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Debt crisis could be excuse for new round of hospital closures

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Socialist Worker looks at how the Tories are forcing NHS trusts to go bust as a way of pushing through unpopular cuts
Issue 2310
Protesters targeted Virgin in London on Saturday over its role in NHS privatisation. They then moved on to Sainsbury’s, which is trying to take over NHS pharmacy services (Pic: Smallman
Protesters targeted Virgin in London on Saturday over its role in NHS privatisation. They then moved on to Sainsbury’s, which is trying to take over NHS pharmacy services (Pic: Guy Smallman

Are the Tories scheming to use a cash crisis in the NHS as an excuse for a new wave of cuts and privatisation?

In an unprecedented move, health secretary Andrew Lansley last week announced plans to put a loss-making NHS Trust into administration.

It seems certain that South London Healthcare will shortly be run by an accountant, with orders to do what politicians fear to do themselves—slash costs by the wholesale closure of services.

The trust has built up a £150 million deficit because of massive PFI payments it was forced to make for hospital buildings.

Hospital departments, including A&E and maternity units, face the possibility of rushed closures without anyone even thinking about the likely effects.

South London Healthcare has two hospitals built under the Private Finance Initiative (PFI) and now struggles to make repayments of £61 million a year—nearly 16 percent of its income.

It is locked into these contracts, made with a consortium of banks and construction firms, for decades to come. It is not the only one.


Leading health economist Mark Hellowell says there is no clear picture of how many trusts are in financial trouble—and that South London was not previously on the list of those in serious difficulty.

“We know that there are more than 40 foundation trusts that have very large PFI projects and that they will be under strain,” he told Socialist Worker.

“We also know that seven other trusts have been told that they are not in a good enough financial state to become Foundation Trusts. These must already be in difficulties.”

The government should admit that the NHS cannot afford its PFI schemes and accept the liabilities itself—but unfortunately that isn’t going to happen.

“Instead, a Whitehall-appointed administrator will step in and they will want to raise productivity, sell assets and slash costs,” says Mark.

The Tories hope that by getting an administrator to close vital parts of a hospital they will deflect anger at cuts away from themselves. After all, David Cameron ran his election campaign promising a “moratorium” on the closure of A&E and maternity units.

The health bosses’ NHS Confederation is urging the Tories to use the crisis to drive through closures of entire hospitals. But so far politicians have been reluctant.

Previous attempts to close or downgrade hospitals have been met with a storm of protest. It is vital that health workers and campaigners start to revive that movement for the battles ahead.

Who’s to blame for PFI?

The Tories blame the NHS’s financial woes on the previous Labour government’s reliance on PFI to fund new hospitals. But for more than 20 years PFI was the only way governments would allow new hospitals to be built.

It was a flagship policy introduced by John Major’s Tory government in 1992. PFI was promoted as a way to get firms to finance the construction and operation of large infrastructure projects. Labour expanded it after 1997.

With PFI the company keeps ownership of a new building, but leases it back to the NHS. Governments liked it since the debt does not appear on their own balance sheet.

But in reality it is far more expensive. PFI has been a key way of handing public money to privateers. Eye-wateringly high interest rates and unbreakable contracts have strained some NHS Trusts to breaking point.

Hundreds meet and call NHS protests

by Julie Sherry

Resistance to the savage attacks on the NHS is gathering pace across London. Over 150 people packed into Ealing town hall in west London, furious at the threat to their local hospitals.

One consultant from Ealing hospital, whose A&E faces closure, told the meeting she was fearful that patients could die while travelling to other hospitals for emergency care.

The meeting agreed to fight the attacks by any means necessary. John McDonnell MP reminded everyone of previous successful occupations.

In Brent, north west London, a meeting of nearly 100 local people called for a big demonstration, marching to the threatened Central Middlesex hospital, in September.

Meanwhile, over 200 people came together to launch a local campaign to defend the A&E at west London’s Hammersmith hospital.

In south London, a meeting to save St Heliers hospital services brought together around 200 local residents and trade unionists. Follow-up meetings were set to take place for all three campaigns this week.

As South London Healthcare foundation trust in Greenwich goes into administration, activists are organising to fight any closures. Greenwich and Bexley trades council has called a demonstration over the issue on 8 September.

One student nurse at the trust told Socialist Worker, “These three hospitals provide services for three million people. We are seeing the biggest attack we’ve seen so far in London—this is a line in the sand.”

The mushrooming of local campaigns in the response to cuts and closures of NHS services across the capital could see a wave of big local marches in defence of hospitals in September. These struggles can feed into the build up to the TUC national demonstration on 20 October.

Protest at Sainsbury’s in Waterloo, central London, Wednesday 4 July, 12 noon. Called by St Thomas’ hospital Unite branch

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