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PFI in the health service: the price of a light switch? Just £333

This article is over 15 years, 4 months old
HOW MUCH does it cost to change a light switch? £333, if you’re an NHS hospital locked into a private finance initiative (PFI) contract.
Issue 2015

HOW MUCH does it cost to change a light switch? £333, if you’re an NHS hospital locked into a private finance initiative (PFI) contract.

That was one scandal exposed by Liam Halligan in a six-month investigation into PFI for Channel 4’s Dispatches programme.

This kind of lunacy is part of a far wider market madness, which sees billions of pounds leeched out of the NHS each year by private corporations. Now New Labour has indicated that the descent into insanity will continue – last week it announced a new PFI programme worth £1.5 billion.

The programme will build six new hospitals. The most efficient and economical way to build these would be for the government to provide funding directly.

If necessary the department of health could borrow the money at extremely low rates of interest – after all there is little chance that the government will go bust, and so little risk for the lender.

Instead, under PFI, private companies will raise the capital needed to build the hospitals at commercial rates of interest. The hospitals – along with non-

clinical services such as cleaning and catering – will then be leased back to the NHS, locking it into an inflexible contract extending 25 or 30 years into the future.

The multinationals view PFI as a reliable source of profit for their shareholders – the government guarantees their income.

Another of Halligan’s revelations was that one local authority is paying thousands of pounds a month for meals and cleaning services in a school that closed a year ago.

PFI costs have soared under New Labour. In a briefing on PFI, John Lister of pressure group Health Emergency, wrote, “Annual payments on a £420 million scheme in central Manchester came out at £51 million per year, index linked, over 38 years, £30 million of which was the ‘availability charge’ for the building itself.”

The total cost of PFI and related payments reached almost 20 percent of the trust’s total revenue.

At Norfolk and Norwich University Hospital, private investors made more than £80 million when they “refinanced” a PFI deal, but the hospital only saw £34 million of this money.

Queen Elizabeth Hospital in south east London is facing insolvency due to a PFI scheme that has cost the trust £9 million a year.

While Labour’s plans to extend PFI is good news for shareholders, they are bad news for NHS users and staff.

The drain on resources is likely to add to the financial deficits across the health service, which are currently driving job cuts, ward closures and other cutbacks.

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