| PFI
Ripoffs- Health Direct news on Labour's NHS Private Finance Initiative:
Treasury
U Turn to ensure taxpayer is no longer the loser in PFI deals
Fri, Oct 24, 2008- The Treasury ordered public bodies doing private
finance initiative (PFI) deals to require a much bigger share of any windfall
gains from refinancing them in the future- though Health Direct
asks why it has taken ditherer Brown 11 years to stop wasting tax payers
money.
Only
14 pc of NHS Trusts give value for money
Fri, Oct 10, 2008- The National Health Service has tightened
its grip on its finances, the Audit Commission said and is beginning to
extract better value for money from its funding, but still has a long
way to go.
NHS
productivity falls as spending rises by billions under Labour
Tue, Sep 16, 2008- The National Health Service has become less
efficient despite Labour pumping millions into its budget.
NHS
hospital car parking charges to be abolished in Scotland
Thu, Sep 11, 2008- Health chiefs in England were under pressure
to scrap hospital car parking charges after a move by the Scottish government
to abolish the charges at 14 NHS hospitals- except PFI hospitals.
NHS
cancels more than 100,000 operations in a year
Tue, Aug 26, 2008- More than 100,000 operations have been cancelled
by the NHS over the past year because of bed shortages, staffing problems
and other non-clinical reasons, new figures released reveal.
Dental
NHS copayments total £4.5bn since 1997
Wed, Aug 20, 2008- NHS dental patients have paid £4.5bn
in charges since 1997, while 2 million people have "lost" their
dentist, the Conservatives have claimed.
Tories
plan a bonfire of the NHS targets in bid to save 100,000 lives
Tue, Jul 22, 2008- David Cameron has set out his vision for the
health service, with a promise to save 100,000 lives a year by giving
patients more information and more power over their own care.
PFI
Hospitals run by HSBC pay £200 to fit wall socket
Mon, Jul 14, 2008- Britain's biggest bank, HSBC, and its investors
have made almost £100m from managing National Health Service hospitals
where contractors routinely charge taxpayers inflated bills for simple
tasks – such as £210 to fit an electrical socket or £200
to install a computer socket
Polyclinics
will not improve care, consultants tell BMA
Wed, Jul 9. 2008- Six out of 10 consultants say polyclinics will
not improve patient care and 83 per cent fear privatisation of the NHS
is detrimental to patient care and the service overall.
NHS
pays up to 60pc higher prices to cut waiting lists
Wed, Jun 25, 2008- Private hospitals are once again being paid
well above the standard National Health Service price in a drive to get
waiting times down that has proved only partially successful.
Cancer
victim told to pay for his own drugs by NHS
Wed, Jun 18, 2008- A cancer patient who was sent home to die
by hospital doctors but then discovered a cocktail of drugs that stabilised
his illness has now been told that the NHS will not pay for his medicine.
Chan
Wheeler to leave NHS less than one year as commercial director
Fri, June 13, 2008- Chan Wheeler, the health department's controversial
US commercial director, whose pay and conditions package was branded "an
eye-watering deal" by the Tories, is resigning to return to the US
less than one year into his three year contract.
Hospitals
are getting better- but only very, very slowly
Wed, Jun 4, 2008- Patients' experience of National Health Service
hospitals is improving, but painfully slowly, according to findings in
the annual survey conducted by the health service inspectorate.
One
in five GPs surgeries faces closure in polyclinic plans
Wed, Apr 30, 2008- One in five GP surgeries in England is set
to close, threatening to end the era of a family doctor in every neighbourhood,
an analysis of NHS plans reveals
Operations
halted by unfit equipment
Fri, Apr 25, 2008- Operations are being cancelled because of
dirty or broken instruments sent back by private companies employed to
clean them, the Royal College of Surgeons (RCS) informed Health
Direct.
Private
hospitals retreat from NHS
Tue, Apr 08, 2008- A drive to get patients to exercise their
right to choose any accredited hospital, public or private, for their
routine treatment was launched by labour ministers - just as some of Britain's
biggest private hospital groups said their appetite for work in the National
Health Service had diminished sharply.
NHS
private service ISTC buyback deal could cost £187m
Wed, Mar 19, 2008- The National Health Service will have to pay
out £187m to buy back 14 of the independent sector treatment centres
if their five year contracts are not renewed, the Department of Health
has acknowledged.
Whitehall
clash looms over PFI for NHS hospitals
Mon, Mar 10, 2008- A clash between different accounting standards
for private finance initiative projects is threatening to create conflicting
incentives within the labour government, with the Treasury continuing
to favour PFI while other departments are more circumspect.
Hospital
PFI project hit by US monoline credit crunch
Fri, Mar 07, 2008- Reverberations from the crisis in US bond
insurers were felt this week in an unlikely corner of the financial markets-
Tunbridge Wells.
Private
surgeries hurt NHS, say academics
Wed, Feb 27, 2008- Two leading academics claimed the government’s
fast track private surgery centres for NHS patients would “contribute
to NHS deficits, NHS service closure and staff redundancies”.
PFI
wastes £180m finds NAO watchdog
Thu, Feb 14, 2008- Millions of pounds of public money are being
wasted because contractors are charging unjustifiably high fees for making
changes to active private finance initiative (PFI) projects, according
to the National Audit Office (NAO).
Private
healthcare study suppressed by Dept of Health
Wed, Feb 06, 2008- The Department of Health has suppressed evidence
that axed programmes to buy £750m of private sector care a year
for NHS patients had earlier been showing "very good value for money".
Private
sector sees NHS role slashed
Fri 16 Nov 2007- Alan Johnson, the health secretary, yesterday
slashed a long planned expansion of the private sector’s role in
the National Health Service, in effect confirming that contracts originally
meant to be worth about £6bn for surgical treatments and diagnostic
services are likely to amount to well under half that sum.
Health
efficiency gains data uncertain claim MPs on PAC
Thu 18 Oct 2007- Up to three quarters of the £13.3bn efficiency
gains the labour government claims to have made may be based on unreliable
and inaccurate estimates, a committee of MPs has found.
