I'll try and explain the funding, and perhaps answer some of the points made here.
One of the main points is that income from private practice didn't/doesn't go direct to the hospital/DHSC - it goes to treasury. You might argue that it's all one government pot, which of course it is, but that doesn't help when it comes to balancing budgets. So, the running of PPU costs money - staffing it mainly, but also heating, lighting, maintenance etc. This comes from a hospital budget. This is largely the same, irrespective of whether or not the PPU ward is full of private patients or NHS patients.
If you're a private patient and you have a procedure, there will be several bills to pay (it may all be combined into one fixed fee - I'm not sure as I've not done any private operating since 2011) - surgeon's fee, anaesthetist's fee, 'hotel services', theatre charges, implant charges, drugs, dressings, tests... Surgeon and anaesthetist tend to bill separately - we can set our own fees, guided by published figures various insurers pay for whatever procedure - and the rest is bundled together by the hospital. To give an example of a hip replacement - all in it might cost a patient about £7000 - Surgeon bills £850, anaesthetist maybe £500, theatre costs about £1500, ward stay about £500 per night, implant costs maybe £1200... (These figures are illustrative, and not an offer!) All but the surgeon and anaesthetist fee will be paid to the IOM gov.
For government there are other private practice income streams apart from procedures - if I send a patient for a scan there will again be two charges - one for the scan (which goes to IOM gov) and one for the radiologist reporting on the images. When I do a clinic on PPU I rent the room at an hourly rate - something I pay monthly to IOM gov. And of course I'll pay tax and NI on my private practice earnings, again to IOM gov.
So private practice brings income to the government, but running the PPU comes out of the hospital's budget. In the grand scheme of things one offsets the other. To answer WTF's question, I don't know if or when income became less than running costs, but from the hospital's perspective it's always been a 'loss maker', as is the NHS in general if you want to look at it that way.
I can therefore see why the minister and CEO want things to change - by revamping PPU and the brand, setting out a code of practice, and having a more standalone unit. This could be run as a business distinct from Noble's hospital, even if it is on the Noble's site, and it should be a cash generator for IOM gov to invest more in the NHS. The announcement and implementation however has been handled very badly resulting in, so far, one consultant resignation and much disquiet amongst others. To my knowledge (I've said it again) there has only been one resignation, but there are certainly fears that there may be more. It seems to me that the plan has been rushed through without proper (any?) consultation, as evidenced by 'clarification' announcements by both the CEO and the minister in the past few days. And it's not just the consultants that are affected - nursing staff and admin staff on PPU are affected too, even if they're not being made redundant they are being moved around possibly to areas they don't want to go.
Personally it doesn't affect me much - many years ago I was advised by one of my consultants to never rely on private practice income for your mortgage/school fees etc, consequently I've never been an 'enthusiastic' private practitioner even though it's nice to have. I do sympathise with some of my colleagues however, particularly those that have moved here relatively recently at considerable personal and professional risk, and were assured at their interview that private practice was encouraged.
PS - For 10 points, can anyone name the other countries in the world where private practice is banned?