Comprehensive Report: NHS Privatization and UK Economic Consequences

This report analyzes the impact of privatization on the UK economy, focusing on the privatization of electricity supply, railroads, and the NHS. It examines the benefits and drawbacks of electricity and railroad privatization, including increased competition, investment, and passenger numbers, while also addressing concerns about rising fares and government funding. The core of the report delves into the debate surrounding NHS privatization, presenting arguments for and against the involvement of the private sector. Proponents highlight potential improvements in healthcare quality and efficiency through competition, while opponents emphasize the risks to universal access, potential job losses, and the prioritization of profits over patient care. The report concludes with an evaluation of the overall impact of privatization on the UK economy, offering a balanced perspective on its complexities and consequences.

Running head: NHS PRIVATIZATION
NHS Privatisation
Name of the Student
Name of the University
Author Note

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Executive Summary
The main purpose of the report is to analyse the impact of privatisation on UK economy. In
this context, the report analyses the impact of privatisation on UK electricity supply and rail
road. It further elaborates an argument for and against the NHS privatisation. From the above
mentioned analysis, the report concludes with a clear understanding of the concept of
privatisation and its positive as well as negative impact on UK economy.

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Contents
Executive Summary...................................................................................................................1
1. Answer...................................................................................................................................3
Impact of electricity privatisation on UK economy:..............................................................3
Impact of railroads privatisation on UK economy:................................................................4
2. Answer..................................................................................................................................5
Debate regarding NHS privatisation:.....................................................................................5
3. Answer...................................................................................................................................7
Reference:..................................................................................................................................9

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1. Answer
Impact of electricity privatisation on UK economy:
Privatisation is an economic reform that has brushed off the economy over the last
two years. Since the era of the Thatcher government in the United Kingdom, who initiated
privatisation, it became a global event. UK government’s one of the most complex
privatisation is the sale of the electricity industry in England and Wales as the lack of
previous investment in electricity network had resulted incompetent electricity supply in that
regions (Surrey 2013). Therefore, the objective of electricity privatisation and generation is to
boost the foreign direct investment and promote market liberalisation. Privatisation reduces
commercial and technical losses as new investment enters into the market. Along with this, as
the industry has moved away from monopoly to duopolistic market structure, competition
increased in electricity generation and its supply (Alonso and Andrews 2016). As more
investors entered into the market, this led to an increase in managerial and technological
innovation and drastic reduction in cost and prices; import also increases which is an
important source of competition for electricity suppliers and generators (Torriti 2014). The
net gain from electricity privatisation is higher than that of the pro-privatisation situation.
This gain usually came from the excessive nuclear expansion programs, the building of new
nuclear power stations and a shift from costly British coal to cheaper natural gas. However,
some of the gains have been consumed by paying higher payments to the French electricity
for its cheaper import facility (Surrey 2013). Moreover, electricity privatisation had resulted a
huge environmental benefit because older cold fired plant has been replaced by cleaner gas
generation and thermal efficiencies had also risen correspondingly that reduced emission.
Despite all the benefits gained from the privatisation, there are some areas of improvement in
the process of privatisation. Firstly, as major income has been transferred to France because

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of import payment, more attention need to be paid to prevent such things. Secondly,
introducing competition in generation might have reduced excess entry and thus lowered
prices and increased social welfare (Torriti 2014). For example in case of British Gas,
privatisation has offered various positive impacts. Due to privatisation there has been various
improvement made for the consumers. Better electricity generation after privatisation has
helped many water authorities to offer better pressure of water to the consumer. British Gas
received the fastest rate of privatisation in the past years (The Guardian 2018). Moreover,
with privatisation the prices of gas have fallen by 23 percent, benefitting the consumers.
However, to some extent the profit of the company suffered due to privatisation due to falling
prises.
Impact of railroads privatisation on UK economy:
The main objective of UK railroads privatisation is not only to earn more profits and
public subsidy but also to create financial arrangements and their political consequences. As
per the survey conducted by Adam Smith Institute, rail privatisation introduced more
competition in the UK market leading to a huge increase in passenger numbers, rail fare and
public subsidy (Wellings 2014). Around 1.65 million passengers have increased annually,
which is more than doubled than that of pre-privatisation era (Preston and Robins 2013). The
lines that linked Waterloo with South-West London, Surray and New Hampshire had started
experiencing an exceptional use of these roads. Volume of freight carried has also been
increased around 80% after the rail privatisation (Wellings 2014). This led to a drastic
increase in economic growth in UK during that time as compare to France, the Netherlands
and Germany. In the post-privatisation era, all the rail networks and stations and branch lines
were reopened as half of the UK populations are totally dependent on rail networks which
were then government owned. However, this increase in train passengers mainly determined
through three factors (Preston and Robins 2013). These are their long term GDP growth,