Unhealthy
signs- Financial Times editorial on Labours NHS actions
Wed 3 Oct 2007- The Financial Times recently reviewed the labour
government's actions towards the NHS and questioned their muddled directions.
Health Direct reproduces their Editorial below.
Foundation
trusts increase cash as patient care declines
Tue 25 Sep 2007- Foundation trusts, a flagship of the labour
government’s National Health Service reforms, are building a growing
cash mountain that they appear unable or unwilling to invest in improved
services. The sums involved are up by more than £300m from about
£1bn at the end of the last financial year to £1.32bn in the
first three months of this year.
Labour
govt overpays private groups £222m for outsourced NHS treatments
Wed 19 Sep 2007- The Labour government is overpaying private
hospital operators by more than £200 million to carry out surgery
for NHS patients. In an effort to cut waiting lists, labour launched a
programme in 2005 to outsource some routine surgery to the private sector.
Man
who helped NHS to spend £46bn says it wasted the money and needs
more
Tue 11 Sept 2007- Sir Derek Wanless says billions of pounds poured
into the NHS has not made it more efficient. The money poured into the
NHS has failed to produce a more efficient service, or to reduce unhealthy
lifestyles. As a result even more cash will be needed in the future.
The
NHS is a service, not a business
Fri 7 Sept 2007- From the letters section of the Financial Times:
Sir, Margaret McCartney's view would be endorsed by the majority of the
medical profession, and shows the hollowness of the labour government's
stated policy of a "patient-led NHS".
New
nurses, doctors and physios left jobless by labours NHS budget squeeze
Thu 23 Aug 07- Thousands of newly qualified nurses are facing
unemployment because of labour's NHS hospital cutbacks, with recruitment
vacancies at their lowest for 10 years. New National Health Service figures
have revealed how difficult it is for nurses, physiotherapists, scientists
and doctors to find jobs.
PFI-
Time to set the record straight claims Financial Times
Mon 30 Jul 07- Off balance sheet accounting has a long and often
dishonourable history. Just think of Enron. The Treasury now has a chance
to fix one of the most inconsistent and problematic examples of its use,
in the way the private finance initiative is accounted for, by using the
introduction of International Financial Reporting Standards as a chance
to bring all PFI projects on to the public balance sheet.
Johnson
blocks new wave of private health clinics
Thu 26 Jul 07- The health secretary, Alan Johnson, yesterday
vetoed plans for a third wave of independent sector treatment centres
to compete with NHS hospitals.
Hopes
fade over private sector role in NHS
Wed 4 Jul 07- Private sector hopes of a sustainable role in delivering
National Health Service care are receding, judging by a study commissioned
by the NHS commercial directorate. The 2004 study estimated the NHS needed
to buy 450,000-500,000 procedures a year if the market that has attracted
overseas health groups as well as UK operators such as Bupa and Nuffield
was not to "stagnate and ultimately collapse".
NHS
service cuts urged at non PFI hospitals
Mon 18 Jun 07- Primary care trusts wanting to reconfigure services
were given a stark message in an economic analysis prepared for the NHS
in London: financially, it will make sense to cut beds and services at
non private finance initiative (PFI) hospitals.
Call
for scrutiny of PFI equity sales says MPs' Public Accounts Committee
Mon 21 May 07- The market for sales of equity in Private Finance
Initiative (PFI) deals should be closely watched by the Treasury, parliament's
public spending watchdog said, as it raised fears that they might not
be in the public interest.
Labour
rewards failure as NHS pays private companies for failed PFI bids
Tue, 8 May 07- Private companies that fail to win hospital building
contracts are set to pocket millions of pounds in "compensation"
from the NHS. Hospitals negotiating private finance initiative (PFI) schemes
could be forced to pay almost 2 per cent of the total contract costs to
short-listed private companies which fail to secure deals, under proposals
being discussed by the Department of Health (DoH).
Setback
for NHS on treatment centres as one in five PFI projects unprofitable
Thu 26 Apr 07- Nuffield Hospitals, the not-for-profit private
hospital operator, has pulled out of negotiations to provide operations
for NHS patients using mobile operating theatres in the West Midlands.
The news comes at the same time that new research shows that almost one
in five private finance initiative projects are still not making their
owners money, a survey of almost 100 of them has shown.
Mixed
wards- another broken labour promise as new PFI projects continue the
scandal
Tue 10 Apr 07- A spell in a hospital in England is likely to
mean being placed on a ward with people of the opposite sex. But in Europe
and the US this would be unthinkable. Health Direct reports on a pledge
the government has yet to keep.
Patients
feel pain as PFI Patientline deal backfires with hospital phone charges
up 160%
Mon 9 Apr 07- Patientline, provider of hospital bedside telephone
and television units, said it is to increase by 160 per cent charges to
NHS patients for outgoing calls. The company was criticised by medical
providers for the emergency measure, taken to compensate it for deepening
losses incurred since it signed a 2002 private finance initiative deal
with the Department of Health.
Takeover
of first NHS hospital- Good Hope in Birmingham becomes the Heart of England
Tue
3 Apr 07- The first takeover of an insolvent
National Health Service hospital by one of Labour's flagship foundation
trusts will formally take effect next Sunday, the health service announced
at the weekend - paving the way for similar solutions for a number of
other, effectively bankrupt, NHS institutions.
NHS
crisis is forcing cuts to maternity care, charity warns
Tue 27 Mar 07- Support for pregnant women is being cut because
of the NHS's financial troubles, a healthcare charity has warned. The
National Childbirth Trust (NCT) says it is receiving "increasing
reports" that NHS antenatal classes, breastfeeding services and postnatal
visits are being cancelled.
Seven
more PFI hospitals to go ahead
Tue 27 Feb 07- Seven more private finance initiative (PFI) hospitals,
with a capital value of almost £1.5bn, were finally given the go-ahead
yesterday but amid growing frustration among PFI providers at the time
it is taking for the Department of Health to adjust hospital building
plans to the new, more competitive, NHS market.
