Len McCluskey is not entirely correct about the NHS and TTIP


According to Len McCluskey the upcoming Transatlantic Trade and Investment Partnership is going to mean the end of the NHS. As one might expect from such a source he's slightly, umm, shading, the reality of what is going on here.

Now Cameron is set on giving these US investors new powers to sue any future UK government if it makes changes to health policy that might stop the dollars rolling in.

The deal will mean that American investors will be able to haul any UK government that tries to reverse privatisation to a tribunal – the “investor state dispute settlement” that would operate outside the law of this land. These tribunals will have the power to award billions in damages and compensation for lost profits and the loss of projected future profits, with no right of appeal. Yes, that is right – no right of appeal.

In short, the British public would face massive costs to bring NHS services back into public hands, making it nigh on impossible.

What is actually happening here is two things. The first being that the investor dispute system under the TTIP is arbitration rather than court action in the state in question. This is for the fairly obvious reason that the disputes will be between the government of the country and the investors and the government of a country controls (well, D'oh!) the legislature of that country and therefore what the law is. And as we've seen that's a very dangerous place for investors to be in. Those who lent money to Greece in Greek law bonds found themselves having a 70% haircut imposed after the Greek Government (and legislature) changed the collective action clauses (what portion of a bond issue must agree to changes in those bonds) after the bonds had been issued and paid for. Those who lent money to the same government but in English law bonds got paid out in full. Because the Greek Government didn't have the power to change English law in that manner.

We might not think that that could happen in our own dear courts in England and Wales. But this is a deal that includes the entire EU and as we've seen this has happened in the past couple of years here in the EU. So what is being offered is legal certainty to investors, that certainty being ensured by insisting that governments cannot change the rules of the game after the whistle has blown. All of which seems fair enough.

As to the second part, what this actually means, it just means that governments must adhere to whatever contracts they sign with foreign investors. If the contract says that it can be cancelled with no compensation to be paid then it can be cancelled with no compensation to be paid. If the contract says that compensation must be paid upon cancellation then compensation (whatever a government might do to change the law later) must be paid.

In this it is very similar to current law on such things as nationalisations for example. Any government is allowed, under international law, to nationalise anything that it might wish to. The UK Government could, if Red Ed were elected to power, simply decide to nationalise all private sector providers of health care and or health care services. Nothing at all to prevent them doing so: but under current law they would have to pay a fair market price for those assets. Under the new TTIP system they would also have to pay a fair market price for them.

The only people who could possibly complain about this would be those who would like to nationalise things without fair market price compensation: you know, thieves.

The whole TTIP system is simply a method by which governments can be forced to stand by the contracts they have signed with people not employed by those governments deciding whether they have or not. Which, given the power that governments do have to confiscate things from people, all seems entirely fair and just.