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December 7, 2014

Private Eye Special Report on PFI by Paul Foot, March 19, 2004
Filed under: Private Eye — Dr. Phil @ 2:37 pm

This one of my favourite investigative reports by the brilliant, much missed Private Eye journalist Paul Foot. The current PFI debt disaster facing the NHS was entirely predictable, and predicted by many even before Labour took office in 1997 (most notably Professor Allyson Pollock and her colleagues) We now know how truly staggering PFI debts for the NHS are. For example,

North East build cost £812 million,  total repayment  costs by NHS  £5512 million

North West build cost £1345 million, total repayment costs by NHS 10,325 million

North (Leeds area) build cost £903 million, total repayment costs by NHS £4,388 million

Even allowing for maintenance and running costs, these mark ups would amaze any loan shark. Especially given that the NHS wont even own the buildings even if it does manage to pay back the outrageous loans.

PFI was the brainchild of the Tory frontbencher David ‘Two Brains” Willets.  Labour and the TUC vigorously opposed it in 1996, and in a commons debate on May 1, Labour frontbencher Sam Galbraith nailed its attraction to the Treasury: ‘The Private Finance Initiative is basically about government bodies borrowing money but not having to set it against the public sector borrowing requirement. Today the private sector will only get involved in the PFI within the health services if it carries no real risk. The result is a financial sleight of hand, a massaging of figures as a result of which the increase in the public sector borrowing requirement is not shown and is this a matter of deceit.’

Labour’s Harriet Harman was equally unimpressed; ‘When the private sector is building, owning managing and running a hospital, that hospital has been privatized.’

Paul Foot’s fascinating report may be a decade old, but it remains a very powerful contribution and warning of the dangers of poor value deals in the public sector, the appalling debts that result, the greed and profiteering of the private sector and the reckless stupidity of politicians who are still trying to keep PFI alive with PF2. Instead, the government should buy back these debts and renegotiate the deals for an amount that represents fair value to the NHS and the taxpayer.

As Paul Foot concluded in 2004

‘What is already clear is the awful legacy PFI has left behind. Is it cheaper for the taxpayer? No it is not. In every area it has been adopted, it has cost more, and will go on costing more. The PFI buildings are as prone to disaster as buildings constructed by any other method…. ‘Borrow more and charge more’ will forever be the  PFI slogan of government, even if that means wholesale abdication from responsible accounting and eventually from all democratic government.’

PFI Report Private Eye 2004