Lucy’s latest blog explores profiteering from delivery of NHS contracts. This blog was first published on the 2degrees network, see https://www.2degreesnetwork.com/groups/2degrees-community/resources/profiteering-sick-and-dying/
At the beginning of the summer there was an announcement that Staffordshire Clinical Commissioning Group plan to contract out their cancer and end of life care to the tune of £1.2bn. By my estimation, given the profit margins of at least 10%, this is at least £120m profit taken out of care services, for shareholders (and could be as much as £240m). I suspect there will be a lot of interest from the private sector as an opportunity to get into this potentially lucrative market.
Almost in tandem with this announcement there was a Daily Mail article which reported survey results showing most people do not care who delivers NHS services as long as it’s free. On the face of this, it is discouraging news for social enterprises. However, if you were to turn this around, given the latest health and care scandals, I’m sure that trust would be the number one priority. Social enterprises with their local knowledge, approachability and transparency are very well placed to engender this. They are not some faceless corporate just after a fast buck, because their number one reason for being set up is to deliver that service to fit their social mission.
I am really encouraged that the Labour Party is now talking about ring-fencing a number of public sector contracts for social enterprise delivery, although this does miss the point that there is an inherent difference in the way that a social enterprise delivers – because of its primary social motivation. I am due to meet with Chi Onwurah and I will be making this point. At least there is recognition that social enterprises do offer a good alternative.
My prediction is that in years to come, we will all be questioning the values (or lack of them) that were used to make public spending decisions.
There must be wider recognition that social enterprises not only often take a lower profit margin, but they are also reinvesting and devising a service that is aimed at the people they serve – a win-win! Just looking at the price and not what’s going on behind the scenes is not good enough. We need commissioners and politicians to understand this fundamental point.
LucyFindlay
Lucy Findlay 
As a trustee of East Herts YMCA, I see that this is a growing trend and not a good one. Elsewhere, the drive for cost effectiveness creates short term behaviours that can be destructive in the longer term. The issue is that it can unfortunately be common in the commercial world to bid and win contracts and worry about delivery later. This gives the illusion to the funders that they are getting value for money when in fact what they are getting is a pitch.
We’re seeing this in the consolidation of contracting out of various support services in the local community in East Herts. The Council are asking for fewer, larger tenders and we see smaller, effective organisations making people redundant. These workers are then being contacted by the larger organisations who won the bid to hoover them up to try and meet committed deadlines which they promised but don’t actually have resources to meet their commitment.
Well done Lucy – please keep promoting the social enterprise spirit. We need businesses to be successful as part of our communities not feeding off them.
Thanks Richard – you are right about the pitch not matching up to the delivery. Some of these big organisations do not worry to much about delivering what they initially promised as they know that they can get away with it once the foot is in the door, which is why a lot of organisations are used as ‘bid candy’.