June 2018
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Britain’s “Parasitocracy” – just another example of how the 1% fleece us

Below is an attempt I’ve been making for years to report a suspected fraud to our useless NHS who always claim to be short of money.

The story is fairly self-explanatory: Over 100 construction companies investigated by the Office of Fair Trading were found to have conspired to massively inflate prices on public-sector contracts for new hospitals, schools and other buildings. The construction companies were given hefty fines. But on appeal, these were reduced to a pittance. Moreover, as far as I know, not a single hospital or school or local authority has demanded their money back from the construction companies that overcharged them.

Why not? Because they’re all in this together. The elite 1% of politicians, business bosses, bankers and bureaucrats look after each other. Our politicians go to work for the companies they should be controlling; our supposed regulators are forever increasing their own budgets while doing little to no regulating; and business bosses loot the companies they are supposed to be running for their shareholders.

Britain is not a democracy. It has become a “Parasitocracy”.

Here’s my complaint to the department responsible for stamping out fraud in the NHS. As you would expect, no action has been taken and no action will ever be taken:

From: David Craig
Subject: Possible fraud and financial mismanagement at Bournemouth Hospital
I am a former elected governor of Bournemouth and Christchurch NHS Trust. I was concerned about the cost of a new hospital car park being built by a construction company called Kier Construction. I investigated and found that the hospital car park being built by Kier was around 40% more expensive per parking space than other hospital car parks built in Britain. The cost per parking parking space of the Bournemouth Hospital car park was around £7,800 compared to a cost of nearer £5,000 per parking space at other hospital car parks I studied.
This was strange as the Bournemouth Hospital car park was built in the depth of the recession (2009) when tens of thousands of building workers were losing their jobs and when building companies were desperate for work and yet the Bournemouth Hospital car park was more expensive than similar car parks built during the 2000-2007 Gordon Brown economic boom.
Other factors also seemed strange to me having spent more than 20 years as a management consultant working in over 100 public-sector and private-sector organisations and having written several books on public spending.
As far as I remember, the Bournemouth Hospital car park was built before planning permission was received for the use of the top floor for parking and for a period the top floor could not be used. Moreover, about 2 miles away from Bournemouth Hospital there is the Castlepoint shopping centre. The car park there was also built by Kier Construction and has had massive problems requiring constant reinforcing to prevent it collapsing and will have to be demolished and rebuilt. I attach a link to a newspaper article about the Castlepoint car park http://www.bournemouthecho.co.uk/news/11661285.Castlepoint_car_park_to_be_demolished_and_rebuilt_as_multi_million_plans_get_go_ahead/
So, it seemed odd to me that the Bournemouth Hospital should choose precisely the construction company that was responsible for such a disastrous car park at the Castlepoint shopping centre close by.
This made me suspicious that Kier were still involved in what is called ‘cover pricing. ‘Cover pricing’ occurs when a cartel of construction companies colludes and decides which company will get which contracts. They do this by the companies who are not intended to win the contract submitting higher prices than the company intended to win the contract. I attach a link to a BBC article about an Office for Fair Trading (OFT) investigation which found that 103 construction firms had been colluding in ‘cover pricing’ to force up the prices on public-sector contracts http://news.bbc.co.uk/1/hi/business/8268116.stm and here is a Daily Telegraph article about the OFT investigation which underlines that the price-rigging took place mainly on contracts for schools and hospitals http://www.telegraph.co.uk/finance/newsbysector/constructionandproperty/6216928/OFT-fines-103-construction-firms-129.5m-for-bid-rigging.html
The company which received the largest fine for this ‘cover pricing; collusion was Kier Construction.
At the time I had a contact within Kier Construction who gave me figures on car park construction costs and these confirmed that Bournemouth Hospital Trust had paid Kier around £100 per square foot whereas the cost of a multi-storey car park should have been in the region of £60 per square foot whereas an office building typically cost around £110 per square foot. According to my source, the Bournemouth Hospital car park should only have cost around £2.94m and not the £5.3m that was paid to Kier Construction.
I brought my concerns to the attention of the Bournemouth and Christchurch Hospital Trust chief executive in the expectation that he would investigate whether the hospital had been fooled by ‘cover pricing’ into believing there had been real competition for the contract to build the car park and had thus overpaid. However, instead of acting on the information I provided, the chief executive seemed to me to have refused to investigate and instead sent me a letter informing me that “It is important going forward that you work within the auspices of the role defined for a Governor and in accordance with the Code of Conduct we have set out”.
Given this I felt I could no longer remain as a Governor and so resigned.
I don’t accuse the chief executive of corruption. But I do suspect there is ample evidence that he and the management team were duped by the construction industry’s ‘cover pricing’ cartel into paying £5.3m for a hospital car park that should have cost (according to my source within Kier Construction) only around £2.94m. And I believe that the hospital chief executive should have investigated my suspicions about Kier Construction overcharging the hospital by around £2.36m especially given that an Office for Fair Trading investigation had concluded that ‘cover pricing’ had been widespread (103 construction companies) throughout the British construction industry on public-sector contracts for schools and hospitals.
I therefore feel that hospital management has been delinquent by not investigating this issue and that this failure constitutes financial mismanagement.
I hope you will take up this matter and hopefully act to recover for Bournemouth Hospital the millions that believe the Bournemouth and Christchurch Hospital Trust was overcharged by Kier Construction.

