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Deep in Virgin territory
NHS outsourcing, Issue 1462
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Sir Richard Branson, who from his bolt hole in the British Virgin Islands spares the business from insolvency by promising to provide Virgin Care with support
IF Carillion was a financial wreck that had to be fed ever more contracts to keep going until it was too late, something similar can be seen in the UK’s outsourced health services.

The company now winning the most NHS contracts is Virgin Care, which provides everything from children’s services in Devon to urgent care in Croydon and adult social care in Somerset. Yet it has a balance sheet that makes Carillion’s look like a picture of health.

On a total turnover of £252m up to March 2017, Virgin Care companies recorded losses of £15.9m last year. Set against this, income from several joint venture partnerships with local GPs totalling £4.2m still left the group with an eight-figure loss. Having been in the business several years now, the fact that Virgin can’t make a profit on its healthcare contracts raises the awkward question of whether it, like Carillion, has been bidding too low for them – and in the process elbowing out the NHS organisations with which it often competes. (When it loses, recent legal action against health commissioners in Surrey showed, those elbows are pretty sharp – see Eyes 1439 & 1440).

Liabilities exceeding assets
The years of loss-making have left the Virgin Care companies, mainly Virgin Care Ltd and Virgin Care Services Ltd, with liabilities exceeding assets by around £28m, and most of what assets the companies do have are in the “intangible” form of technology Virgin Care has developed. The losses are replenished by loans from unknown sources within the wider Virgin group. Since its accounts also show that it doesn’t expect profits for the “foreseeable future” – which again questions the wisdom of low-balling bids – these will have to keep rolling in for some time yet.

The business is spared from insolvency by ultimate owner Sir Richard Branson promising from his bolt-hole in the British Virgin Islands to continue to provide support, allowing Virgin Care’s directors and its auditor KPMG (which checked the Carillion numbers!) to declare that the companies are “going concerns”.

So long as Beardie continues to plough cash into the healthcare companies, the contracts carry on rolling in (a record £1bn worth last year), and other parts of the business such as his rail group secure large taxpayer bailouts, all remains well. But relying on the kindness of strangers, ie taxpayers, and a proprietor with who-knows-what long-term plans to provide stable public services looks about as sensible as it was to rely on Carillion.

More top stories in the latest issue:

PFEYE TOLD YOU SO…
Carillion’s collapse and a damning National Audit Office report confirm what the Eye revealed years ago: the private finance initiative is a public swindle.

CARILLION BUCKS
Carillion’s demise was no surprise to one roads sub-contractor who was being paid tens of thousands of pounds monthly on a Carillion company credit card.

WORLD OF HYPE
Financial PR firm Lansons, much praised by the Paradise Papers lawyers Appleby, speaks passionately about its commitment to, ahem, transparency.

ETHIOPIA WATCH
Don’t be deceived by the recent release of political prisoners: tens of thousands of dissenters still suffer abuse in jail in Ethiopia, writes Dr Grim.

UNLUCKY STRIKE
Loud muttering in the mess about the Army’s new Strike Brigade which – if anything ever gets built – could see UK troops in light infantry vehicles lining up against heavy Russian tanks and artillery.

REEKIE HAVOC
The city council and developers score a second legal victory in the battle to build a highly controversial 225-room hotel in Edinburgh’s Old Town.

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Next issue on sale: 20th February 2018.
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In This Issue private eye
Troubled HS2 Contract Saved by Trotters Independent Traders… Boris Johnson’s Bold Plan to Build Huge New Pie in the Sky… ‘Just to Be Clear, I Never Liked Woody Allen,’ Say Ann Actor and Ann Otheractor… Battle of the Rival Royals! It’s Kate v Meghan… Petition for Osborne Peerage Soars from Zero to One Signature… Penis Dispute Goes Global – From The Message Boards… The Crown, Episode 94, as told to Craig Brown

And also...

- PFI, RIP: Chronicle of a rip-off foretold (years ago by the Eye)
- Who’s Whose: A cut-out-and-keep guide to crony capitalism
- Labour pains: The MP suing pro-Corbyn propaganda site Skwawkbox

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Private Eye Issue 1461