MPs
want greater scrutiny of PFI hospitals to prevent more waste
Tue 30 Jan 07- Hospitals built under the Private Finance Initiative
(PFI) must be subject to much "closer and sustained scrutiny"
if millions more pounds are not to be wasted, the Public Accounts Committee
said. Estimated capital costs for 17 PFI schemes approved by the end of
2005 have more than doubled - up by some £4bn to £13bn.
PFI
firms make £23bn profits from NHS
Mon 22 Jan 07- The private sector will make £23bn in profits
and interest over the next 30 years by building NHS hospitals, campaigners
have calculated. Under the private finance initiative, a company builds
a hospital and then gets "rent" from the NHS for a set term.
A report by the Keep Our NHS Public claims the Labour government is carrying
out "patchwork privatisation" of the NHS.
Brother
Brown can’t cure this paralysed NHS, so he plans to privatise it
Tue 16 Jan 07- The former Granada boss Sir Gerry Robinson recently
spent six months trying to reform Rotherham general hospital. The result
was shown in three hours of fly on the wall television on BBC2 last week.
It was rightly put after the watershed: as politics it was certificate
18. At the end of each day Robinson could be seen slumped in the back
of his car, his face buried in his hands. A tycoon sobbing in a limousine
is the perfect icon of Labour’s health service.
Labour's
unsustainable NHS resource account and budgeting (RAB) rules to stay
Thu 14 Dec 06- The health department has postponed a decision
to scrap a set of accounting rules- that have plunged some NHS trusts
into potentially irrecoverable financial deficit. The NHS Confederation,
which represents health authorities and trusts, said yesterday that it
was disappointed at the decision which came despite the health department
accepting that the application of the rules to individual NHS trusts "will
become increasingly unsustainable".
Leaked
paper reveals Labour fears on NHS cutbacks as 50 Accident and Emergency
centers will be downgraded
Wed 6 Dec 06- Patricia Hewitt and other ministers have privately
conceded that the government is in real difficulty over its efforts to
sell controversial health reforms, a minute of a private briefing reveals.
At a brainstorming on the future of the NHS between the health secretary
and ministers last Thursday, some raised anxieties about the way the reforms
were being presented to the public. "Too often the debate on public
service reforms seemed to pitch the government against frontline staff,"
said the minute, which was marked restricted.
DoH
reveals true extent of NHS management consultant costs- which will exceed
the total deficit
Fri 1 Dec 06- The imposition of turnaround teams on cash-strapped
trusts has cost the NHS more than £22m, new Labour figures reveal.
And the report showed that the DoH spent a massive £133m on management
consultants last year -more than the £94m projected net deficit
for the NHS next year.
First
NHS hospital privatisation-- 60 more may follow
Mon 2 Oct 06- A foundation hospital trust is planning to "takeover"
a smaller cash strapped NHS hospital in what is thought to be the first
privatisation of its kind. The Heart of England NHS Foundation Trust in
Birmingham hopes to acquire Good Hope Hospital, which is £15m in
debt.
New
ONS PFI figures are a 'step forward in a murky area'
Thu 21 Sep 06- The Labour government has long been accused of
finessing the public finances by favouring private finance initiative
deals for capital investment projects, such as schools and hospitals,
because the debt did not show up on the government's books. Now, after
pondering the problem for five years, the Office for National Statistics
has put a £4.95bn figure on the value of the debt of PFI and public-private
partnership deals, which it has added to public sector net debt. Its estimate
represents what it thinks the government would have to borrow today to
buy back a PFI asset for the remainder of its PFI contract.
Pensioner
strikes blow against reforms of family doctor services
Thu 24 Aug 06- A pensioner has struck a blow against government
health reforms after she won a legal battle to stop a US-owned company
from taking over family doctor services in part of Derbyshire. The Court
of Appeal yesterday ruled that the North Eastern Derbyshire Primary Care
Trust had failed properly to consult the residents of two former mining
villages before provisionally awarding UnitedHealth Europe a contract
to run GP surgeries in the area.
PFI
profits exposed by Channel 4 as greater than credit card companies
Wed 16 Aug 06- In Public Service, Private Profit, Liam Halligan
revealed how the private funding of state schools and hospitals is draining
hundreds of millions of pounds from frontline services, while creating
a £4 billion-a-year industry and a new elite of publicly-unaccountable
PFI professionals.
Postcode
lottery for cancer, hearts and mental health King's Fund reports
Wed 9 Aug 06- Wide variations in NHS spending may be denying
patients fair access to drugs and treatment, a study says. The King's
Fund think tank found that some English trusts spent four times as much
on certain diseases than others. The research, compiled from government
data from 2003-4 to 2004-5, also showed mental health got the most cash,
followed by heart disease and cancer.
Anger
over 'legality' of NHS cuts
Tues 18 July 2006- A Cornish district council boss is questioning
the legality of an NHS trust's plans to cut health services after the
proposals for the closure of St Michael's Hospital were leaked to the
media. Penwith Council chief executive Jim McKenna has written to the
Royal Cornwall Hospitals Trust over proposals for hospitals in Hayle and
Penzance.
BMA
reports that the NHS does not provide choice claims public
Tue
27 Jun 2006- More than half the people in a general public survey
on patient choice in the health service believe the NHS does not offer
choice. The British Medical Association commissioned the survey and is
publishing the findings on the eve of its annual meeting.
Foundation
hospitals- Labour's PFI promise will "fall short"- Monitor regulator
warns
Thur 1 Jun 2006-
Tony Bliar's promise that every NHS hospital in England will be ready
to break free from Whitehall control by 2008 will not be honoured, papers
of the foundation trust watchdog revealed yesterday. The board minutes
of the regulator, Monitor, note that William Moyes, its chairman, has
warned the Department of Health that well under 50% of trusts are set
to achieve foundation status by April 2008. Others may be held back for
years by their inability to break even and by the cost of hospital building
schemes under private finance initiatives.
