This is the story of the disaster that befell users of an NHS hospital at Hinchingbrooke, after it was taken over by a private company called Circle Holdings. It is also the story of the wider privatisation of the English National Health Service, which is now falling apart at the seams as a result of this nightmarish, ideologically-imposed policy.

Hinchingbrooke Hospital was the Conservative-led Coalition Government’s flagship scheme to integrate private healthcare with the publicly-funded National Health Service. The contract was signed before Andrew Lansley (funded by Care UK, another private health firm) managed to get his Health and Social Care Act passed into law.

Circle Partnership was created in 2004 by merchant banker Ali Parsa and Massoud Fouladi “to exploit the newly created market in NHS care”. It seems likely that this was made possible by then-Prime Minister Tony Blair’s adherence to ‘Third Way’ politics, in which it was believed to be possible for the private sector to be able to contribute to public service provision. We know now that this is nonsense.

In 2011, Circle won its first major NHS contract from the Conservative-led Coalition Government – Hinchingbrooke Hospital. It beat that other bastion of private enterprise working in the service of the public – Serco. But was Circle helped along its way by the £1.4 million in donations it had made to the Conservative Party since its formation seven years previously?

Tories who benefited from a connection with Circle included: Henry Bellingham (former director of Lansdowne Advisory Ltd, which has shares in private healthcare company Circle),  Mark Simmonds (who was paid £50,000 a year as a “strategic adviser” to Circle Health), Richard Graham (received £3,000 from asset manager Crispin Odey, a major investor in Circle), Mark Harper (received £5,000 from Crispin Odey), Downing Street policy adviser Jo Johnson (received £6,000 from Crispin Odey), Jesse Norman (received £5,000 from Crispin Odey), and Nicholas Soames (received £2,000 from Crispin Odey) – that’s all in addition to the money given directly to the Conservative Party.

Here are some of the things said by Conservatives when the deal was signed:

Much was made of the decision by the right-wing press at the time – this Telegraph article and this Mail article provide amusing reading with hindsight.

Then it all fell apart – over a period of three years, which isn’t very long in terms of health provision. The problem, as revealed this week, can be summed up in this infographic, lampooning David Cameron’s infamous “We can’t go on like this; I’ll cut the deficit, not the NHS” poster of 2010:

That’s right – Circle couldn’t make a profit out of Hinchingbrooke. The claim had been that it would bring stability to the hospital, which had amassed £40 million worth of debts at the time of the takeover. But the terms of the deal allowed Circle to withdraw if it had to put £5 million or more of its own money into keeping the hospital solvent. On Friday (January 9) it hit that limit, triggering the ‘break clause’ in its contract.

What’s most interesting about the announcement is its timing. Later that same day, the Care Quality Commission recommended that the Trust should be placed into special measures after it was rated ‘inadequate’ on the questions of whether it was caring, safe and well-led.

According to Health Policy Insight, “This creates a problem for right-wing ideologues, who saw Hinchingbrooke as their proof of concept that the private sector is indefinably yet ineffably better. Circle’s statement blames the same, predictable-if-not-visible-from-space financial and demand pressures facing every other NHS provider. It also gets its retaliation in first on its CQC report: ‘We understand the CQC report will be published soon, and expect it to be both unbalanced and to disagree with many of its conclusions’.”

That statement, to the London Stock Exchange, blames funding cuts, a surge in demand for accident and emergency services and a failure to deliver “joined-up” reform between health and social services. It said the company had entered into discussions with the NHS Trust Development Authority “with the view to ensuring an orderly withdrawal from the current contract”.

In other words, this private sector company was admitting defeat and giving the hospital back to the public-sector NHS.

Now comes the politicking. According to The Guardian: Labour’s Andy Burnham inherited the decision to call in the private sector at the troubled hospital when he became health secretary in June 2009 and was in office when a shortlist of three providers, including Circle, was drawn up in March 2010 on the eve of the general election. Circle was selected as the preferred bidder in November 2010 by the Coalition and awarded the contract a year later.

The current Health Secretary, Jeremy Hunt, was therefore wrong when he tweeted: “Disappointing news on Hinchingbrooke, but @andyburnhammp must stop playing politics – he signed off decision to allow private sector operator.”

He added in a tweet: “This [government] makes no apology for seeking solutions for failing hospitals. We won’t be deterred from tackling poor care & driving up standards.”

Driving up standards? What was the overall rating for Hinchingbrooke again? “Inadequate”. Hmm.

And more political embarrassment is likely to follow during the general election campaign in the local constituency, where a Tory MP faces a Labour challenger whose day job is as a paediatric consultant at Hinchingbrooke Hospital.

According to The Guardian (again): “Dr Nik Johnson, who faces a Tory incumbent with a 10,000-plus majority… [said] “Hospital departments are not there to make money. You are not going to make money out of an A&E or an obstetrics unit, and nor should you,” … adding that he would like to see an NHS provider manage Hinchingbrooke.

And that is where we are today. Hinchingbrooke stands as the latest chapter in an ongoing Tory NHS Crisis – but also, perhaps, as the most significant.

It represents the failure of Tory claims that profiteers could run NHS services as effectively as the state-run organisation. After all, what did Jeremy Hunt have to offer, on hearing the announcement of Circle’s decision?

Lies.