By Claire West

The government is withdrawing its controversial plans for a 14% ‘NHS privatisation tax’ which would have helped private healthcare companies take over great swathes of the health service.

The government has now tabled amendments to the Health and Social Care Bill, currently going through Parliament, which, in effect, stops private companies getting a financial leg-up when competing for lucrative NHS contracts.

The amendments won’t be debated for about a fortnight, but as they are government amendments they will certainly be passed.

Unite Assistant General Secretary, Jennie Bremner said:

‘This is a victory when coupled with Health Secretary Andrew Lansley’s intention to now rule out competition on price.’

‘But there is a lot further to go to save the NHS and this U-turn calls into question how this proposal was ever made. The government’s handling of this legislation has descended from muddle into shambles.’

Unite, which has 100,000 members working in the health service, had said that the 14 per cent ‘tax’ would have meant taxpayers subsidising the corporation tax that the private healthcare companies would incur on the profits they would make on their NHS contracts. Other elements would have included ‘help’ with pension provision and building costs.

Unite research had discovered that the Impact Assessment — which accompanies the bill - indicated that private providers would have been given a 14 per cent ‘leg up’ - for every £100 they spent in the new NHS ‘market’, the taxpayer would have been made to refund them £14. This could have cost the taxpayer millions of pounds in subsidies for private firms.

Jennie Bremner said: ‘Unite now needs to press for a firm guarantee that this doesn't leave any scope for individual private providers to claim that their specific cost base is higher than NHS providers.’

Unite had said that the reason that the bill had originally been structured in this way was that the NHS does not pay corporation tax on its activities; that private companies wanted public funding for providing pension provision for the staff they employ; and these firms complained that the NHS already has buildings in place that they would have to provide.