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changing commuting pattern as most of the people shifted to the urban area for better
employment opportunities and increasing their standard of living. Therefore, this rise in
passenger journey is not due to privatisation. Moreover, as per the government report, more
than 90% of new investment in railways comes from the UK government and several other
governments funding (Reynolds 2013). Therefore, innovation and new investment is also not
a reason of privatisation. On the other hand, critics claimed that rail privatisation has resulted
cheaper services for daily passengers. However, a report from 1995-2015 revealed that rail
fare has been increased by 117% post privatisation (Pollock 2016). From the above
discussion, it can be argued that rail road privatisation resulted a complete failure in the UK
economy.
2. Answer
Debate regarding NHS privatisation:
The argument about the privatisation of NHS has been intense. The private sector role
for the development of NHS needs a serious consideration. In this context, three individuals
Fraser Coppin, Jessica Hubbard and Clive Peedell have been argued for and against the NHS
privatisation.
The argument for NHS privatisation by Fraser Coppin:
The fundamental principle of NHS is to get the basic healthcare based has on the need
rather than the ability to pay. This idealism has been so inbred in the public that a slight
reform in the healthcare system has been a political issue. NHS is one of the famous
institutions in Britain. However, there are several problems associated with it (Powell and
Miller 2016). As per the critics, there is a bitter rivalry between the NHS and rest of the
world. As compare to the OECD, WHO and Commonwealth Fund, NHS ranks the third last

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of developed country. Even in the health outcome category, it ranks the last. A report
conducted by Institute of Economic Affairs revealed that if UK’s cancer patients were treated
in Germany instead of UK, then approximately 12,000 lives would be saved. Similarly, in the
Netherlands, around 9000 lives and in Belgium around 14,000 lives would be saved; because
in UK, hardly a hospital bed can be allotted for the patients (Reynolds 2013). Therefore, there
is a huge shortfall in those cases. Overall, NHS has been failed drastically in every aspect.
While encountering the issue, some defender will argue that certain things would be better if
they were properly funded by the government. However, it is a fact that spending in the NHS
by the government has been risen from EUR 68bn to EUR 143bn and it increases year after
year. However, it is also a fact that it is not possible for a country to inject money on certain
things which does not work. In fact, people are not quite interested to discuss its
improvement. Therefore, the injection of unlimited cash is needed to be stopped somewhere.
Get in this point, the question might arise that how privatisation would have a positive impact
in this scenario. The best possible solution in this regard would be a private social insurance
system. With this, every citizen irrespective of their income, has get the access of best quality
healthcare, and when it comes to patient fallout, its result is a way better than the NHS in
every aspect. Therefore, state owned public sector healthcare is badly needed a reform. So, it
can be concluded that privatisation can work very well if it is possible to explore the possible
alternatives and if it is possible to look after of what really matters: the patients instead of
focusing ideological predicament.
Argument for privatisation of NHS- Thomas Cawston
NHS privatisation has received a lot of support for its ability of improving the care
system with rising competitive environment. This will benefit patients by receiving better
service (BBC News 2018). NHS has also asked other organization under them to give their
views for supporting privatisation to get better equipment. Private companies along with were

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asked to submit bid for supplying best facilities and service to the patients (Reynolds 2013).
Thus the private companies that win the bid will get to run NHS. This shows that
privatisation in this process will have a beneficial effect on NHS.
Argument for privatisation of NHS- Dr. Jonathan Fielden
NHS has been receiving various increase in its cost and service requirement with the
increasing demand from the patients. This is due to increase in aging customers and rising
expectation from the health services (Telegraph 2018). It was becoming increasingly difficult
for NHS to cope up with the costly healthcare services. In this scenario it has been rightly
supported that privatisation has helped NHS to take up costly healthcare services and
technology for the patients (Powell and Miller 2016). Thus, the view that private companies
only aim to earn profit from NHS has proved to be a wrong claim.
The argument by Jessica Hubbard against the NHS privatization
The National Health Service is the cornerstone of British society. Its fundamental
principle lies in providing basic healthcare to the Britons to the free of cost. Therefore, if
NHS were in the hand of private sector, there will definitely be the absence of basic
healthcare of those who cannot afford. Due to the privatisation, many parts of their hospital
are being sold to the private parties (Campbell 2017). Moreover, competition will be more
rapid and it further leads to job losses that in turn leads to bad healthcare services. On the
other hand, private sector will demand more funding to run their business; however, most of
the expenses are being wasted on marketing. In fact, 1 out of 10 pounds have been wasted in
non-clinical expenses. This proves that there is a problem regarding the funding. Therefore,
instead of privatising, government must fund nursing courses and other proper and relevant
healthcare training that will enhance safety and more number of patients can be handled by
them and this will lead to a limited hours of work and control the work pressure a well.

