As the Tories slash the health service, eight multinational corporations are leeching millions in profits from the NHS.
In the last six years alone, they have taken £831 million from the NHS through Private Finance Initiative (PFI) hospital building projects. The Centre for Health and the Public Interest’s new report, PFI—Profiting from Infirmaries, lifts the lid on this scam.
This is money that could have been spent on patient care. It also comes as the Tories try to slash £22 billion from the NHS in England by 2020—and deny nurses and other health workers a pay rise.
PFI schemes were first brought in by John Major’s Tory government in 1992 to fund building hospitals, schools and other public infrastructure through using the private sector.
They mushroomed after New Labour got into office in 1997.
They were justified as a quick way of building hospitals, but PFI was a way of cooking the government’s books. It is health workers and patients that have to pay the price for this costly con-trick (see below).
The “capital value” of the hospitals that have been built is £12.4 billion—but hospitals will pay private companies £80.8 billion for using them.
The report notes that University College London Hospital (UCLH) is “particularly concerning”.
The hospital has a “capital value” of £292 million. But from the beginning of the scheme in 2005 to 2015, UCLH NHS Foundation Trust paid the PFI company £724.8 million for using it.
It creamed off £190.4 million in profits—and kept £150.1 million after corporation tax. That means some 31 percent of the money that hospital bosses paid out has gone straight to corporations.
The report notes that “this alone is enough profit to build an additional hospital”.
The companies that own UCLH’s PFI company include Credit Suisse, which reported a 78 percent surge in profits to over £700 million in July.
The second biggest stakeholder in the UCLH PFI is investment firm Semperian, which posted over £500 million in profits last year. This group of investors boast that the company was set up specifically for “investing in social infrastructure”.
Such schemes have a direct impact on health workers and patients as hospital bosses slash services and terms and conditions to cope with payments. When the costs become too much, hospitals also fall back on the government.
Jeremy Corbyn’s Labour Party has rightly said that it will not use any more PFI schemes, but that still leaves the existing ones intact. Labour has also floated the idea of setting up a public fund to help hospitals with the costs.
But why should the multinationals be allowed to take any more money? If the NHS did not have to pay profits to PFI companies over the next five years, some £973 million would be available for patient care.
All of this money should be used to improve care—the PFI schemes should be scrapped without any compensation.
How PFI works
Normally, the government could build hospitals and schools itself or borrow money and pay a construction company to build them. After the building work was finished, the contractor would hand over the keys to the local NHS trust.
PFI turns this upside down.
NHS trusts set up PFI companies known as Special Purpose Vehicles (SPVs). The SPV borrows money from banks to fund the project and tenders out the building and future maintenance work of the hospital.
This way borrowing doesn’t show up on the government’s books—and it looks good to its international creditors.
Once the hospitals are built, NHS trusts effectively pay rent for using them and pay for any maintenance of the buildings. This money goes into the pockets of the various banks and multinationals that own the SPVs.