WHY THE NHS IS BEING PRIVATISED

When governments used their borrowing capacity to bail out the banks they mortgaged themselves. Those, like the UK that already had large debts were more vulnerable, but those with only limited borrowing capacity (Ireland, Portugal, Spain and Greece) were particularly vulnerable to the kind of experience anyone who has taken on a mortgage that is too big will be familiar with. Just like many of us use a credit card to get today what we hope we can afford tomorrow, so do governments use their borrowing capacity as part of budgeting. Whereas we have to accept high interests rates though, governments expect to borrow cheap. When the ability to borrow cheap is under threat, governments are in big trouble. They need that AAA rating from the credit rating agencies. Without it they are in danger of being unable to pay public service wages. They know that if that happens they become a distressed creditor, and that the country will have to accept what ever terms bankers demand.

As is the way these things work, shrewd governments don't wait for this to happen. They try to buy off the bankers before the trouble begins. That is the UK strategy. They ask the bankers what they want. What the bankers want is what bankers always want; low risk investment opportunities. The UK is therefore playing the banks at their own game. By enabling as much government expenditure as possible to pass to the private sector the UK is trying to make itself (from the banks perspective) too big to fail. This is why there is such a push to privatise the delivery of the NHS. If the banks are heavily invested in UK public expenditure they will be less likely to threaten the UK government with higher interest rates,

Gordon Brown can be credited for this discovery, although his intention was quite different. In taking the view that he needed to take the debts for government infrastructure projects "off balance sheet" so as to avoid increasing the costs of government borrowing for revenue commitments, Brown developed the Private Finance Initiative. In practice PFI enabled private contractors to obtain the short term finance for the construction phase, before the debts were sold on to banks who used the "backed by the Bank of England" service contracts as leverage assets or sold them on to private equity companies. They effectively became, along with companies in the defence and utility sectors, the assets that underpinned the shadow banking system. When the crisis came in 2008, PF| was the UK insurance policy.

There are two types of insurance. There is insurance that you take out because you want to protect yourself against random events. There is also insurance that you have to take out because if you don't the insurer is promising to break your legs. Turning public expenditure into private contracts very much smacks of the second. Dressing it up as political dogma doesn't alter the equation: tax money is being given to organizations who will add their bung to the costs of delivering the service that we already have without their involvement. The people delivering the service will be the same, the wages and conditions will become gradually worse, while the quality of service will depend on how weak the government was when it signed the contracts.

So here in a nutshell is why the NHS bill will go through. Here also is an explanation as to why Nick Clegg is threatening the bill's real purpose. Cameron wants to be able to go to the thugs from the banks and say how it isn't easy, that they are asking too much, that he is doing his best, but he is up against real opposition. This is part of the negotiation. The bill has to go through giving the banks the opportunity to buy the NHS contracts in the end and this stage is all about enabling the eventual contracts to not be an open cheque book that will enable the gangsters to raid the UK treasury for evermore as a condition for having a health service.

We are in that stage of a game of Monopoly where the player with hotels on Mayfair, Park Lane and the orange set on the other side of the board  is slowly and painfully getting all the other players to demolish their hotels and houses and surrender everything they have. The difference between this and Monopoly is that here the government and the people are the losers. The government has the right to change the rules to stop it happening, but is so deluded by its own dogma and so scared of facing reality that it would rather pretend that somehow it is its duty to sell us all out.