Defend the NHS, kill PFI
PFI (Private Finance Initiative) – what it means
1) Private Finance Initiative projects consist of a consortia of business people coming together to finance capital projects such as hospitals, schools, prisons etc. In the case of hospitals PFI contracts can also include provision services.
2) PFI contracts can last between 30 and 60 years by which time the demographics of the area served could have changed dramatically resulting in inadequate health provision.
3) PFI agreements are not like mortgages as the building (hospital, or whatever) still belongs to the consortia at the end of the contract.
4) The payments due every year are the first charge on a hospital (or other project) and these payments, in the case of hospitals, were to come out their existing operational budgets, forcing them to become more efficient hence ‘performance targets’. (Prof Allyson Pollock in her book ‘NHS plc’ 2004)
5) Some of the latest PFI built hospitals have been too small to provide sufficient beds for the community it serves because financial needs take priority over clinical needs.
6) PFI was introduced by the John Major Tory government as a way of getting round the rules set out in the EU Maastricht Treaty, which he signed! The treaty states that government borrowing should be no more than 3% of GDP and debt no greater than 60% of GDP.
7) The Blair New Labour government, which followed the Tory government, adopted PFI not only as a way of getting around public borrowing limits but also as a way of helping transnational companies to expand in markets abroad. In the EU for example?
8) PFI hospitals are much more costly than publicly built ones. For example, the costs of raising finance using PFI at North Durham, Carlisle and Worcester PFI hospitals added an average of 39% to the total capital costs to the schemes. (Unison in ‘PFI: Failing the future’).
9) Unison pamphlet ‘Rebuilding the Welfare State’ published in 1996 stated the following on PFI: – “This could provide means by which transnational companies gain control of the welfare state. Once PFI is entrenched in the government’s spending programme private capital will effectively manage and control an ever increasing proportion of welfare state services. If the PFI is allowed to continue, it is conceivable that companies will not proceed to design and develop their own private welfare services and products leading to further residualisation of a ‘public’ welfare state. In other words, the public sector will shrink until it served only the very poor – a minimum service of last resort.”
Latest results of using PFI
The latest effect of PFI has been the announcement by Health Secretary, Andrew Lansley that the South London Healthcare Trust, which serves more than one million people, will be put into administration, citing losses of £1m a week. PFI repayments have accounted for 14% of its annual budget and last year ended £69m in the red although the turnover was £424m.
It’s is time to end PFI deals, renegotiate existing ones and take profit out of health.