors feels is a grave threat to patient safety:
Back to it, this clip talks about the fiscal and fiduciary responsibilities the RCP have. Although not shown in this particular clip (I'll include it in the thread later), mentions of millions in reparations/ law-suits/ class actions is made. pic.twitter.com/OYLBQtN5VO
— platinumpizza
And then the second, which shows the RCP’s treasurer admitting/warning that the RCP could stand to lose millions if the PA expansion is halted or even slowed down – and the RCP apparently disagreeing with the RCP of a short while below about being a ‘union’, at least when it comes to ensuring PAs have jobs:
I know you are all waiting to hear the millions the RCP might be forced to pay up…so this clip is just that!
Will someone think about the pensions?! pic.twitter.com/s8JD70ooXs— platinumpizza
And, adding farce to the ‘contempt’ of which doctors accused the RCP after the meeting, the panel refuses to say what additional benefit a PA brings to a ‘multi-disciplinary team’ that is not already present in the mix – rounded off by a clip of a doctor warning of the dangers of pressing ahead with the whole damaging system:
And lastly, in what can only be described as an epic season finale, @DrAsifQasim drops an absolute banger.
"i am deeply concerned we will take a patient safety hit if we do not act" pic.twitter.com/LaqIozrAEV— platinumpizza
And in a clip not included in the thread but created by Skwawkbox, one of the movers of the motion for the expansion to be slowed down until it can be shown to be safe for patients explains why it is so important for voting members of the RCP to support it, despite the RCP management’s recommendation to reject it and plough on:
Other discussions during the meeting included the panel failing to explain how it was going to ‘hold the government to account’ for the safe functioning of the system, as it had claimed it would – and treating the mere inclusion of any extra doctors in the government’s ‘long-term workforce plan’ as an achievement by the RCP.
The use of PAs, which is considered by nine out of ten doctors to be dangerous to patients and confuses many patients, who do not realise that they have not been seen and treated by a fully-qualified medic, is being pushed by the government as a way of ‘downskilling’ the NHS, reducing costs and allowing increased profits for private providers, under the guise of the so-called ‘NHS Workforce Plan’ as part of the ‘Integrated Care Systems’ (ICS) project.
ICS, formerly called ‘Accountable Care Organisations’ (ACOs) after the US system it copied, were renamed after awareness began to spread that ACOs were a system for withholding care from patients and that care providers were incentivised to cut care because they receive a share of the ‘savings’. The system remained the same, but the rebranding disguised the reality.
The government used a ‘statutory instrument’ (SI) to pass these changes, avoiding proper parliamentary scrutiny, but both the Tories and Keir Starmer’s Labour support these and other measures to cheapen the NHS for private involvement and only independent MP Claudia Webbe spoke against them during the brief SI debate. Green peer Natalie Bennett’s motion in the House of Lords to attempt to kill the instrument was defeated by the Tories with the help of Labour peers.
Watch the full RCP meeting here.
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McDonalds, Starbucks, others admit Gaza boycott hitting profits
Firms admit losses or even cut ties with Israel
The chief executives of food chains McDonalds and Starbucks have admitted that the global boycott of their stores and products because of the firms’ support for Israel is hitting their profits. McDonalds in Israel provided free meals to Israeli soldiers participating in Israel’s mass slaughter of Palestinian civilians, while Starbucks has sued a union representing some Starbucks workers – the firm has engaged in union-busting efforts – for a post on the union’s social media account expressing solidarity with Palestinians in Gaza.
Other firms have suffered similarly and have even cut ties with Israel because of widespread grassroots anger over the genocide in Gaza. Swiss-based shipping firm Kuehne & Nagel has ceased transporting materials for Israeli weapons firm Elbit Systems and Japanese giant Itochu has announced it will end all collaboration with the same Israeli firm by the end of this month, citing the International Court of Justice’s damning findings against Israel last month in the case brought by South Africa.
January also saw controversy in Ireland after Dublin airport closed its Starbucks but continued to sell the firm’s products under a different brand.
The longstanding ‘boycott, divestment and sanctions’ (BDS) campaign of peaceful resistance to Israel’s apartheid and illegal occupation rattles Israel to such an extent that it set up a specific government department to combat and discredit it. Now, with the Houthi blockade of Israel-bound shipping hitting Israel’s economy, BDS is biting even deeper.
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Profits in a time of inflation: what do company accounts say in the UK and euro area?
Gabija Zemaityte and Danny Walker
Inflation has been high in many countries since 2021. Some have said that companies have increased their profits over that period: so-called ‘greedflation’. We use published company accounts for thousands of large listed companies to look for signs of increased profits in the data. Consistent with previous analysis of aggregate incomes, price indices and business surveys, we find no evidence of a rise in overall profits in the UK – prices have gone up alongside wages, salaries and other input costs. Companies in the euro area are in a similar position. However, companies in the oil, gas and mining sectors have bucked the trend, and there is lots of variation within sectors too – some companies have been much more profitable than others.
Recent analysis by Sophie Piton, Ivan Yotzov and Ed Manuel has shown that corporate profits have been relatively stable in the UK and that profits are unlikely to have been a big contributor to inflation. Others have suggested that the trend in the euro area has been somewhat different. In this post we use a novel data source to look at this question: the information companies have reported in their accounts.
