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Scandal of tax loophole driving NHS pharmacy sell-off

Scandal of tax loophole driving NHS pharmacy sell-off

23 July 2014

Hospital pharmacies are being privatised at an alarming rate because of a ‘toxic combination’ of the government’s health act and an unfair loophole in VAT rules meaning pharmaceutical companies like Lloyds and Boots don’t have to pay 20 per cent VAT but NHS providers do.
 
This is the thin end of the wedge as NHS trusts up and down the country use the government’s health act to sell off huge swathes of NHS clinical services. Health campaigners in Morecambe Bay campaigning against the sell-off of NHS pharmacy services are furious over revelations about the tax loophole which stacks the cards against the NHS.

Cuts to the NHS and the government’s Health and Social Care Act have accelerated privatisation, putting NHS pharmacies at even more at risk. Since this Act came in to force, 70 per cent of health services put out to tender have gone to the private sector.

A contract for pharmacy services worth in the region of £25 million is currently up for grabs in Morecambe Bay which could mean a private company would be brought in to profit from medication provided by the NHS. Campaigners fear that selling-off NHS pharmacy services will put more emphasis on sales and that the contract will be about driving down costs, not improving patient care. Campaigners found that the advert which announced the sale of pharmacy services in Morecambe Bay explicitly stated that “VAT savings” was a “key business driver.”

At least 31 NHS trusts have already chosen to use private companies to run outpatient pharmacy services and a further 18 are out to tender.  Lloyds Pharmacy has been the biggest beneficiary of the loophole having secured around 18 contracts to run hospital pharmacy services, Boots have won 5, Sainsbury’s 3 and the Co-op 5.
 
Unite general secretary, Len McCluskey said: “This is the thin end of the wedge as NHS trusts up and down the country use the government’s odious health act to sell-off huge swathes of NHS clinical services.

“A toxic combination of a tax loophole, cuts and the government’s drive to sell-off the NHS mean that hospital pharmacies are being bought up by companies like Boots and Lloyds. Health campaigners in Morecambe Bay campaigning against the sell-off of NHS pharmacy services are furious after finding out about this unfair tax advantage.

“To make matters worse an EU-US trade deal called TTIP threatens to lock-in privatisation. It will give US and Wall Street investors the right to sue the UK government in secret courts if it attempts to reverse privatisation.

“The fact that the government has done nothing to level the playing field is proof of its zeal to dismantle our cherished NHS.”

ENDS

For further information please contact Ciaran Naidoo on 07768 931 315

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Notes to editors

•     Unite is Britain and Ireland’s largest trade union with over 1.4 million members working across all sectors of the economy. The general secretary is Len McCluskey.