South London Health Care Trust has excellent clinical outcomes and enormous PFI debts. Last year the Trust ‘overspent’ by £65 million and paid out £69 million on PFI. Instead of cancelling the debt, the government wants to close down wards and services.
PFI (Private Finance Initiative) was a scheme set-up by a Tory government led by John Major in the 1990s and was continued with enthusiasm by New Labour.
PFI allows a consortium of private investors (usually a mixture of finance, construction and service industry capitalists) to build and maintain a public building, like a hospital, and then rent it back to the public like a massive hire-purchase scheme.
The consortium also locks the public sector into maintenance contracts. After several decades of extortion the building eventually falls into public ownership. A lot of PFI contracts were sold off after the initial building work. Carillion, for example, sold its rights to a future PFI income to Portsmouth’s Queen Alexandra Hospital for £31 million after an initial investment of just £12 million – a 160% profit!
According to analyst Dexter Whitfield, a great majority of PFI assets are now held by private individuals in offshore tax havens.
If the government wishes to borrow money for the big capital investment projects (like building hospitals), it can do so at rock bottom rates. By using PFI, the government is choosing to pay more to private contractors leaving the NHS with less.
Total PFI payments will reach £65 billion by 2048 – for hospitals that cost just 11.3 billion to build.
South London Healthcare now pays out 15% of its operating budget on servicing PFI.
Allyson Pollock states: “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 though conventional procurement. In other words, for every PFI hospital up and running, equity investors and bankers are charging as if for two”.
The socialist solution is to cancel the debt and take the hospitals into public ownership. By doing that we can liberate the NHS from its role as a slush fund for private investors and free up taxpayers’ money to be spent on equitable healthcare.
Labour pledged at its last conference that it would ‘liberate the NHS from extortionate PFI debt’; but the labour leadership will need to feel the force of a mass working class movement behind them before they stand up to capitalist class interests and reverse their former policy.
Even the Tories could easily take the PFI debt onto the public accounts, thus cancelling it for South London Healthcare Trust and enabling it to continue without closures.