Company accounts provide a window into how profits have evolved
Large companies that are listed on the stock market publish company accounts at regular intervals, which give a summary of their operating performance. We use a sample of more than 1,000 companies per year – based on accounts that are currently available up to the end of 2022 – to analyse how profits have evolved during the high-inflation period.
Why look at large companies? They play a major role in the UK economy – they account for 40% of total employment and almost half of total turnover. There is also evidence that they have more market power than smaller companies, so are more likely to be able to increase profits.
We compute the ratio of profits to value added for all non-financial listed companies in the UK and the euro area. The profit measure we use is earnings before interest and taxes (EBIT), which is a standard accounting measure. Value added is defined as EBIT plus total wage and salary costs at the company level. This measure naturally avoids some of the issues that distort the national accounting data, such as the inclusion of non-market income, tax and self-employment or mixed income.
We compare the UK to the euro area, where companies have faced similar shocks over the last few years, including the Covid lockdowns and recovery, the rise in global supply-chain pressures and the surge in European energy and other raw material prices.
There is no evidence of a significant rise in the profit share on aggregate in the UK or euro area
The profit share has increased only moderately since Covid in the UK and euro area (we focus here on companies in Germany, France, Italy and Spain). It has remained broadly in line with its long-term trend since the early 2000s (Chart 1).
How has the profit share been so stable? Profits have increased significantly in nominal terms in the UK and euro area, by somewhat more in the UK than in the euro area. But this increase in profits has been accompanied by sharp increases in inputs costs. Indeed, total costs – defined as the sum of the cost of goods sold, wages and salaries – has increased by around 60% in the Euro area since 2020, and around 80% in the UK.
The level of the profit share reflects the set of companies captured in the sample, which tend to be larger, more profitable and more capital-intensive than the average in the economy as a whole – and the oil and gas sector is over-represented. These compositional issues mean we should focus on analysing changes in the UK or euro area over time, rather than differences between the two. But it is notable that in aggregate, the profit share has been broadly stable even when excluding oil, gas and mining sectors.
Chart 1: Profit share in UK and euro area based on company accounts
Notes: Sum of total profits (EBIT) as a ratio to value added (EBIT plus wages and salaries) across all non-financial listed companies in each region. Dotted line is a linear trend. Euro area includes non-financial companies in Germany, France, Italy and Spain.
The oil, gas and mining sectors have seen a large increase in profits in the UK and euro area
Chart 2 compares the profit shares in 2022 to those in 2021 at sectoral level, for the UK and the euro area in turn.
Most sectors have had very little change in profit shares in the UK. But three sectors have seen an increase in profit share that is larger than 5 percentage points. Those sectors are oil, gas and mining; utilities; and other services (which includes industries such as gambling and leisure facilities). Together they make up around 7% of total output in the economy.
The euro area has had stable profit shares for most sectors too. The sectors that have seen an increase in profit share that is larger than 5 percentage points are oil, gas and mining, professional services and construction. Those sectors account for around 12% of total output in the economy.
Chart 2: Profit share in UK and euro area by sector
UK companies
Euro area companies
Notes: Average profits (EBIT) as a ratio to value added (EBIT plus wages and salaries) in 2021 and 2022 across all non-financial listed companies. Excludes companies with negative profits. Bubble size is proportional to sectoral gross value added in the national accounts. Solid line is the 45 degree line – sectors on the line have had a constant profit share.
Every sector includes companies that have done much better than others
While only a few sectors have seen a significant increase in profit shares, there is lots of variation within sectors. The newspapers are full of stories about individual companies that have done well. Chart 3 shows the share of revenue within each sector accounted for by companies that have seen an increase in their profit share of at least 5 percentage points.
In the UK, the sectors with the highest share of companies with large increases in profit share are other services (88%), oil, gas and mining (66%) and utilities (43%), which is unsurprising given those sectors did well on aggregate. But all of the other sectors contain companies that have seen large increases in profit shares. The smallest share is in the construction sector, where less than 2% of companies have seen a large increase in profits.
In the euro area, on the other hand, the top three sectors with the highest share of companies with large increases in profit share are oil, gas and mining (52%), transport (45%) and wholesale trade (43%). Other than oil, gas and mining, this paints a different picture to the aggregate results, which means that those results are driven by a few large companies. Consistent with the UK results, all sectors contain companies that have seen large increases.
Chart 3: Share of companies reporting more than a 5 percentage point increase in profit share from 2021 to 2022 by sector
Notes: The chart shows the proportion of companies in each sector and region – weighted by total revenue – where aggregate profits (EBIT) as a ratio to value added (EBIT plus wages and salaries) rose by 5 percentage points or more from 2021 to 2022. Sample is all non-financial listed companies. In the euro area it includes companies in Germany, France, Italy and Spain.
Summing up
This post uses a large sample of listed UK and euro-area companies to test for the existence of ‘greedflation’. Consistent with other sources, it doesn’t look like the corporate sector as a whole has seen an abnormally large increase in profits during the period of high inflation. That is because wages, salaries and other input costs have gone up by just as much as profits. The oil, gas and mining sector consistently bucks the trend, which is unsurprising. And there are of course many examples of individual companies in all sectors that have been particularly profitable.
Gabija Zemaityte works in the Bank’s Macro-financial Risks Division and Danny Walker works in the Bank’s Deputy Governor’s office.
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