“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.”
East Devon Watch 