[Boeing Guy]

BBC Sept 2011

Paying off the "NHS mortgage" is putting so much pressure on the system in England that the future of some hospitals is at risk, ministers say.

The government said 22 trusts - running 60 units - are facing difficulties because of the cost of paying for privately-funded building projects.

The group represents nearly a fifth of the 100-plus PFI schemes in the NHS.

Problems are being encountered because, for some trusts, repayments account for up to a fifth of their budget.

Unison

Reason 3: PFI costs more
PFI schemes cost much more than conventionally funded projects. The private sector borrows at higher rates than the public sector since governments can borrow at much lower rates. Audit Scotland have calculated these costs as adding £0.2 - £0.3 million each year for every £10 million invested. They have high set up costs, due to lengthy negotiations involving expensive city lawyers and consultants employed by both sides. The first 15 NHS trust hospitals spent £45 million on advisers an average of 4% of the capital value. The private sector demands high returns and despite very low risks, profits from PFI are extremely high.
There is a growing body of evidence that PFI projects escalate both in scale and cost. These are not simple cases of costs going up for a project but reflect the very nature of PFI itself. The higher costs inevitably lead to an affordability gap for the procuring authority that is often met by reductions in services and capacity, subsidies from other parts of public authority budgets and pressures on labour costs. A recent article in the British Medical Journal found that there were 20% cuts in staffing levels in PFI hospitals.

Reason 4: PFI profits from people
UNISON has conducted research into the impact of contracting out in local government on the terms and conditions of the workforce. UNISON's survey found evidence of a two-tier workforce, something commented on by both the Treasury and Health committees of the House of commons.
Over 90% of those contacted said pay levels for new employees were worse that for transferred staff.
1 in 5 of contracts showed a difference in the standard working week
Pensions are a high value item for employees and a high cost item for contractors and public authorities.
Guidance from government means that successful contractors are obliged to offer a comparable pension scheme to transferred employees. Our research could not find a single comparable scheme open to new employees. There was either no scheme or else it was inferior and often the contractor made no contribution whatever.
There is inevitably a gender impact with women increasingly bearing the brunt of these new privatisations, just as they did under CCT and market testing. PFI contracts are at least 25 years long. As the first tier gradually disappears and only those staff on private sector terms and conditions are left, there will be a whole class of women workers providing public services who will have no occupational pensions and who will be working on inferior terms and conditions.

Reason 5: PFI goes wrong
There have been many claims that the private sector is more efficient than the public sector but there is no evidence offered to support this. Now that PFI schemes are coming on stream there is growing evidence that they are not producing the anticipated improvements in delivery to time or cost nor are they meeting the quality standards expected. After all, many of the same companies that were involved in pre-PFI cost and time overruns are also building PFI schemes.

Reason 6: PFI does not give 'value for money'
For many PFI projects, it is only the transferred risks that make the project value for money. Research for UNISON by Professor Allyson Pollock, looking at schools and hospitals, shows that the calculations of risk are arbitrary and unreliable. The National Audit Office has called the value for money calculation "pseudo-scientific mumbo jumbo where the financial modelling takes over from thinking".

BBC News November 2011

The committee said paying off a PFI debt of £1bn could cost taxpayers the same as paying off a direct government debt of £1.7bn.

The websites:
BBC News - Hospitals 'struggling with NHS mortgage repayments'

UNISON Private Finance Initiative (PFI) | the public service union

BBC News - Chancellor George Osborne set to 'reassess' PFI

Sorry to paste and copy, I know that's our dog stabbers modus operandi.

Yes PFI was introduced by the John Major Conservative Government, but Gordon ran with it and made it his own.

your move