DoH
orders £200m cuts to scheme to stay within Treasury guidelines
Tue
23 May 2006- The Department of Health has trimmed back another major
private finance initiative scheme, forcing a trust to abandon plans for
new buildings on the site of one of the three hospitals involved. The
DoH has instructed University Hospitals of Leicester trust to cut just
under £200m from its £761m plans to revamp and reconfigure
services at Leicester’s General, Royal Infirmary and Glenfield hospitals.
PFI
profits from secondary market creates storm over unacceptable gains
Thu
4 May 2006- Some of the biggest operators in the private
finance initiative were condemned this week for making gains that are
"unacceptable, even for an early PFI deal" from the refinancing
of Norfolk and Norwich hospital. Even as that row erupted, the focus on
how money is being made out of PFI contracts is shifting to the newer
secondary market in PFI - the sale of the equity investments in them.
Last month the National Audit Office raised concerns about how transparent
those deals are.
Watchdog
brands 60 per cent profits on PFI scheme as unacceptable
Wed
3 May 2006- Some of Britain's biggest investors in the Private
Finance Initiative were yesterday condemned as "the unacceptable
face of capitalism" by parliament's public spending watchdog. John
Laing, Innisfree, 3i, Barclays Infrastructure and Serco were accused of
taking gains "unacceptable even for an early PFI deal" from
a refinancing of the £158m Norfolk and Norwich Hospital.
D
Day for Dentists- 1,000 dentists expected to quit NHS in contract row
Sat
1 Apr2006 - Unfortunately, not an April Fool: an exodus of about
1,000 dentists from the NHS in England was predicted last night by the
chief executives of primary care trusts, who take over untried and untested
management of the service from today. The NHS Confederation provided the
first hard evidence of how patients will be affected by a dentists' contract
that came into effect at midnight.
Patient
care is suffering in NHS cash cuts
Fri
31 Mar 2006- Forcing trusts to break even too quickly will compromise
patient care, chief executives have warned this week. Speaking in parliament
in January, health secretary Patricia Hewitt told MPs that actions to
deliver organisational turnaround will ‘never compromise patient
care’. But chief executives said they could not make the savings
demanded of them for 2006-07 without an impact on the quality of care
delivered.
One
CEO when asked whether a demand to break even would affect patient care,
he admitted ‘Of course it will. I cannot see how we can take a sum
like that out without it affecting services. It is about minimising the
impact on patient care."
Mon
13 Mar 2006- The new consultants' contract in Scotland cost
almost four times more than originally estimated, Audit Scotland found,
with no clear evidence it has yet improved patient care. The deal for
hospital specialists was a UK-wide one and despite some distinct features
of the Scottish health service, National Health Service auditors said
there was no reason the picture should be any different in England, Wales
or Northern Ireland.
Sat
4 Mar 2006- Health managers have reacted with disbelief
and fury after the Department of Health withdrew the national tariff for
Payment by Results (PbR) and admitted that the sums behind it did not
add up. Last week the DoH withdrew the tariff - due to go live in April
- admitting that ‘underlying errors in the calculation’ had
been identified.
Tue
28 Feb 2006- The National Health Service is heading for a record
overspend at a time of record growth, according to the latest returns
from hospitals and health authorities. Senior executives said yesterday
the service in England was heading for a £790m overspend at the
end of January - up from the £620m that was forecast in only December.
Thu
23 Feb 2006- Doubts are being raised about the future of
new PFI hospitals which are being built using private money. Billions
of pounds have been spent on PFI projects to date, but many more are still
in the pipeline. Are Labour's bad habits of moving the goal posts in the
middle of a game about to score a spectacular own goal by Ministers making
the future financing of the all of the proposed new NHS capital building
projects too risky for potential financiers? Which would effectively stop
the whole new NHS building programme.
Wed 1 Feb 2006-
The National Health Service’s £12bn hospital building programme
in England under the private finance initiative faces a cut of up to 40
per cent, according to leaked documents. Although the department has repeatedly
denied there is a review or moratorium on new PFI hospitals under way,
it has now admitted to a “reappraisal”.
Tue 24 Jan
2006- The financial crisis gripping the NHS is deepening and
hitting patient services, with operations cancelled, appointments deferred
and wards closed, according to two reports. NHS managers are struggling
to reduce ballooning deficits that have swelled to £1.2bn. Managers
have been freezing jobs, cancelling training and cutting up to 4,000 posts,
the Royal College of Nursing says. A separate survey of NHS chief executives
found three-quarters believe patient care is suffering as a result of
cuts that are imposed to balance the books.
Fri
20 Jan 2006-
A Treasury presentation leaked to the Financial Times reveals vividly
how the National Health Service threatens the government's other competing
priorities with its huge demand for cash. The spending review that concludes
next year will present Gordon Brown, whether he is prime minister or still
chancellor by then, with some very hard choices.
Tue 27 Dec 2005-
Billions of pounds worth of hospital projects to be built under the private
finance initiative have been put in doubt by health department concerns
over the cost of the biggest – the £1.1bn rebuilding of St
Bartholomew’s and Royal London hospitals. The department has challenged
the project’s affordability and has even suggested the Bart’s
part of the 1,250-bed scheme should be reconsidered– raising again
the question of whether England’s oldest hospital, founded in 1123,
could yet close.
Fri 23 Dec-
Health Direct notes the contradiction at Christmas time that more expectant
parents are being denied a choice of where they can have their baby, campaigners
have warned. The National Childbirth Trust says at least 10 birth centres
across the UK are now considering closing, or are definitely set to do
so. Some "temporary" closures over Christmas may become permanent
due to a lack of funds, the NCT says.
Wed 14 Dec-
A controversial scheme to divert patients away from Surrey and Sussex
Healthcare trust is to end - after sending them elsewhere turned out to
be more expensive. Routine inpatients are shortly to return to the cash-
strapped trust, following a four- month period when local primary care
trusts sent them to other providers.
