Privatisation by Stealth: VCSEs, Corporate Contracts & the Erosion of NHS Care (NHS Privitisation Part 2):

Inside the slow erosion of NHS mental health care through outsourcing, fragmentation and political choice.

Dr. John Mulligan

For years, politicians have insisted that the NHS is “not being privatised.” What they rarely mention is that privatisation no longer arrives in the dramatic, Thatcher-era fashion most people imagine. It arrives slowly, quietly, bureaucratically - through procurement frameworks, funding “transformation plans,” and the gradual diversion of NHS budgets away from the public sector and into private or corporate hands. Mental health care has become the test case for this new model of privatisation by stealth.

Under what is now branded Community Transformation, local commissioners across England are being encouraged - and in reality pressured - to redirect between 25% and 50% of community mental health budgets into VCSEs (Voluntary, Community and Social Enterprise organisations) and private companies. On the surface, this is framed as innovation: “community-led,” “holistic,” “place-based support.” But the deeper pattern is one of fragmentation, outsourcing and an ideological shift that positions NHS services as outdated and interchangeable, while private delivery partners are cast as modern, flexible, and essential.

What is happening in practice is very different from the rhetoric. Many of these organisations have little to no experience in delivering complex mental health interventions. They succeed in winning contracts not because they provide better care, but because they are better at navigating procurement processes designed with them in mind. Larger VCSEs (some with multimillion-pound turnovers) are now competing directly with the NHS for mental health contracts - and winning - often despite offering less expertise, less accountability, and in some cases virtually no measurable outcomes at all.

Meanwhile, the NHS services left behind are expected to pick up whatever is left: the high-risk, high-complexity, or resource-intensive care that no private or third-sector provider wants. The result is not a “community-led revolution,” but a quiet redirection of public money into profit-driven or corporate-style organisations at the exact moment NHS teams are being hollowed out.

A Rhetoric of “Transformation” Built on Workforce Collapse

The entire Community Transformation agenda depends on something commissioners rarely acknowledge publicly: the NHS no longer has enough staff to deliver its own services. Instead of addressing this workforce crisis - by improving pay, conditions, training pipelines or retention - policymakers have chosen a path of replacement. They describe this as “integrated care” or “multi-agency support,” but what it often means in practice is diluting clinical services with cheaper, less qualified roles.

“Living Well” teams are the clearest example. On paper, they sound innovative: multidisciplinary groups led by people with “lived experience,” community connectors and wellbeing coaches. In reality, they have been used in many areas as a way to mask the absence of clinicians. The message is simple: if you can’t staff NHS teams, redefine what a team is.

None of this is to dismiss the value of peer support or community workers - both have huge strengths when used correctly. But replacing qualified roles with unqualified ones is not integration; it is displacement. And it is a displacement driven not by evidence, but by political convenience.

The tragedy is that these changes are being introduced at the exact moment that serious mental illness is rising, acuity is worsening, and outcomes are deteriorating. Instead of investing in clinical capacity, the government and NHS England are restructuring services so that clinical capacity appears less necessary. The consequences, already visible, will take a generation to undo.

Manchester as a Case Study in Failure

Manchester provides a stark illustration of how these structural changes are playing out at ground level.

The £3 Million Employment Support Contract That Delivered Almost Nothing

One of the most infamous examples is a multimillion-pound employment support contract awarded to a private provider with minimal experience in serious mental illness. The contract - worth more than £3 million - was intended to support people into work through specialist coaching. In practice, the provider delivered next to nothing.

Frontline teams repeatedly expressed concerns: poor engagement, minimal client contact, weak understanding of mental health, poor outcomes. Despite this, the contract was extended. The logic seemed to be that failure was irrelevant because the success of the contract was never measured by clinical outcomes — only by adherence to the procurement process.

Meanwhile, NHS teams were forced to absorb the consequences: more crises, more relapses, more people deteriorating without the support they were promised.

The Disappearance of £1.03 Million from Early Intervention Services

The Early Intervention Service (EIS) - one of the most effective and evidence-based components of mental health care - has been left dangerously underfunded in Manchester. £1.03 million identified as necessary for the service simply never materialised.

Instead, EIS was told to “innovate,” “restructure,” and “work differently,” while thresholds were raised and caseloads increased. The result is predictable: rising untreated psychosis, longer Duration of Untreated Psychosis (DUP), and greater long-term disability - all while commissioners talk about “improving outcomes.”

Private Bed Providers: The Black Hole of Mental Health Spending

Few areas reveal the absurdity of privatisation more clearly than inpatient beds. Across the country, NHS mental health trusts are now spending hundreds of millions per year on private hospital beds — often poor-quality, far from patients’ homes, and in many cases linked to avoidable harm or neglect.

These beds cost significantly more than NHS equivalents. They continue to expand not because they provide good care, but because NHS bed numbers have been cut and no government has reversed the trend. When the NHS cannot accommodate people in crisis - which is increasingly common - the private sector steps in, charges inflated rates, and delivers poorer outcomes.

This is privatisation at its purest: public money flowing into private hands because public infrastructure has been allowed to collapse.

The Ideological Shift Behind the Procurement

The transformation agenda is not simply a managerial failure. It is an ideological project, based on the belief that the NHS is incapable of reforming itself and must therefore be reshaped through market dynamics and external competition.

The language is revealing:

· “Choice” instead of investment

· “Diversity of provision” instead of adequate staffing

· “Community partnerships” instead of properly funded NHS teams

The aim is to reduce the NHS to a coordinating body rather than a service provider. The long-term implication is a two-tier system where “light-touch,” low-quality provision becomes the norm for most people, while clinical expertise becomes a scarce and rationed resource.

Fragmentation as a Systemic Risk

Mental health care depends on continuity: long-term relationships, consistent professionals, unified records, clear clinical responsibility. Fragmentation undermines all of this. When responsibilities are split between multiple providers - each with their own contracts, payment mechanisms, and targets - patients fall through the gaps.

We see this already:

· people being bounced between teams

· unclear responsibility during crises

· delays caused by referral loops

· clinicians unable to communicate with outsourced services

· patients assessed repeatedly because information is not shared

This is not innovation. It is chaos disguised as modernity.

Privatisation Isn’t Coming. It’s Here.

The most dangerous misunderstanding about NHS privatisation is that it will be obvious. It won’t. It is already happening through the incremental redirection of budgets, the downgrading of roles, the outsourcing of core functions, and the erosion of NHS capacity. The public still sees the NHS brand and believes the service remains intact. But behind the logo, the structures have changed dramatically.

Mental health care is the front line of this shift. Because mental health was already underfunded, it became the easiest part of the system to restructure without resistance. But the consequences will not remain confined to mental health - they will spread into primary care, community services, and ultimately acute hospitals.

If we allow this direction of travel to continue, the NHS will remain free in name only. The care itself will be increasingly fragmented, increasingly privatised, and increasingly unaccountable.

This is not an abstract policy debate. It is a lived reality for patients and staff today - and unless it is challenged, it will define the future of healthcare in England.