UK corporate state: GATS preparations

Michael Keaney michael.keaney at
Mon Dec 9 05:45:09 MST 2002

Ruling could pave way for privatisation of schools and hospitals
The Herald, 9 December 2002

SCHOOLS, hospitals, and social services could be completely privatised as a
result of an obscure tribunal involving a Belfast nursing home.

Linda Fabiani, the SNP MSP, said yesterday it "could spell the end of public
services as we know them," with virtually the whole public sector opened up
to privatisation.

Ministers admit that the potential consequences of the tribunal ruling have
not yet been assessed.

The warning came after the Competition Commission Appeals Tribunal backed
the private firm, Bettercare, which claimed a local health trust had an
unfair monopoly over care of the elderly.

Ms Fabiani believes that this ruling reflects the pressure the UK is under
to comply more fully with the spirit of the General Agreement on Trade in
Services (GATS), which the Westminster government sign-ed up to seven years
ago as a member of the World Trade Organisation.

She fears that because the UK has now ruled, under its own domestic
legislation, that commissioning by public bodies amounts to a commercial
undertaking, any opt-out under the agreement could begin to unravel, and
providers of health and education services, many of them powerful
corporations from North America, could insist on British markets being
opened up to them.

"It is no exaggeration to say that this could spell the end of public
services as we know them," said Ms Fabiani. "Taken in conjunction with the
plans to extend the encroachment of GATS, almost everything in our public
sector such as all health and education provision could be forcibly thrown
open to the private sector."

She has asked a number of parliamentary questions of health and education
ministers who, while stressing that the issue is reserved to Westminster,
have given assurances that a specific opt-out clause protects Scotland's
public services.

But when she raised the BetterCare ruling, the tone from Frank McAveety,
deputy health minister, seemed less confident. He replied: "One implication
is that, potentially, local authorities' commissioning of care services
could be subject to the competition act, but each case would need to be
decided on its particular merits."

The minister said the judgment did not rule on whether the act was being
contravened, only that local authorities may be subject to it, adding: "The
European Court is currently considering a similar case and an outcome is
expected by next spring. This may help to clarify whether the act applies to
the commissioning functions of public bodies. Against this background, no
general assessment has been made of the implications of the ruling and we
remain in touch with our counterparts in Northern Ireland and other UK
administrations on this issue."

BetterCare, a residential and nursing care firm, had claimed that the North
& West Belfast health and social services trust had been abusing its
position as a monopoly purchaser of places to offer unfair prices and terms.

The Office of Fair Trading rejected the company's case because, as a public
body commissioning services, the trust said it was not a commercial
"undertaking" under the competitions act.

The firm appealed to the appeals tribunal which "took a wider view in
relation to the purchasing activities of a public body", ruling that as the
trust was engaging in economic activities, it was therefore an undertaking
and subject to the act. The OFT has decided not to appeal the decision.

A report last week from the World Development Movement highlighted the
potential threat of GATS to a whole range of public services, from health
and education to communications, mail deliveries, energy, transport, and the

Article 1.3 of the treaty exempts services "supplied in the exercise of
governmental authority" and "supplied neither on a commercial basis, nor in
competition with one or more service suppliers".

The WDM report points out that this raises the question of whether state
schools are in competition with private schools, or the NHS competes with
BUPA. Developments in England and Wales such as semi-privatised city
academies or foundation hospitals blur the line further, making it harder to
hold against global pressures for opening up the market in services.

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