7 comments to Britain’s “Parasitocracy” – just another example of how the 1% fleece us

  • David Brown

    The French and Germans seem to get much better value for their health service provision.Also their hospitals are not infested with leech like managers.

    off topic – please read http://www.englandcalling.wordpress.com/2016/07/20/dont-be-fooled-eu-enthusiast-teresa-may-is-intent-on-subverting-brexit/

  • Anon

    Have you sent this to the Daily Mail or similar newspaper. Good work but it needs some attention from a wider audience.

  • Calling Third World Londonistan

    Legend Jeremy Grantham Just Issued A Dire Warning To The World.

    This is producing in these failing states increasing numbers of desperate people, mainly young men, willing to risk money and their lives to attempt an entry into the EU.

    For the best example of the non-compute intractability of this problem, consider Nigeria. It had 21 million people when I was born and now has 187 million. In a recent poll, 40% of Nigerians (75 million) said they would like to emigrate, mostly to the U.K. (population 64 million). Difficult. But the official UN estimate for Nigeria’s population in 2100 is over 800 million! (They still have a fertility rate of six children per woman.) Without discussing the likelihood of ever reaching 800 million, I suspect you will understand the problem at hand. Impossible.

    I wrote two years ago that this immigration pressure would stress Europe and that the first victim would be Western Europe’s liberal traditions. Well, this is happening in real time as they say, far faster than I expected. It will only get worse as hundreds of thousands of refugees become millions.

    The numbers are mind-blowing. The number of Nigerians who want to come to Britain would double the British population. That puts a Brexit vote in a slightly different, but more dramatic, light.

    Dont hold your breath Sharia May will ensure they all get here…

  • MGJ

    This is an example of people responding to incentives.

    If you are a manager in the NHS spending other people’s money for the use of people other than yourself then your incentive is to cover your arse first but then to agree to anything offered so you can get to the pub sooner. Knowing this and the likely low quality and experience of those you are dealing with, the private companies are incentivised to take the p*ss accordingly.

    Milton Friedman discussed this and produced a famous table with 2 columns, ‘Your Money’ & ‘Not your money’ and 2 rows, ‘Spent on yourself’ & ‘Spent on others’. He then asked how much care you take in each of the 4 cases. This is a perfect example of row 2, column 2!

  • AmericanMan

    Hey, I come from another “Parasitocracy” called America.

    Right now the hospital is trying to leach every dollar they can out of my dying 90 year old mother, to her last breath.

  • mike mines

    Isn’t Kier one of the company tails that wags the EU commission dog?

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