Successive governments have sold off the old hospitals that we, the public, used to own. Often it sold them to consortia of building and finance companies who have then ripped us off by building new hospitals that THEY own and lease back to us/the NHS at exorbitant rates of interest – plus high charges for the maintenance and servicing of the buildings. This is what the NHS Private Finance Initiative is.
This means that over the duration of the lease, the private consortia get back 7 times the money that it cost them to build the hospitals. (The cost of building PFI hospitals was £11.9bn. Over the life of the hospital leases, the NHS will pay £79bn). Reliable researchers have calculated that the exorbitant PFI charges mean that for each PFI hospital, two could have been built using cheaper public borrowing.
The cost of repaying the PFI is crippling the NHS. It takes 10% of the annual Calderdale NHS budget to pay for the Calderdale Royal Hospital PFI. This is money that isn’t going on patient care. Now there isn’t enough money to keep the hospital running safely, particularly since the government has been requiring it to keep cutting its costs year on year since 2011. So now the hospital’s running a deficit, the market competition enforcer Monitor has put it in special measures and who knows what’s going to happen to the hospital?
To make matters worse, the consortia don’t pay tax on their massive earnings from the PFI repayments, because they are registered in tax havens. And they often sell the debt on to other finance companies at huge profits, that they don’t pay tax on either. The Calderdale Royal Hospital PFI debt has been sold on 10 times.
And because the hospitals were so expensive to build, they are smaller with fewer beds than the old hospitals they replaced, so hospitals are in a state of permanent chaos because there aren’t enough beds. And the PFI hospitals were badly designed by consortia that had no clinical skills or knowledge of how a hospital works.
And anyway the whole PFI thing was unlawful until the government changed the law to make it lawful. Government rules called the Ryrie Rules required that any private financing for public infrastructure must be provably cheaper than the cheapest public option, which is government borrowing. But this can never be achieved in practice, because interest rates on major financing for private borrowers are always higher than government borrowing rates. So the early PFI deals all incorporate blatantly dishonest financial modelling, to make it look as if they’re following the Ryrie Rules. Then the government passed a law to remove the obstructive Ryrie Rules which made the PFI deals illegal.
These reasons are why PFI needs to stop being used any more in the NHS or any other public sector infrastructure. To deal with existing PFI debts, 999 Call for the NHS campaigners think they need to be renegotiated to fair value if possible and where they can be shown to be onerous/fraudulent, the consortia responsible for them should be subject to criminal prosecution.
PFI is a key part of the privatisation of the NHS, because it privatised the hospitals – unlike the old hospitals, we the public don’t own them, we just lease them. So if we want to restore the NHS to full public ownership via the 2015 NHS Reinstatement Bill, dealing with PFI is a key part of the process.
The current draft of the Bill proposes to take the burden of the PFI debt repayments and hospital maintenance and service charges off the NHS, by centralising them in the Treasury. But 999 Call for the NHS thinks that this isn’t a very good idea because it still leaves the public paying for the usurious rip off debts set up by the private finance and building consortia.
That’s why we think it would be better for the 2015 NHS Reinstatement Bill to say that NHS PFI debts will be investigated as to their legality and where they are onerous/fraudulent, the PFI consortia should be prosecuted under criminal law, and elsewhere they should be renegotiated to fair value.
Please ask your MP to vote for the 2015 NHS Reinstatement Bill on 11 March 2016
Most people in England want the NHS to be nationalised – publicly owned and run. That cuts across all parties. An October 2013 YouGov survey (page 3) asked:
Do you think the NHS should be nationalised and run in the public sector, or privatised and run by private companies?
Of Tory voters, 77% said it should be nationalised and run in the public sector, 13% that it should be run in private sector, 10% didn’t know.
Figures for Labour voters were 92% in favour of nationalisation and being run in the public sector, 3% in favour of nationalisation and being run in the private sector and 5% didn’t know.
Lib Dems were 82%, 8% and 10% and UKIP voters were 84%, 10% and 7%.
So to respect their constituents’ wishes, MPs of all parties should vote for the cross-party 2015 NHS Reinstatement Bill at its second reading in the House of Commons on 11 March 2016. Please ask your MP to do so. It’s on a Friday, so they need warning in advance as many MPs leave London on Thursday evenings to return to their constituencies.