12 June 2007

PFI: Public Fleecing Initiative?

"These long term debts are distorting clinical priorities now, they are distorting our ability to treat patients."

This is the verdict of a leading member of the British Medical Association on debts accumulated by hospitals under the Private Finance Initiative (PFI). Even supporters of PFI say it could lead to the "wrong services in the wrong places" for local patients and note that there are already one or two PFI hospitals where wards and wings are standing empty because nobody wants to buy their services.

Last year the Government was forced to reveal that eventual repayments for 83 PFI hospital building projects worth £8billion would total £53billion—it would have been far cheaper to use normal borrowing. Yet, it's not just the NHS that is suffering the consequences of these rushed schemes. I know of a leading autistic centre attached to an excellent primary school that shares a site with a secondary school and a special needs school. The secondary school completely rebuilt on a vacant part of the site, which should have made room for the special needs school to relocate to the secondary's old location (a reshuffle that would also have alleviated a dire parking problem). This, in turn, would have allowed the special needs buildings to make way for new build for the autistic centre — something that is desperately overdue, as the wind literally blows through the holes in the walls and even eight years ago the structure was condemned as unfit for purpose. However, the secondary school rebuild was constrained by a PFI arrangement, so now the council needs to finance the scheme or be burdened with an impossible debt. The simplest way for them to do so is to build new houses on part of the site, at the expense of re-development for one of the schools—most probably the autistic centre. So, in this case it is not patients but pupils whose service is being hindered and not doctors but teachers who are left frustrated and demoralised.

Remember what Labour's one-time leadership hopeful John McDonnell told hustings last month about a PFI school in his constituency? "We opposed the PFI but it was imposed upon us. It's run by Jarvis. We can't afford the school rooms after half past five. The local police who want to run a football competition can't use it at the weekend for the local kids because they can't afford it. We can't even have the rehearsals for our drama classes in the evening for our school kids because the Jarvis prices are so high. That's the implications of PFI in many of our areas."

The silver lining is that PFI isn't bad for everyone involved, as construction companies are making a return of 58% on some of their NHS PFI schemes — better profits than on their main business.
Andy Vine cartoon: Special Offer - Instant cashback on all PFI-PPP products - Guaranteed to make your cat fat! - 'Choices ... choices which flavour would best appease the greedy little rascals?'


Alex said...

I see the key problem with PPP/PFI as being incompetent public sector politicians and management. The private sector will provide what they are asked to, as long as the risk/reward ratio is right.

Some schemes (eg the London Underground refurbishment) make significant losses for the private sector - and these losses have therefore been avoided by the public sector. Yet even this got a negative spin in the press.