NHS & PFI: Too late to cry!

Please, do not cry! Its too late!

©2012 Am Ang Zhang

.....Health bosses in Peterborough have been branded as negligent by MPs for the decision to build a new hospital that is now costing taxpayers £1 million a week to keep afloat.

The 611-bed Peterborough City Hospital was opened in November 2010 at a cost of £289 million with the funding being provided through the government-backed private finance initiative scheme.

Margaret Hodge, M.P. did not shy away from pointing out that:

“Every single one of you has failed to do proper due diligence about this and no one has been brought to account.

“There is an issue of negligence here and one that I have not felt with a health report to this committee before.”

Who were they that failed?

Dr. David Bennett (not a medical doctor and seemed less confident for someone from McKinsey), Una O’Brien, permanent secretary for the Department of Health, who looked the most confident of the lot she did not know that Hospital Trust Boards are not to be trusted and of course the Trust CEO (well there has been 5) and Head of the Strategic Health Authority.

MPs were also outraged at the apparent failure of trust bosses, the health regulator Monitor and the Strategic Health Authority to take responsibility for the crisis.

The PFI Hospital:

This is about the 611-bed Peterborough City Hospital was opened in November 2010 at a cost of £289 million with the funding being provided through the government-backed PFI scheme.

The solution: millions again! Not on nurses or doctors!

MPs were also told that over the last few years, some £14 million has been spent on a range of consultants as well as five chief executives, to try and resolve the crisis.

A further £3 million is to be spent on setting up a new team of consultants, which was announced by Monitor today, and which will go into the hospital next year also in a bid find a solution to the trust’s woes.

Free advice from Bloggers etc: why not just buy the companies that own the PFI shares and if necessary by compulsory purchase?

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.


Metronet calls in administrators: Cost to Taxpayers £410 million

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.

Colin Douglas

Here in The BMJ, he reviewed Allyson Pollock’s Book, NHS plc.

"Since it was Pollock's views on the PFI that so upset its proponents, it is worth summarising them briefly. Costs are now intrinsically higher, because of capital borrowing at higher rates than those available to government, because of cash hungry consultancies and the vast transactional and monitoring costs of countless contracts, and because—for the first time on a large scale in the NHS—commercial profits must be made. To accommodate all these new costs clinical services have been scaled down, while matching assumptions about increased efficiency are only variably delivered. All this, along with the rigidity of a trust based strategy for building hospitals and the locking in effect of contracts fixed for decades, seems to Pollock and many others at best a bad bargain, at worst a naive betrayal that opens the NHS to piecemeal destruction and the eventual abandonment of its founding principles. And all over the country PFIs—greedy, noisy, alien cuckoos in the NHS nest—gobble up its finances and will do so for the next 30 years.”


Next 30 years!

PFI: £23 Billion in 30 years

The private finance initiative was devised to get schools, hospitals and roads built without swelling the government's overdraft. Critics discerned a conjuring trick. Instead of the state borrowing, private consortiums did, and then the public paid – at a premium rate. It has often been likened to sticking a mortgage on a credit card; but Whitehall always resisted that charge.

It was just too important to flatter the books, especially to Gordon Brown. His twin obsessions were constructing temples to New Labour's social policies and establishing his prudence: PFI appeared to further both. But the trickery was too flagrant. Friendly thinktanks were tasked with devising a rationale couched in the language of public-private partnerships. It was said that City expertise would somehow foster efficiency. Henceforth PFI was all about improving the allocation of risk. Beautifying the books had nothing to do with it. 

PFI: The Enron of the NHS

“PFI makes me particularly angry. It is a guaranteed loan to property investors, where high-rate mortgage payments are kept off-balance to reduce the country’s declared debt. In other words, it’s the Enron of the NHS. This is money the NHS has committed to leave frontline healthcare for the next 35 years.”
Dr Helena McKeown