By Charlie Kimber
Downloading PDF. Please wait... Issue 2025

PFI costs NHS £45bn

This article is over 17 years, 4 months old
The cost to the NHS of the Private Finance Initiative (PFI) is £45 billion - enough to reverse all the present cuts and lay a secure basis for the future.
Issue 2025

The cost to the NHS of the Private Finance Initiative (PFI) is £45 billion – enough to reverse all the present cuts and lay a secure basis for the future.

The figure was revealed in an answer to a parliamentary question from the Tory shadow health secretary. It showed that the eventual repayments for 83 hospital building projects worth £8 billion would total £53 billion under PFI.

Under PFI, a private company builds a hospital on the basis that it will then receive “unitary payments” from the NHS each year for a period of around 30 years. The unitary costs include the costs of providing maintenance over the lifetime of the contract.

The scheme began under the Conservatives but was stepped up under Labour. Bobby Noyes is the chair of Southampton health branch of the Unison union and president of Southampton TUC.

Speaking in a personal capacity, she told Socialist Worker, “It’s hypocritical and outrageous that the Tories should seek to make capital out of this revelation. They were the architects of this scheme, which has channeled money away from patients, services and health workers into the pockets of shareholders and multinationals.

“But let’s also recognise that Labour has followed absolutely in their footsteps. The unions called for an end to PFI as soon as Labour was elected in 1997, and won the position at Labour’s conference. But the government has accelerated the programme.

“Locally the Lymington hospital is a PFI project. It will be run by a private company from March, not the local Primary Care Trust. But even now the company involved is not finalised. So the hospital opens in December but a full nursing team can’t be recruited because it isn’t known what the hospital will specialise in.

“The new hospital means other services are being cut. But there isn’t room in the new hospital for the maternity unit. So it’s being moved 15 miles and will displace a unit for young disabled people.”

Labour says it is not privatising health, but damning evidence is now available of just how far the process has gone. And it’s far more than PFI.


Alex Nunns, information officer for Keep Our NHS public, is compiling a dossier on the full range of privatisation that is already infecting the NHS. “The government is carrying out the ‘patchwork privatisation’ of the health service,” he says.

“Unlike the Thatcher privatisations of the 1980s, the entire NHS is not being put up for auction. Instead, the health service is being parcelled up into bite-sized pieces, and handed over to private control bit by bit.

“This precludes the possibility of rational planning of care to meet health needs, the organisational principle of the NHS since 1948. It also removes healthcare from democratic control, destroys accountability, fragments the service, and will lead to reduced care with higher costs.”

Alex goes on to draw together the various forms of privatisation that so far make up this patchwork.

These include:

  • Payment by results (PbR) – the financial system underpinning the new market model of healthcare. In April 2006 it was rolled out to cover over 80 percent of hospital activity. One of the purposes of PbR is to allow the private sector into NHS facilities in nearly every form of care.
  • Choose and Book – the facility for patients to choose the site of their secondary care from a limited “menu” of providers, including at least one non-NHS facility, acts as a golden stairway for the private sector to raise its business within the NHS.
  • Independent Sector Treatment Centres. These are stand-alone private sector clinics specialising in a limited range of treatments, such as cataract operations or hip replacements.
  • Outsourcing the commissioning function of Primary Care Trusts (PCTs).

    In late June the Department of Health placed an advert in the Official Journal of the European Union inviting companies to tender for all the management functions of PCTs. The advertisement was withdrawn after Keep Our NHS Public alerted the press. Two-weeks later it reappeared, this time using vague language but to the same end.

    lPrivatising GP services. The Alternative Provider of Medical Services contract is the vehicle being used to bring the private sector in to run GP services.

  • Practice-based commissioning allows the commissioning power for purchasing treatments – including hospital operations – to be transferred from PCTs to consortia of GPs, an increasing number of which will be employed by multinational corporations.
  • Outsourcing PCT provision. Commissioning a patient-led NHS, published in summer 2005, set out the vision of services delivered by a patchwork of the private sector and social enterprises, not PCTs.
  • The Private Finance Initiative.
  • Unbundling of primary care services – primary care services are being broken up into saleable commodities in a process known as unbundling.
  • LIFT – the primary care version of PFI.

    LIFT projects cost to eight times more than traditional ways of building. In Newham in east London, two LIFT premises that cater to just 9 percent of the local population are taking up 28 percent of the PCT’s expenditure on accommodation.

  • Subsidising private sector infrastructure. The department of health has issued advice that service commissioners should be “lowering the barriers for new providers” through “reducing the capital investment required from the provider” – supplying the buildings.
  • Privatisation of NHS Logistics. This award-winning not for profit organisation has been outsourced to delivery firm DHL and its controversial US contractor, Novation.
  • Privatisation of oxygen supplies and pathology services, increasing the use of private ambulance services and outsourcing medical secretaries abroad.
  • Connecting for Health.The NHS’s ill-fated IT programme has given corporations a huge slice of public money and unprecedented involvement in shaping the way the NHS will deliver care in future. Latest estimates suggest the cost to the taxpayer could reach £20 billion.

Trade unionists and NHS campaigners were to lobby parliament this week in defence of the health service. “We have to fight the cuts, drive out the privateers, and force a change in government policy,” says Bobby.

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