Tue 6 Dec-
The NHS is heading for a deficit of more than £600 million this
year, the Government said yesterday. Predictions of a deficit this early
in the financial year are unprecedented, indicating how serious the situation
has become. Patricia Hewitt, the Health Secretary, said: I have made the
decision to publish the data because I want to make it clear that inefficiency
and poor financial management are not acceptable.
Fri
1 Dec- Almost a third of all primary care trusts ended the last financial
year in deficit, accounts for the Department of Health reveal. Of the
303 PCTs in England, 91 overspent in the year 2004-05. The overspends
contributed to the overall NHS deficit of £250m last year.
Fri 28 Oct-
The private finance initiative PFI- "has had its day" as a way
of building hospitals, at least in its current form, the NHS Confederation,
which represents health authorities and trusts, said yesterday. Following
a survey of 13 completed schemes, the confederation said the 30-year contracts
were too inflexible to cope with rapidly changing healthcare, particularly
as more care was likely to be delivered outside hospitals.
Thu 20 Oct-
A review of National Health Service regulation - soon to become a £100bn-a-year
business - was launched by the Department of Health, while a leading regulator
said the department's role should be that of a giant "insurance company".
Fri 14 Oct-
The introduction of payment by results- the funding mechanism that underpins
Labour's new NHS market- represented "real dangers" for the
NHS in the short term the Audit Commission has warned. Even amongst the
first foundation trusts, which in theory were amongst the best equipped
to cope, the new payment mechanism had exposed real financial problems
at Bradford and elswehere.
Thu 5 Oct-
Surrey and Sussex Healthcare trust would be bankrupt if it was a company,
trust chair Roy Davies has admitted. Mr Davies, speaking at the trust's
annual general meeting, painted a bleak picture of the trust's financial
position, saying the battle was just to live within its income and it
did not 'have a hope in hell' of paying back its £30m deficit.
Tue 27 Sep-
The National Health Service is poised to spend £4.5bn a year - approaching
6 per cent of its budget - on privately provided clinical care and facilities
management as the second wave of independent treatment centres and new
diagnostic facilities come on stream.
Fri 23 Sep-
NHS trusts are £250m in the red despite record increases in government
investment, according to the Department of Health which has published
individual trust accounts for the first time. In a stark warning, chief
executive Sir Nigel Crisp told trust managers that it was 'not acceptable
for any NHS organisation to spend more resources than it has been allocated
or received in income'
Fri 26 Aug-
The NHS is failing to use thousands of extra diagnostic scans bought by
the Department of Health from the private sector last year. More than
half of the MRI (magnetic resonance imaging) scans - almost 70,000 - that
the DoH bought on behalf of the NHS from Alliance Medical last year have
yet to be used.
Fri 12 Aug-
Organisations that fail to comply with a new code of conduct on payment
by results will be penalised using a 'range of mechanisms' depending on
the severity of the breach, the government has warned. And the Department
of Health has said protracted disputes between commissioners and providers
will be seen as a 'failure'. Details of the disagreements - including
the sum concerned - will be made public.
Tue 2 Aug-
In the 12 weeks since the general election, cash-starved hospitals and
primary care trusts have earmarked more than 1,000 beds for closure. An
investigation by The Sunday Telegraph has revealed that trusts around
Britain have drawn up plans to close beds, wards and entire community
hospitals.
Fri 29 July-
The collapsed £1 billion Paddington health campus will be subjected
to a two-pronged review in an attempt to improve the quality of future
private finance initiative schemes in the NHS.
Tue
5 July- Tony Blair's commitment to radical reform of the public services
is set to be tested this week when a flagship group of NHS hospitals demands
more freedom to borrow for investment.
Thu
30 June- Ill-equipped to compete in the increasingly cut-throat healthcare
market, the NHS is now £140m in the red. A government that has done
everything it can to expand the role of the private sector in the NHS
is unlikely to bail hospitals out this time, and so this deficit will
translate into hundreds of lost beds, and ward closures up and down the
country.
Mon 13 June- PFI
building company Octagon made a 60% return on investment refinancing the
Norfolk & Norwich PFI Hospital says the National Audit Office.
Wed 25 May-
The huge cost of employing agency nurses has been repeatedly blamed for
sending the NHS into debt.
Sat- April 16-
Auditors sound alarm bells in Surrey and Sussex cash crisis- the government
must hand over millions of pounds to crisis-stricken Surrey and Sussex
Healthcare trust to prevent effective bankruptcy, according to its auditors
PricewaterhouseCoopers.
Fri, April 8-
Monitor has warned hospital trusts that a breach of one of 10 tough new
financial rules could provoke intervention. Under the independent regulator's
compliance framework foundation trusts will receive three scores: 'traffic
light' ratings on governance and the provision of mandatory services;
and a score from one to five on financial strength.
Wed, March 16-
A whistleblower in the NHS is threatening to lift the lid on alleged falling
standards and hidden costs at Britain’s first Private Finance Initiative
(PFI) hospital.
Thursday, February
24, - Speaking at the conference of Honorary Secretaries of BMA Divisions
in Edinburgh, Dr Sam Everington, Deputy Chairman of the BMA (UK) warned
that the Westminster Government’s continuing push for private sector
involvement in the provision of NHS services could spread to the other
countries of the UK."
Tuesday, February
22, - Senior lenders on Jarvis's former private finance initiative
construction projects are understood to be withholding cash needed to
complete work on schools and hospitals because they want to satisfy themselves
that they are getting value for money.
-
Wednesday, February 15,- A hospital set up three years ago as
a blueprint for cutting NHS waiting times is facing closure after failing
to attract patients and running into multimillion- pound debt. Doctors’
leaders said that the hospital’s problems were symptomatic of fundamental
flaws in the policy: wasting money and destabilising existing hospitals.
Buying
hospitals on the nation's credit card
Politicians
call credit card companies usurers for charging 30% interest rates- yet
this very same Labour government is paying 30% annaul costs for building
PFI hospitals. Don't take my word for it- it's the ACCA- the Association
of Chartered Certified Accountants who have calculated these charges:
Evaluating
the operation of PFI in roads and hospitals
By the ACCA Research Report No. 84
Pam Edwards, Jean Shaoul, Anne Stafford and Lorna Arblaster, 2004
Executive summary
Partnerships are one
of the keystones of the Government’s reform of the public services.
