Don’t be fooled by Owen Smith’s claims to stand up for our NHS, he’s spent his life working for the private interests destroying it, says STEVE SWEENEY
LABOUR leadership challenger Owen Smith is understandably keen to downplay his work as a lobbyist for Pfizer — but this is not the first time that concerns over his role have been raised.
In 2006, Smith failed to win back the formerly safe Labour seat of Blaenau Gwent to independent candidate Dai Davies.
In a seat that used to set record majorities for Labour, the 2006 by-election saw Smith’s candidacy slammed as “an insult to Bevan” by his opponent.
Davies went on to challenge the Labour Party to respond to criticism of its decision to stand Smith in Nye Bevan’s former seat, saying: “Mr Smith is Pfizer’s top lobbyist in Britain. He cannot avoid being linked with what many people in Blaenau Gwent and beyond may consider an obnoxious corporate strategy.
“If Mr Smith was a true socialist, as he is trying to claim in this election campaign, he would not be working for Pfizer. He has made a career decision to go and work for a company whose values seem alien to many people in this area.”
Smith held the post of Pfizer’s head of policy and government relations and was described as their “top lobbyist in the UK.” Smith and Pfizer are exactly the danger Bevan warned of when he said that “the NHS will last as long as there are folk left with the faith to fight for it.”
Pfizer donated over £40,000 to Labour’s right-wing group Progress between 2003 and 2005, making it the largest corporate donor at that time.
Companies don’t donate to think tanks for nothing. On the pretext of seeking lobbying advice, undercover reporters were told by former health secretary Patricia Hewitt that packages provided by a number of think tanks included friendly reports for the media and access to key politicians. It’s easy to see why a company committed to NHS privatisation would make such a donation.
In 2009, a letter signed by Progress acting director Jessica Asato was sent to then health secretary Andy Burnham lamenting his decision to make the NHS “preferred provider” when bidding to run services and urging him to “rethink” his approach.
Pushing for an increased role for the private sector in the NHS, the letter claimed that the “private and voluntary sectors” offer innovation and “are ideally placed to help find more cost-effective and user-orientated solutions to provision as budget-holders increasingly strive for efficiency savings.”
Smith has also been embroiled in controversy around the cost of drugs to the NHS. After leaving another top lobbying post at Amgen to become a Labour MP, he said ministers should “improve incentives” for big pharmaceutical companies, warning against the use of cheaper drugs by the NHS as it may hurt the industry.
Speaking in a Commons debate in October 2010, Smith warned against the “generic substitution of epilepsy drugs” putting firms off spending money on research. Big pharma’s man on the inside was certainly playing to their tune.
It turns out there was much at stake.
In August 2015 Pfizer was slammed by the Competition and Markets Authority (CMA) in a strongly worded statement because “Pfizer and Flynn Pharma each abused a dominant position by charging excessive and unfair prices in the UK for phenytoin sodium capsules, an anti-epilepsy drug, in breach of UK and EU competition law.”
The CMA stated: “Prior to September 2012, the NHS spent approximately £2.3 million on phenytoin sodium capsules annually.”
Pfizer then sold distribution rights to Flynn, continuing to manufacture the capsules but selling them on to Flynn at prices “significantly higher” than it had previously charged in Britain.
“This spend (paid to Flynn and other suppliers of phenytoin sodium capsules) was just over £50m in 2013 and over £40m, in 2014,” said the CMA, which is due to issue a final ruling in the case in September.
The cost of the anti-epilepsy drug had spiralled, increasing by as much as 2,600 per cent.
The National Institute for Health and Care Excellence (Nice) has already ruled that the cost of some drugs are too high, however Pfizer continue to lobby for changes in the rules so its drugs can make their way to the British market. They accuse Nice of blocking innovation and “denying patients access to some of the best treatments available.”
What Pfizer really means is that the NHS is a barrier to its profit margin.
It has other ways of ensuring this is increased however. In 2012 it was revealed that Pfizer paid no tax to the British government. In 2011, despite having a turnover of £1.8 billion on UK sales, Pfizer suggested that it made operating losses of £59m in 2011 and £46m in 2010. While acting lawfully, this effectively means money that would be spent on the NHS has ended up lining the pockets of shareholders.
In 2015, following a controversial and ultimately unsuccessful attempt to take over AstraZeneca, Pfizer finally struck a deal with Irish-based company Allergan.
In a statement announcing the merger, Pfizer said it “anticipates that the combined company will have a pro-forma adjusted effective tax rate of approximately 17-18 per cent.”
This would have meant a reduction from a tax bill of 26 per cent simply by shifting its base to Ireland to take advantage of lower rates of corporation tax. The merger was called off in April 2016 due to new US Treasury rules on paying taxes.
Smith has also voiced support for private finance initiatives, saying: “We’ve had PFI in Wales, we’ve had a hospital built down in Baglan through PFI. If PFI works, then let’s do it. What people want to see are more hospitals, better services.
“I’m not someone, frankly, who gets terribly wound up about some of the ideological nuances that get read into some of these things, and I think sometimes they are totally overblown.”
Welsh Labour’s 2011 Assembly manifesto included the pledge to “continue to rule out the use of PFI in health services” — and with good reason.
The hospital that Smith refers to is hardly an example of a resounding success for PFI-built hospitals. Within a year of opening services had been downgraded, it did not take accident and emergency cases and there was a campaign to save the maternity services at the hospital which faced being downgraded or lost altogether.
Porters were outsourced and then threatened industrial action due to short staffing. Costs spiralled and the initial £66m outlay multiplied, with the taxpayer facing a potential bill of over £300m.
That is just just how “overblown” the “ideological nuances” Smith refers to are. PFI deals have been widely condemned as poor value for money and have led the NHS into massive debt. NHS trusts owe £80bn in PFI loan repayments and maintenance charges and this year alone almost £2bn will be paid to private-sector companies.
Peterborough City Hospital is a prime example of how PFI goes wrong, with the trust spending around £42m a year servicing its PFI debts, wracking up an annual deficit of almost £40m.
The PFI deal, which was heavily criticised at the time, is simply bankrupting the trust which cannot repay the PFI debt.
The hospital was offered to the private sector but since the collapse of the nearby Hinchingbrooke Hospital franchise deal the health profiteers seem lukewarm on the idea.
Shadow health secretary Diane Abbott warned last week that the trust needs a government cash injection of £650m due to the wasteful deal.
Smith comes from the murky world of corporate lobbying and claims that he is a supporter of the NHS are easily dismissed. There is now a Labour Party leadership election which is a battle for the soul of the party. The track records of both Jeremy Corbyn and Smith speak for themselves.
Like a snake-oil salesman, Smith desperately tries to portray himself as a defender of the NHS when he has spent most of his career working in senior roles for companies that actively seek to undermine it and promotes schemes that have plunged NHS trusts into massive debt.
Corbyn has promised an end to NHS privatisation and has spent his entire political career fighting for the NHS and health workers, most recently speaking at rallies in support of striking junior doctors.
One thing we can be sure of, the NHS is not safe in Smith’s hands. Don’t be fooled by Owen’s myth.