"If Circle makes a success of Hinchingbrooke, maintains NHS standards and pays off the debt, money can be handed over to the company's private backers."Note the order: first Circle has to make a surplus, then it has to pay off the debt, and when all that has been done, finally, Circle get some profits.
Now we know the truth.
3 May 2012 BBC News website (filching the story from HSJ):
"If it succeeds in reversing the hospital's fortunes then the first £2m of any yearly surplus goes to Circle. It will then keep a quarter of any profits between £2m and £6m, and of third of those between £6m and £10m. All income above that level in any year will go towards paying the hospital's debts, currently £40m."The actual contract gives a different order: first Circle has to make a surplus, then it takes the first £2m of that surplus, finally, if there is anything left, the surplus will go to pay off the debt.
So why is it that the BBC got the order wrong? The first version sounds so much better to the public, it sounds like Circle are being squeezed hard to make any profit. We know that Circle won't be squeezed. Indeed, HSJ have calculated that for Circle to pay off Hinchingbrooke's £40m debt they will have to make £70m surplus. That is, Circle will be handsomely rewarded by being paid almost £30m.
The first BBC article was published while the Health and Social Care Bill was going through Parliament. The Bill, now the Act, has a clause specifically to allow "franchises" like Hinchingbrooke. The government hopes that there will be many more such franchises* and the BBC, through printing government press releases, were helping to spin for the government. The government's aim was to make the Hinchingbrooke deal look better for the taxpayer than it actually was as part of their effort to get the Bill passed.
[* The next franchise is likely to be George Eliot in Nuneaton. There are three NHS bids for this trust, but the Strategic Health Authority, who have to agree to the final tender, have made it known that they would prefer a franchise with one of the private sector bids. The government ought to spend some time in Nuneaton: there is no support at all for a private sector franchise. The local Nuneaton MP, and the nearby North Warwickshire MP, are both Conservative, and have tiny majorities. If only for their sake, it is about time the Government reigned in the privatisers in the Midlands and East SHA cluster, because if this deal goes ahead it will be a significant factor at the next election.]
How did this happen? It's called churnalism: journalism by Press Release. The government manages the news agenda by releasing Press Releases, journalists re-word and publish the PR, in effect, saying exactly what the government wants to be said. This is not how journalism should work. Is it complicity? Probably not. There is a twin problem with today's journalism. First, twenty four hours news means that there is a huge pressure to produce a large amount of content, and second, the web and the public's reluctance to pay for content on the web, means that editors have fewer resources to provide quality journalism. When presented with a ready written article, an editor sees content for the gap they have to fill and all for free.
Journalism is in decline. When I started as a technology writer in 1996 it was a job that paid me to play with technology: as long as I wrote a report about the playing that I did, I could make a living. (At one point I was a columnist on three US magazines and writing features for two others.) Now most of the magazines I used to write for have closed down, and the remainder have moved to the web in an attempt to survive on online advertising. In response, I have crossed the Rubicon and I now write for the companies whose technology I used to write about: I provide the white papers which journalists will churn into their own content. This is modern journalism. In the past, my vocation was to point out where the technology failed and how to work around the failure, now my job is to show only how the technology works.
Churnalism removes all criticism, even constructive criticism, since it only reports one side of the argument. The result is that the public is doubly short-changed: they get poor journalism, and since there is a lack of criticism (even constructive criticism) services will not be improved. This is what we have seen with the churnalism from the BBC. If, at the time that the Hinchingbrooke deal was announced the BBC presented the whole story (in effect, doing the work that HSJ eventually did) then the law could have been phrased to ensure that in any franchising deal trust deficits - and the taxpayer - were put before profits.