Interview: David Mobbs

The chief executive of Nuffield Health says tax breaks are justified by public benefit

David Mobbs
David Mobbs

David Mobbs, group chief executive of Nuffield Health, is indignant: HCA International, one of Nuffield's for-profit rivals in the private hospitals market, has just published research saying Nuffield's charitable status helped save it almost £18m in tax in 2011 and that fee-charging charitable hospitals have an unfair market advantage.

"It was presented as an exposé, but we have nothing to hide," says Mobbs. "I was very disappointed with the Cass Centre for Charity Effectiveness, which undertook a commission from HCA and didn't contact us. If they'd contacted us, we would have provided the data. We're a charity - charities get tax relief, and they have done for 400 years."

He adds that the figure of £18m was in fact wrong - charitable status saved Nuffield about £21m in tax in 2011 and about £25m in 2012. "Like I say, we have nothing to hide," he says.

Nuffield had an income of £645m in 2012, employs 11,000 people and is the second-largest charity by income in the UK, running 31 fee-charging charitable hospitals, 65 fitness and wellbeing centres and 39 medical centres. It charges market rates for most of its services, but differs from for-profit providers by using at least 10 per cent of its revenue to provide services free or at low cost to those who would otherwise be unable to afford them.

Greatest impact

Mobbs says that Nuffield's public benefit goes further than that. "Our charity work permeates every area," he says. "All the time, we ask how we can make the greatest impact on the UK's health. In our hospitals, we focus on quality and patient experience. Our patient experience results are off the scale - and because we reinvest everything that we earn, we're constantly improving and maintaining what we do."

But is it fair that fee-charging charitable hospitals such as Nuffield avoid paying the same tax as private firms such as HCA? "It's absolutely fair for society to favour charities such as Nuffield that are set up entirely for the public benefit," he says. "It's naive to argue that organisations that exist to increase the personal wealth of investors should be treated in the same way as Nuffield."

Mobbs believes that charitable organisations such as Nuffield also help to keep the prices charged by for-profit providers in check. "That benefit alone probably justifies every tax relief and tax benefit that we get as charities," he says.

Pricing policies

He even argues that every section of the economy could benefit from charitable participation, citing utilities as an example. "Maybe if there were organisations such as Nuffield competing in those markets, we wouldn't have to give winter fuel payments to pensioners, because providers would then have to consider their pricing policies for those on low wages and benefits," he says.

Last month, Nuffield raised £18.6m through an eye-catching retail bond issue. The money, which will be spent across the business, was raised in five weeks and exceeded the initial £15m target. Mobbs says it issued the bond, which will pay 6 per cent a year for the next five years, to help raise the profile of its work as well as to tap a new source of funding. "We wanted to get people to buy into the Nuffield brand," he says. "The fact that we beat the target shows that there's a great affinity for Nuffield and what we do."

In March, a Third Sector study found Mobbs to be the highest paid charity executive. Nuffield's latest annual accounts show he was paid about £850,000 in 2012 - more than the annual income of the majority of registered charities. He understands why some question his pay, but believes that it's a fair rate.

"When you examine the size of Nuffield and the complexity of what we do, it's an appropriate level of remuneration," he says. "My pay is determined by a remuneration committee and it's always pitched at a lower level than a commensurate post in the private sector."

He adds that it's about time that the charity sector "grew up" on the subject of salaries. "If the charity sector believes it has the biggest impact on society, then surely it should have the best talent," he says. "If we want the best talent, then we're going to have to start paying for it. If we have the best talent, we'll get the best results."

He is equally forthright about those in the sector who question whether Nuffield really is a charity. "Some charities look at our model and are sceptical," he says. "But they need to get past that, because the world is changing. If they embraced the model that leads you to engage with your beneficiaries and charge them, they would find a source of funding that was independent from the state."

CV:

2003: Group chief executive, Nuffield Health
1997: Divisional general manager and director of operations, Nuffield Hospitals
1996: Divisional general manager, Community Hospitals Group
1993: General manager, The Yorkshire Clinic
1990: General manager, Bupa Hospital Portsmouth
1989: Management consultant, Ernst & Young Healthcare Group
1987: General manager, medical services, Greenwich DGH

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