BLOOD SUCKERS - how PFI has left a toxic legacy by sucking the NHS dry
Note - this was intended to be the words to a brief documentary film but COVID19 has prevented its making so far.
Private Finance Initiatives (PFI) began under John Major's government in 1992 but was expanded under Labour after 1997. At the 2002 Labour Party conference, Prime Minister Tony Blair assured worried delegates that PFI “isn’t the betrayal of the public services. It’s their renewal.” This was all part of New Labour’s revolution.
Private Finance Initiatives use private money from bankers, construction companies and facilities management firms for major public sector capital projects. Private consortiums build and own the facilities, which are then leased back to the state, in exchange for regular repayments that are considerably higher than if the projects had been funded directly from the public purse.
In 1998, Alan Milburn, Labour health minister, signed a deal for Calderdale and Huddersfield NHS Foundation Trust allowing them to procure under a PFI project the funds to construct a new Halifax hospital, Calderdale Royal Hospital (CRH), costing £65 million. Bovis built the hospital. One of the benefits for Milburn of PFI debts was that they did not form part of Labour’s deficit balance sheet as the costs were passed on to future generations.
Backing the Halifax deal was local Labour Mp Alice Mahon, desperate to see a new local hospital, plus both major opposition parties nationally and locally.
The PFI contract lasts for 60 years and will cost taxpayers £774 million by 2058 with the total cost of the PFI debt of capital + interest over its 30 year life coming to £290 million, with the rest of the monies covering services such as catering, maintenance, portering and domestics.
Private investors are able to charge an annual rate of return much higher than others types of investment. Investors can also sell their equity to other investors as has happened regularly at Calderdale Royal Hospital.
In 2016 Trust chief executive Owen Williams reported that 6% - around £22 million - of the trust’s annual £343 budget had been spent on repayments. Attempts to renegotiate with the owners of the debt or even escape the deal were found to be impossible. Some smaller hospital trusts had been able to buy out PFI contracts. In 2014 Northumbria Healthcare NHS Foundation Trust bought out Hexham General Hospital, which was opened by Tony Blair ten years earlier.
Faced with such crippling debts Calderdale and Huddersfield NHS Foundation Trust sought to close Huddersfield and Accident and Emergency Department, sparking outrage and the largest post war demonstration in Huddersfield in 2016 with 5,000 taking part. The campaign was ultimately successful but only at the expense of the continuing run down in other services at the Huddersfield hospital.
Calderdale Royal Hospital is one of around 100 PFI Hospitals including the Pinderfield’s Hospital in Wakefield.
Originally the PFI hospitals cost £11.5 billion but will ultimately cost 7 times that sum at around £80 billion. £2.1 billion was spent on interest repayments by NHS hospital trusts alone in 2018-2019. Particularly badly hit was St Helens and Knowsley, which paid out over 13% - £51 million - of its overall budget in interest repayments.
Despite such high levels of spending a report last year also calculated that many PFI hospitals require significant improvements such as new fire safety hazards and sewage repairs that are calculated to cost around £3 billion.
Carillion was a major holder of PFI projects with £485 million awarded under Labour between 1997 and 2010, £347 million under the Conservative - Lib Dem coalition between 2010 and 2015 and a further £439 million awarded by the Tories in 2015.
Carillion collapsed in 2018 and following which the Conservative Government abolished PFI projects. None of which stopped the two PFI hospitals that Carillion was building at the time collapsing – Royal Liverpool University Hospital and Midland Metropolitan Hospital – are both currently due for completion several years late.
In August 2019 Boris Johnson promised to upgrade 20 hospitals by boosting NHS spending by £1.8 billion annually.
This is less than was paid to private bank accounts in PFI repayments in 2019 and which ensures NHS trusts have mountainous ongoing debts with no new money for capital improvements. The ongoing decline in the NHS will thus continue.
“For every PFI hospital built and up and running you could have had 3 hospitals up and running and that includes the staffing as well.” Allyson Pollock - Director of the Institute of Health and Society, Newcastle University.
PFI projects were one of the many way used by government’s over the last 40 years plus to dismantle a loved public health service. A mass public mobilisation is needed if we are to reverse these processes in order to keep our health service public for all.