NHS & Banks: LIBOR & PFI!

Diamond questioned by MPs on Barclays Libor scandal: live

Barclays chief Bob Diamond tells MPs was unaware that the bank of falsely lowering its Libor submission until this month as chairman Andrew Tyrie says his memo reads like it was a 'nod and wink' to rig the rate.

16.30 Diamond: "I accept responsibility and responsibility for the changes made. I take the full results of investigation as being on my watch."

16.27 [TSC: You seem to have seen nothing, heard nothing, know nothing. You're in charge and you're not even asking questions internally and people who are acting criminally are not coming to you. You must be grossly incompetent if you were not complicit].

Diamond: "Behaviour was wrong. It's hard to give another answer."

• Barclays raised Libor fears but FSA 'did not act'• TSC: 'Either you were incompetent or complicit'

It reminds me of Mercedes A-Class when it first came out:

Jeremy Clarkson

“Contrary to what many may think, we road testers do get swayed by the opinions of colleagues and I found myself in a quandary. Here was a car from one of the world's most ruthlessly efficient manufacturers, a car that my colleagues liked very much.

It takes a very special kind of bombastic arrogance to be that little boy in The Emperor's New Clothes - to stand up and say: "Actually, its handling is appalling."

But thank God I did, because just a week later, a Swedish magazine found to its cost that while performing what's become known as the ‘Elk Test', the A-class rolled over and put its occupants in hospital. A German mag then repeated the procedure and subsequent examination of the film showed that what we had here was A-class One Disaster.”

Nowadays, it seems that the Emperor does not even listen when he is told.

Clarkson said of the A Class Elk problem: it worries me that Mercedes, if they did not know about the problem they should not be in the business of making cars. And if they did know: it is very worrying!

In our NHS, something similar was happening:

Allyson Pollock:
How PFI is crippling the NHS

Last year the NHS underspent its budget by £900m, returning much of it to the Treasury. This raises serious questions about stewardship of public funds, at a time when hospitals with PFI-associated deficits, such as Hinchingbrooke, have been franchised out to companies such as Circle, and other PFI hospitals in south London and elsewhere are under "special measures". Before 1990 any hospital overspending would have been managed without recourse to closure, and failing hospitals were unheard of.

Failure is a product of successive governments' policies since 1990: Kenneth Clarke's introduction of capital charges and trusts, New Labour's PFI policy, foundation trusts and payment by results, and now Lansley's new funding regime and policies.

Since the policy was launched in 1992, report after report over almost two decades has shown how each wave of PFI has been associated with trust mergers, leading to 30% reductions in beds; staff lay-offs; and closures of hospitals, accident and emergency departments and an untold number of community services – all because of lack of affordability. PFI, once trumpeted as the largest hospital-building programme, was in fact the largest NHS hospital and bed closure programme.

 As with the A-Class, did they know?

Allyson Pollock again:

The debt is toxic.

However, the government will not allow hospitals to default on the debt (it would threaten all the other PFI schemes and result in the banks taking legal action). Moreover, PFI is a Treasury policy for the whole of the public sector and it is a policy that the Treasury is exporting abroad. The Treasury and health department signed off all the PFI deals in the full knowledge that affordability had been an issue from the very beginning. The Treasury stuck to the line that there was no alternative.

This is what the public needs to know and is not being told.

First, the high costs of PFI debt charges means that the NHS can only operate anything from a third to half as many services and staff as it would have done had the scheme been funded through conventional procurement. In other words, for every PFI hospital up and running, equity investors and bankers are charging as if for two. Edward Leigh, the chair of a Treasury committee report into PFI, called investor returns the unacceptable face of capitalism.

Second, we can still afford to pay for universal healthcare – but only if we stop using NHS funds to prop up banks and equity investors.

Third, it is PFI deficits that are driving service closures, not patient demand or an ageing population. Service closures have nothing to do with service redesign.

Fourth, the government has now embarked on a new path, bringing in an Act that effectively abolishes the NHS, and which allows hospitals both to enter into more joint ventures with industry and to raise up to half their income from private patients. Two monsters are now unleashed – PFI and Lansley's Health and Social Care Act 2012.

COI: The Cockroach Catcher used to drive the first generation A Class after they sorted out the Elf problem.

An amazing car, can take a double mattress and four chairs from IKEA. What Mercedes did not know was that if they kept to the original shape, it would have been the Mini of Germany: a modern cult car.