They have both macro-level and micro-level objectives. At the macro level,
the intention is to lever in the private finance that the Government cannot
afford. In some sectors such as roads, a parallel macro objective has
been to create private sector capability. At the micro level, partnership
objectives embrace value for money (VFM), a concept that includes the
transfer to the private sector of risk and the associated costs that would
otherwise be borne by the public sector and the greater expertise, efficiency
and innovation that the private sector is assumed to possess.
The introduction of
partnership working, known as the Private Finance Initiative (PFI), was
heralded with much enthusiasm by the then Conservative Government in the
early 1990s and was later adopted with similar enthusiasm as a cornerstone
of the incoming Labour Government’s policy for improving infrastructure
and public services. The Labour Government re-branded the policy as public
private partnerships (PPP), widened it to include several different forms
of which the PFI is but one, and has, confusingly, used the terms PPP
and PFI interchangeably. Under the PFI, the public sector procures a capital
asset and non-core services from the private sector on a long-term contract,
typically at least 30 years, in return for an annual payment.
Subsequently ministers,
Government officials and others with financial interests in the PFI policy
have claimed much success for projects. However, numerous IT PFI projects
have failed. Several PFI/PPP projects have had to be bailed out, some
have been scrapped and others have been the subject of widespread criticism.
The National Audit Office (NAO), the Public Accounts Committee (PAC),
the Audit Commission and Accounts Commission have been circumspect about
the levels of success, and identified various lessons to be learned. Despite
the welcome investment in public services, the policy remains unpopular
with the public at large and the relevant trade unions.
So far, most research
has focused on the decision-making processes that led up to the signing
of a partnership contract or examined the benefits and costs from an a
priori perspective. The NAO’s studies of some of the early roads
projects report that the payment mechanism created additional risks for
the public sector that raise questions about the value of risk actually
transferred to the private sector (National Audit Office 1998, 1999).
In the context of hospitals, a considerable body of evidence challenges
both the macro and the micro-economic arguments (Pollock et al. 2002),
raising questions about service provision and the conflict between policy
promotion and regulation (Froud and Shaoul 2001). Several studies have
examined the business cases supporting the use of private finance for
new hospital builds, and question the ability of the methodology to measure
VFM in an unbiased way, the degree to which the business cases demonstrate
VFM and the higher cost of PFI over conventional procurement (Gaffney
and Pollock 1999; Price et al. 1999; Pollock et al. 2000; Froud and Shaoul
2001; Shaoul 2005). Their evidence shows that the VFM case rests upon
risk transfer. The credit ratings agency, Standard and Poor’s, in
its report for the capital markets (Standard and Poor’s 2003), states
that the PFI companies carry little effective risk. Other work shows that
the high costs of PFI projects lead to affordability problems, an issue
that the emphasis on VFM downplays, and lead to hospital downsizing in
order to bridge the affordability gap (Hodges and Mellett 1999; Gaffney
and Pollock 1999; 1999b; Gaffney et al. 1999a; 1999b; 1999c; Pollock et
al. 1999).
By way of contrast,
this research study focuses on the actual performance in two sectors,
roads and hospitals, which have substantial commitments to partnership
financing and projects that have been in place for some years. In roads,
where PFI projects are known as design, build, finance and operate (DBFO),
the eight projects signed in 1996 represented about 35% of all new construction
in the roads sector between 1996 and 2001 (DTI 2002). In the Government’s
10-year national plan, 25% of the £21 billion allocated for the
strategic highway network will involve private finance (DETR 2000). In
the health sector, there has been a continuous expansion of private finance
since the first health contract was signed in 1997 and by April 4th 2003
some 117 schemes had been approved by the Department of Health with a
value of £3.2 billion (HM Treasury 2003c). These two sectors offer
contrasting environments, in terms of the relationship between central
government and the procuring entity, and previous experience of contracting
with the private sector.
Our report is in three
parts. First, we examine the advice from official bodies about how PFI
should be evaluated. We examine the literature as it relates to the available
evidence about the nature of post-implementation reviews of PFI projects
and the methodology and process issues that constrain such evaluative
research.
Secondly, we identify
the origins, development, nature and scale of PFI in roads and hospitals.
Our study focuses on the first eight DBFO projects in England managed
by the Highways Agency and the first 13 PFI hospitals (12 in England and
one in Scotland). We then analyse the reported financial performance of
both the public and the private sector partners using information obtained
directly from the Highways Agency and the hospital trusts, and Companies
House respectively. Thus we have focused on information that is in the
public domain, supplemented by contextual information provided by staff
at headquarters level in both sectors. We also examine the costs and affordability
of these PFI projects in terms of their impact on the budget of the relevant
procurer. Our emphasis is on costs to the public sector, returns to the
private sector, the effective cost of private finance and its affordability
to the public purse.
Our concern is with
the extent to which the financial reporting by all the parties involved
in PFI provides accountability to the public. The concept of accountability
in the context of public expenditure on essential public services implies
first that citizens, or at least their political representatives, the
media, trade unions, academics, etc, can see how society’s resources
are being used and, secondly, that no members of that society are seen
to have an explicitly sanctioned unfair advantage over others in relation
to how those resources are used.
Thirdly, as well as
a sectoral analysis of roads and hospitals, we examine two projects in
greater detail, one each from the road and hospital sectors. We chose
projects that had been implemented for at least three years and in which
the construction phase was complete so that, unlike previous work, our
focus is on the operation and maintenance phase. We used semi-structured
interviews with a range of personnel from various parties to the projects.
Given that PFI emphasises the nature of the long-term service agreements,
we describe and evaluate the systems that were put in place to monitor
the operational phase of projects, ensure that risk transfer operates
in the way expected by the contract and thereby obtain VFM.
