Retrospective legislation could take back the NHS fully?

As has been covered many times on this blog and by others, the government is going as fast as it dares, and in as subtle a way as it can, to do as much damage to the NHS as it can during its probably single term in office.

At the same time, Labour has committed, via Ed Miliband as well as through Shadow Health Secretary Andy Burnham and Shadow Health Minister Andrew Gwynne, to repealing the Health and Social Care Act once Labour returns to power. Called upon to make a clear statement regarding Labour’s intentions, Burnham tweeted “I’ll repeal the act. Full Stop.”

However, both activists and politicians fear that the damage done to the NHS will be largely irreversible by the next election in (presumably) 2015. In particular, the concern – as articulated by Andrew Gwynne at a ‘fringe’ event at the recent Labour conference – is that because the government is awarding long contracts to private health providers. the next Labour government will have its hands tied and will be unable to bring the contracted services & facilities back into the NHS until those contracts expire.

Circle’s contract to run Hinchinbrooke hospital in Cambridgeshire runs until the end of 2021, and Circle – on the back of vastly inflated claims of improvements and in spite of failure to hit financial targets – is demanding more NHS contracts. Virgin’s contract to “run seven hospitals along with dentistry services, sexual health clinics, breast cancer screening and other community services” runs until 2017, as do various other contracts it has won, and the length of its contracts to run 25 GP surgeries appear to vary. Interserve recently won a 7-year contract for NHS facilities management. Serco – a company that has admitted deliberately misleading regulators about the performance of its GP services – bought the principle NHS pathology service in expectation of £800m profit over 10 years and in March won a 10-year, £180-million contract to provide facilities services in Kent, just two of its many NHS ‘conquests’ (which already include a contract to run a whole hospital). In total, contracts worth billions of pounds have already been put up for auction and are almost certain to be won by private companies.

These examples represent a tiny percentage of the government’s massive NHS give-away. The consensus of opinion among politicians, activists and commentators appears to be that nothing can be done to bring these contracts, which will represent a vast portion of NHS spending, back into public hands until they expire.

However, I’ve been doing a little reading and I’m not so sure that’s correct. I believe there is a route by which a Labour government could invalidate the contracts and take control of the NHS back into the hands of the British people as soon as it feels ready to do so: retrospective legislation.

‘Retrospective legislation’ means a law that the government passes which applies to a period before the law was passed, as well as to afterward. Such laws are made rarely and are usually controversial because of the principle that someone committing an action in the past wasn’t aware that it was going to become illegal in the future, so penalising them retroactively would be unfair.

However, there is precedent and legal judgment that creates an exception to this rule – and continued under this current (excuse for a) government.

On 27 Feb of this year, the Treasury, under pressure to do something about tax loopholes, announced that it was going to implement legislation to close off key tax-avoidance opportunities. Not only that, but it explicitly included retrospectivity in the law, with David Gauke, Exchequer Secretary to the Treasury, saying:

“The Government wants to ensure that the tax system is fair for all and we will not allow those who seek to benefit from this aggressive avoidance to get an unfair advantage.  We do not take today’s action lightly, but the potential tax loss from this scheme and the history of previous abuse in this area mean that this is a circumstance where the decision to change the law with full retrospective effect is justified.  The Government is committed to creating a competitive tax system and we have brought in a range of corporate tax reforms, but we are absolutely clear that business must pay the tax they owe when they owe it.”

The principle of retrospectivity where there is financial consequence to those affected by the law has been tested and upheld. Section 58 of Labour’s Finance Act 2008 contained retrospective elements against tax avoidance which were challenged in court by an individual who claimed that changing section 58 retrospectively was depriving him unfairly of his own money. The court ruled against him and the appeal court denied his appeal. I’ll summarise afterward, so bear with me, but if you can bear to read them the key points in the judgment were:

“93. The judge was not wrong to conclude in his comprehensive, clear and excellent judgment that the retrospective provisions of the 2008 Act are proportionate and are compatible with Article 1 (of Protocol 1 to the European Convention on Human Rights). There are no grounds which would entitle this court to disturb it.

94. In the circumstances of this case, the liability of the claimant under the retrospective legislation of s.58 to pay the UK income tax that he would have had to pay, if he had not participated in the tax avoidance scheme, is no more an unjustified interference with his enjoyment of his possessions than the ordinary liability that his fellow residents in the UK are under to contribute, by way of UK tax on their income, towards the costs of providing community and other benefits for the purposes of life in a civil society.

95. In summary, the crucial points on examination of all the relevant circumstances of this case are that the retrospective amendments were enacted pursuant to a justified fiscal policy that was within the State’s area of appreciation and discretionary judgment in economic and social matters. The legislation achieves a fair balance between the interests of the general body of taxpayers and the right of the claimant to enjoyment of his possessions, without imposing an unreasonable economic burden on him. This outcome accords with the reasonable expectations of the taxation of residents in the State on the profits of their trade or profession. The legislation prevents the Double Taxation Agreement tax relief provisions from being misused for a purpose different from their originally intended use. There has been no conduct on the part of the State fiscal authorities that has made the retrospective application of the amended legislation to his tax affairs an infringement of his Convention rights.”

In short, the court decided that the government was acting proportionately and that Mr Huitson’s ‘loss’ was only in line with what he would have had to pay if he had not used the avoidance scheme to dodge it. If you want to read the full article on the decision, you can do so here.

I believe that this precedent opens a massive gate for Labour not only to halt the progress of the Health and Social Care Act in whatever’s left of the NHS in public hands by the next election, but to make null and void every contract awarded to private companies to provide ‘NHS’ services.

All Labour would have to do is use its Parliamentary majority to pass a law that declared the award of the contracts to have been illegal and invalid. A Labour government would have the right to make this retrospective legislation. There are ample grounds to block any legal challenge to this in the known actions of private healthcare providers in making payments to the Tories in return for favours, in the multitude of MPs and Peers who stand to profit personally from the awards and in the documented actions of those health providers in orchestrating press coverage and unduly influencing ministerial pronouncements in order to get the NHS Bill through Parliament in the first place.

This foreknowledge and deliberate action would, in my opinion, bring Lansley’s NHS Act, and the contracts awarded under it, under the precedent established by Huitson v HMRC, because those health companies and the politicians doing their bidding, could be reasonably expected to have acted differently and to have known that they were contravening the reasonable expectation of the British people – to protect the NHS and act in the public interest instead of lining their own pockets at our expense and to our detriment.

If this is correct – and no doubt someone with greater legal expertise will comment – then Labour has an open avenue not only to repeal the Act and halt further progress in the privatisation of our NHS, but to undo the vast majority of the damage done and of the Tories’ intent in trying to make the damage irreversible.

All it would require is the political will to do it. Does Labour have that will? We’ll see – but we can influence that rather than just waiting. If enough people demand loudly enough that it be done, Labour will be able to claim a strong mandate for taking the step when it is elected.

So write to your Labour MP, write to Andy Burnham and to Ed Miliband, and demand that they investigate this opportunity and, if legal advice confirms it can be done, that they make it a key election promise that they can act on when elected.

“The NHS will continue to exist for as long as there are folk left with faith to fight for it.”
Aneurin Bevan, founder of the NHS