PFI: PCTs, Tesco & Innisfree

The best views are free and the best advice is often free.

©Am Ang Zhang 2011

Tesco

A highly successful FTSE company, such as Tesco, reckons to make 6 per cent.

Innisfree

Last year Innsfree made 53% on its turnover.

PFI is in the news again.

The Telegraph:

Hospitals 'should re-negotiate PFI contracts'

“Prof Allyson Pollock claims that National Health Service bodies are laying off staff, reducing services and providing lower-quality care because they have to spend so much in interest payments on their privately-constructed buildings.

She says the interest repayments on the 101 PFI hospitals built under Labour now total more than £40billion and are increasing even as public spending is being cut back.

It comes after a Daily Telegraph investigation found that some PFI hospitals – built and run by private firms and effectively rented back to the state – will end up costing taxpayers more than 10 times their capital value.

Last week it emerged that a mental health trust has become the first to get out of one of its PFI contracts, and will save an estimated £14million by “paying the mortgage off early”.

In a paper published on Bmj.com, the website of the leading medical journal, Prof Pollock claims that “NHS PFI contracts are not good value and are endangering patient care”.

The genius of PFI is the way it diverts public resources from public to private interests, providing guaranteed profits to its backers in a time of austerity. But the shiny “new builds” will be cold comfort for the thousands of NHS staff now being served “at risk of redundancy notices” and millions of patients who face withdrawal of much needed entitlements and public services. A public enquiry and full publication of all contracts are long overdue.                                   BMJ

The Telegraph

27 Jan 2011

David Metter: Skiing in the Alps, the King of the PFIs who owns 28 hospitals and a motorway

Under PFI, David Metter's company has made millions out of the British taxpayer, writes Andrew Gilligan.

“Mr Metter is the king of the PFIs, the biggest single player in the market. He personally controls almost three-quarters of a company called Innisfree. He employs just 14 people – but he owns or co-owns 28 NHS hospitals, 269 schools, the Whitehall HQ of the Ministry of Defence, a Scottish motorway and a Welsh jail.

Of course, the prices we pay to PFI companies include interest, inflation, and often support services, such as maintenance – but they also include, numerous independent academics have warned, “significant excess returns” for the companies and “far above market” financing costs for the taxpayer. Even repayments on a normal mortgage, of the kind you or I could get, work out at perhaps just three times a property’s capital value.

Innisfree insists that it risks its own money, or that of its investors, in deals which can go wrong. But actually, it invests only tiny amounts. The hospitals it owns or co-owns have a total capital value of £4.8 billion; Innisfree’s share of them is worth about £2.2 billion. By its own account, the actual amount of money it has put into those hospitals is £376 million, or an average of £13 million per hospital. The rest is borrowed.

And from the company’s latest accounts it does not, to be blunt, look too great a risk. Last year, Innisfree made 53 per cent profit on its turnover. A highly successful FTSE company, such as Tesco, reckons to make 6 per cent.

Mr Metter collected pay and dividends of £8.6 million last year, and can afford an enviable lifestyle. He has a £5 million villa in London’s chi-chi Little Venice. Skiing in Chamonix’s expensive mountains is an annual treat for the “PPP Forum”, his lobbying group – its brochure jokes about “high-level networking”. Ninety people, the cream of the PFI business, went last year, most staying at the Albert the First or the second-best hotel in town.”

Free advice:

PCTs

Just occurred to me that if PCTs defaulted on the PFI contracts……..As Metronet did, mmmm interesting thought.

Failing that, the government should just buy up as much Innisfree and anyone that owns PFIs and when at it buy up Tesco as well and perhaps the Lottery too.