The research findings
may be summarised under three interrelated headings: partnership and managing
the contract; VFM and risk transfer; and financial reporting and accountability.
Partnership and Managing
the Contract
* Partnership
is an ideal to be aspired to rather than a description of the actual working
relationship between public and private contracting parties and has implications
for monitoring and accountability relationships.
* Planning of the
performance monitoring systems is poor and leads to an increased workload
in the management of the projects.
* Self-monitoring
systems require high levels of trust, which is not always present, and
public sector partners are conducting more monitoring activities than
expected.
* Outcomes that are
subjective in nature, eg hospital cleaning, are difficult to write in
contractually effective ways and cause monitoring difficulties.
* While contingency
plans should be prepared at least in outline for all major PFIs against
the possibility of default by the private sector, none are evident.
Value for Money and
Risk Transfer
* Soft project
objectives may not be evaluated and user opinions about service are not
always sought.
* It is impossible
to compare the actual costs of PFI and thus VFM (one of the justifications
for PFI) against the original public sector comparator (PSC) as the PSC
quickly becomes out of date.
* Additional monitoring
costs have increased the public sector’s costs and thus reduced
VFM compared with the original expectations.
* Where risk is shared
between partners its allocation may be unclear and therefore its transfer
– so central to PFI – is uncertain.
In relation to roads,
we find that:
* Demand risk is
held by the private sector but this may create a new source of risk because
the private sector cannot manage this demand.
* The Government
guarantees the Highways Agency’s payments to the DBFO companies,
which reduces the risk to the private sector.
* We calculate that
the Highways Agency paid a premium of some 25% of construction cost on
the first four DBFO roads to ensure the project was built on time and
to budget.
* In just three
years the Highways Agency paid £618 m for the first eight projects,
more than the initial capital cost of £590 m, which refutes one
of the Government’s justifications for DBFO. This means that the
remaining payments on the 30-year contracts (worth about £6 billion)
are for risk transfer, operation and maintenance.
* Because the full
business cases are not in the public domain, there has been little external
financial scrutiny of the deals and post implementation it is unclear
how the actual cost of DBFO compares with the expected costs. Our evidence
suggests that DBFO has turned out to be more expensive than expected.
But how this affects the Highways Agency’s ability to fund other
maintenance projects is unclear.
* The special purpose
vehicles (SPVs) report an operating profit before interest and tax of
about two thirds of their receipts from the Highways Agency and this is
after subcontracting to sister companies. This operating profit (less
tax) is the effective cost of capital.
* About 35% of the
SPVs’ income from the Highways Agency is paid to their operations
and maintenance subcontractors, typically sister companies, including
an unidentifiable profit element for the subcontractor. Given that the
contracts are still in their early years, the payments to the subcontractors
are likely to represent operations rather than maintenance.
* Subcontracting
in this way means that it is difficult to isolate the costs of operations
and maintenance in DBFO contracts since the subcontractor may have multiple
contracts elsewhere. The absence of such information makes it difficult
for the public sector to benchmark costs when it comes to amending the
contracts and negotiating new ones.
* Although the amount
of tax payable by the SPVs is only 7% of operating profits, even this
overstates the actual tax paid since this includes an element of deferred
tax. This low tax rate, in the early years at least, challenges an important
part of the Treasury’s new appraisal methodology for PFI which assumes
that tax payable will be about 22%, which will in turn distort the VFM
analysis in favour of PFI.
* The SPVs’
interest rate of 11% in 2001 and 9% in 2002 and the high level of debt,
which is greater than the construction costs, means that the DBFO contracts
are considerably more expensive than the cost of conventional procurement
using Treasury gilts at the current rate of 4.5%.
* The seven SPVs’
post-tax returns on shareholders’ funds are high and higher than
elsewhere in the industry.
* The seven
SPVs’ total effective cost of capital was about 11% in 2002. While
the NAO believes that this additional cost of private finance (six percentage
points above Treasury stock) represents the cost of risk transfer (about
£56 m), it is difficult to see what risks the companies actually
bore since their payments were guaranteed by the Government and based
on shadow tolls. In the context of rising traffic, this means that they
were insulated from downside risk at the Highways Agency’s expense.
* In practice, the
shadow tolls have led to a front loading of the payment flows to cover
the future cost of maintenance, and hence the SPVs’ profits. But
in the absence of arrangements to ring fence the post-tax profits, should
the DBFOs fail for whatever reason later in the contract, the Highways
Agency could find that it has to bear the remaining and higher cost of
private capital and the maintenance costs that it thought it had already
paid for.
In conclusion, the
road projects appear to be costing more than expected as reflected in
net present costs that are higher than those identified by the Highways
Agency (Haynes and Roden 1999), due to rising traffic and contract changes.
It is however impossible to know at this point whether or not VFM has
been or is indeed likely to be achieved because the expensive element
of the service contract relates to maintenance that generally will not
be required for many years.
In relation to hospitals,
we find that:
* The annual cost
of capital for trusts rises with PFI by at least £45 m over and
above the cost of a new hospital financed under the Government’s
capital charging regime, even though the hospitals are considerably smaller
than the ones they replace. This underestimates the additional cost of
PFI, since the construction costs of PFI include an amount of up to 30%
to cover the cost of private finance, transaction costs, etc.
* Conservatively estimated,
the trusts appear to be paying a risk premium of about 30% of the total
construction costs, just to get the hospitals built to time and budget,
a sum that considerably exceeds the evidence about past cost overruns.
Nine of the trusts report off balance sheet schemes, as the Treasury had
originally intended, implying that most of the ownership risks have been
transferred to their private sector partners. But as none of the corresponding
SPVs report their hospitals on balance sheet either, this creates uncertainty
as to who has ultimate responsibility.
* Within a few years of financial
close, PFI charges are in some cases much higher than anticipated. This
raises questions about the reliability and validity of the VFM case that
was used to justify the decision to use private finance.
* The high cost of
PFI means that about 26% of the increase in income in 2003 since 2000
is going to pay for PFI charges for new hospitals. About half of the income
that the SPVs receive from the trusts relates to the cost of capital.
