PFI: Private Fuddery Incorporated
Over the last three years the Scottish government has taken a principled stand against the use of PFI (Private Finance Initiative) to build new schools. They are currently committed to investing £300 million of public money to build 35 new schools. It’s not nearly enough new schools, this is a fact, but working under the constraints of a country that can’t raise its own revenues it’s about as much as we can hope for at present.
New Labour have consistently slammed this approach claiming ideology was holding back the building of new schools. Gordon Brown’s answer was to privatise the construction of new public buildings under PFI schemes. Today the brutal economic realities of PFI are revealed. And they are much worse than most of us ever imagined.
103 hospitals were built in England under various PFI schemes – basically glorified 30 year mortgages. These PFI schemes were valued at £11.3 billion when they were built. Under a Freedom of Information request it was revealed that the total cost to the NHS – over the 30 years of the scheme – will come to a staggering £65 billion. Yearly repayments made by individual NHS Trusts are expected to rise from £1.25 billion to £2.3 billion by 2030. NHS Trusts are stuck with these contracts so these repayments will continue until 2048.
Dr Mark Porter, of the British Medical Association, commented: “Locking the NHS into long-term contracts with the private sector has made entire local health economies more vulnerable to changing conditions. Now the financial crisis has changed conditions beyond recognition, so trusts tied into PFI deals have even less freedom to make business decisions that protect services, making cuts and closures more likely.”
The PFI companies awarded contracts are effectively skimming the public purse. For example, in Liverpool a PFI deal for new schools had a clause in the contract which allowed the private company to make charges of up to £47 an hour to provide caretakers, heating, lighting, cleaning and site management outside school hours – effectively pricing out extracurricular activities. Education and health suffers. The PFI companies prosper. Tax payers are fleeced.
One could ask where are the howls of indignation from the Tory front organisation who have elected to call themselves “The Tax Payers Alliance”? Where indeed. But more importantly where are the New Labour cheerleaders for PFI this morning? Have Iain Gray and Jackie Baillie gone mute? Or are they hiding their faces in embarrassment as New Labour’s privatisation swindles unravel in public.
Labour’s “health” spokesperson Jackie Baillie is doing a good impression of a fat Pinocchio when she claims: “The cuts that the Health Secretary Nicola Sturgeon is imposing on the NHS will undermine patient safety and we need to fight them.” The reality is that the PFI legacy of the New Labour government will cost the NHS in Scotland £6.7 billion over the next 30 years.
The SNP’s Kenny Gibson hit the nail on the head when he said in June: “The NHS will pay more to banks in repayments over the next five years for three hospitals than those hospitals are actually worth. That is an example of the profligacy and incompetence that characterised Labour’s financial management and that Scotland’s public services are now paying for. After taking out repayment policies like this Labour has no credibility left on public spending and must answer to NHS staff and patients who are left facing up to Labour’s outrageous debts.”
We are continually sold The Big Economic Lie that savage cuts must be made in the public sector to reduce the Westminster budget deficit. Yet in breath-taking hypocrisy the same public sector service providers are expected to shell out what amounts to TEN PER CENT OR MORE of their total annual revenue (for some NHS Trusts) to service crippling PFI repayments. Its like having two vampires sucking at the same neck.
Meanwhile Scotland continues to have some of the worst alcohol, drug, obesity and heart problems in Western Europe. New Labour’s wacky answer is to install a clinically obese woman as their Health & Wellbeing spokesperson and back a Get Rich Scheme to syphon money out of the NHS into the pockets of private PFI companies. You can’t make this up.