Britain’s Conservatives are howling over revelations that a private finance scheme to build new hospitals will cost taxpayers an extra £45 billion—nearly CDN$100 billion–over the next three decades. In their outrage, the Tories seem to have conveniently forgotten that it was they themselves who ushered in the era of private finance initiatives (PFIs).
New figures show that over the next 30 years, private contractors will receive £53 billion for hospitals worth only £8 billion — an outrageous 540 per cent return on initial investment.
Andrew Lansley, the Conservative health critic, said that PFIs place hospitals in a “financial straitjacket” and called for a review of the way Britain’s National Health Service (NHS) trusts secure funding for future new building projects.
Unison, the health care union that has campaigned vigorously against PFIs, accused the Conservatives of hypocrisy. The PFI scheme was introduced by John Major’s Tories in 1992 but was stepped up under the current Labour government.
PFIs are similar to P3s. A private sector consortium builds and maintains the facilities, providing services such as catering and cleaning, in return for annual payments over the lifetime of the contract, which is usually 30 years.
Critics of the scheme—who are growing more numerous–say that hospitals are left paying annual bills that are much higher than if the projects had been financed in the traditional way, because private investors expect a return on their investment. The greatest fear is that this will lead to money being will be siphoned awataway from budgets designed for patient care and salaries.
The examples are piling up. Government figures show that a hospital commissioned by Cornwall Partnership NHS Trust had a capital value of £10 million, but the payments under PFI will total £113.4 million, a more than 1,000 per cent return. A £67-million hospital commissioned by South Manchester University Trust will generate £974.2 million, a return of more than 1,300 per cent.
Gordon Brown, the Chancellor (finance minister), recently acknowledged the squeeze on the NHS when he said that public sector pay increases this year must be kept below two per cent. Public sector unions are warning of job action in 2007 over pay and increasing privatization.
With notes from The Guardian and The Telegraph