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The argument against the NHS privatisation by Clive Peedell:
Over the last few years, UK government has taken several public service agenda
regarding market competition, consumer choice and increasing number of private sector. In
the context of NHS, all these were started since the Thatcher government; the injection of
private sector in NHS led to trigger market competition and innovation, lower the cost of
production (Sass 2015). However, market failure is a serious concern as price competition
depressed the patient care. Another main problem is that private firms are profit maximisers
rather than cost minimisers. Therefore, private firm stimulates profits by diminishing the
NHS finances, reducing local healthcare services and patient choices. On the other hand,
medical professions are undetermined because the relationship between the doctor and
patients are underestimated. Therefore, proper healthcare services require a long-term
strategic planning and it should not be left in the hands of private sectors (Jupe and Funnell
2017). NHS should be publicised and should be seen as a publicly funded healthcare service.
Argument against privatisation- Oliver Huitson
Privatisation for the health sector has received criticism largely from various grounds.
This is because competition and privatised health provision has never shown any positive
evidence (BBC News 2018). There has been large evidence that shows that healthcare
privatisation and depending on the competitive market has largely proved to negatively
impact the health care sector (Sass 2015). Similar things will happen after NHS privatization.
This is because due to privatization, health care sector will totally target to increase income,
cost cut and other profit maximizing solution which increases the evel of fraud in the in the
system.

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3. Answer
The basic concept of NHS privatization under the guise of proper patient care
damages the concept of NHS. The scenario of public and private sector has been more
complicated in recent years (El-Gingihy 2017). However, evidence suggests that private
medical sector has been changing more rapidly over the last two decades. The percentage of
population covered by private health insurance, and the number of private hospitals have
been stimulating day-by-day. In 1997, around 3,367,000 patients were subscribed to the
private health insurance which composed 11% of total population (Abel-Smith and Titmuss
2016). Moreover, 28% of hospital beds were in the hands of private sector in 1979, which
was further increased to 56% in 1989. On the contrary, private medicines were grown during
the last 20 years which is a definite alternative to the NHS. Therefore, from the initial point
of view NHS is definitely beneficial for the UK economy.
It is quite difficult to estimate the impact of private sector involvement in the NHS.
However, it is clear that after privatisation, those who have jumped to the private medical
sector had gain the access of elective surgery, and these people tend to be well-off by the
private insurance schemes. Moreover, the concept of equal access faced challenges due to the
privatisation of NHS (Hughes 2014). However, Joan Higgins argues that both the advantaged
and disadvantaged people are just imitated in the private sector and the advantaged people
who gained from the NHS also started gaining from the private sector. The introduction of
private sector helps to stimulate the choice of people who can afford. When it comes to the
quality of healthcare, there is an absence of information in this regard. However, it is true that
the process of private healthcare might be more comfortable yet it stimulates some over-
testing and over-treatment (Smith et al. 2014). Also, doctors in the private sector can not earn
incentives for maintaining medical records or clinical audits. Professional isolation, work
culture of part time staff, deficient emergency coverage are some of the factors that lead to

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shift patients from private hospital to NHS. In early 1990’s, private sectors gained enormous
growth through several policy initiatives (Pollock 2016). A paper published in the Journal of
Public Health, the rate of treatment for NHS-funded elective surgery had fallen from 143.8
per 100,000 in 2006-07 to 137.8 per 100,000 (Pollock 2016). Research suggests that the UK
people want to see NHS as a cherished institution. Therefore, it can be concluded that
healthcare planning requires a long term strategy to meet all the need of healthcare activities.
Therefore, NHS requires being publicly funded liable public healthcare services.

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