* About half of the income
the SPVs receive from the trusts is paid to the SPVs’ subcontractors
(typically sister companies) for construction, maintenance and services.
Subcontracting in this way makes it difficult to isolate the cost of services
in PFI contracts since subcontractors are likely to have multiple sources
of income. This puts the public sector at a disadvantage when it tests
the market some years into the contract.
* The SPVs were paying
an effective cost of capital of 10% in 2002, about five points higher
than the public sector’s cost of borrowing. The SPVs’ high
effective cost of capital means that PFI contracts are considerably more
expensive than the conventional procurement.
* The SPVs made a post-tax
return on shareholders’ funds of more than 100% in each of the three
years 2000–02, higher than elsewhere in the industry and which,
in the case of the Meridian Hospital Company Plc, was more than expected.
* This financial analysis
is likely to underestimate the total returns to the parent companies because
the SPVs subcontract to their sister companies and some of these subcontractors
benefit from additional income via user charges for car parks, canteen
charges, etc.
* £123 m or 51% of the
private sector’s receipts from the trusts are attributable to the
cost of capital. Since this is about five percentage points above the
cost of Treasury debt, then the extra cost of private finance constitutes
the cost of transferring risk, the risk premium. The risk premium was
approximately £62 m in 2002. It is unclear whether this is money
well spent.
* Six out of the 13
trusts we analysed are in deficit, and four of the nine trusts with off
balance sheet PFI projects had significant net deficits after paying for
the cost of capital.
* Assuming that the financial
performance of trusts is a proxy for affordability, then the fact that
hospitals with PFI contracts were more likely to be in deficit than the
national average in the period 2002–03 suggests that PFI is not
affordable. This has potentially serious implications for service provision
and access to healthcare.
* As well as the cost to the
trusts, PFI creates additional costs at Treasury level since the capital
charges that would normally be recycled within the healthcare economy
‘leak’ out of the system. We estimate conservatively that
this is costing about £125 m a year.
Taken together, this financial
analysis shows first, that in some cases PFI has turned out to be less
economical than expected, and secondly, since these are all long-term
projects, it is impossible to know whether they will deliver VFM over
the full term of the contract. In so far as they are costing more than
expected, this has an impact on the individual trusts and the wider NHS
budget that must affect both staff and patients.
Financial Reporting
and Accountability
* Despite annual costs in
each sector of about £210 m for just these initial projects, there
is little information available to the public as taxpayers and users.
* Financial information about
PFI is opaque, partly because of Government-imposed confidentiality. In
the roads sector in particular, this restricts access to the Highways
Agency’s full business cases used to support the case for using
private finance. The lack of information in the public domain makes it
difficult to estimate the exact extent of the commitments incurred by
the Highways Agency and the Department of Transport (DoT) and therefore
provides little accountability to the public. In the NHS, disclosure is
generally better than in central or local government.
* Private sector organisations
use complex structures that involve close company status. Therefore related
party transactions are not disclosed. The result is that returns on PFI
projects are spread between these various entities and thus are disguised.
* Not only is there a lack
of explanation for the treatment of PFI assets/liabilities and income/expenditure
in both sectors, neither the treatments nor the amounts match across the
public and private sectors. Some PFI projects are accounted for on balance
sheet but others are off balance sheet and there has been a change in
accounting policy in relation to some projects.
The net result of
all this is that while risk transfer is the central element in justifying
VFM and thus PFI, our analysis shows that risk does not appear to have
been transferred to the party best able to manage it. Indeed, rather than
transferring risk to the private sector, in the case of roads DBFO has
created additional costs and risks to the public agency, and to the public
sector as a whole, through tax concessions that must increase costs to
the taxpayer and/or reduce service provision. In the case of hospitals,
PFI has generated extra costs to hospital users, both staff and patients,
and to the Treasury through the leakage of the capital charge element
in the NHS budget. In both roads and hospitals these costs and risks are
neither transparent nor quantifiable. This means that it is impossible
to demonstrate whether or not VFM has been, or indeed can be, achieved
in these or any other projects.
While the
Government’s case rests upon value for money, including the cost
of transferring risk, our research suggests that PFI may lead to a loss
of benefits in kind and a redistribution of income, from the public to
the corporate sector. It has boosted the construction industry, many of
whose PFI subsidiaries are now the most profitable parts of their enterprises,
and led to a significant expansion of the facilities management sector.
But the main beneficiaries are likely to be the financial institutions
whose loans are effectively underwritten by the taxpayers, as evidenced
by the renegotiation of the Royal Armouries PFI (NAO 2001a).
Our study has identified
a number of areas for future research including longitudinal case studies
that track the long-term relationships between contracting parties; an
investigation into the technical accounting issues that surround accounting
for the assets involved in PFI; a comparison of the financial performance
of trust hospitals with PFIs against those without PFIs; and an examination
both of the impact on public expenditure and the financial performance
and viability of both public and private sector partners.
In conclusion,
as we state earlier, our concept of accountability in the context of public
expenditure on essential public services implies first that citizens,
or at least their political representatives, the media, trade unions,
academics, etc, can see how society’s resources are being used and,
secondly, that no members of that society are seen to have an explicitly
sanctioned unfair advantage over others in relation to how those resources
are used. With respect to the first point, the difficulties experienced
by the research team in obtaining and interpreting the financial statements
of the relevant parties do not generate much hope that patients, road
users, taxpayers and other citizens can see how society’s resources
are being used. It is significant that more information is made available
both by the companies and the Government to the capital markets than to
the public at large. Within the financial statements there is little information
about the impact of PFI contracts on the performance of the procurer,
and there is a build-up of commitments and implicit guarantees within
very long-term contracts about which there is little transparency. With
respect to the second point, our analysis suggests that PFI is an expensive
way of financing and delivering public services that may, where public
expenditure is constrained, lead to cuts in public services and/or tax
rises. In contrast, we suggest that the chief beneficiaries are the providers
of finance and some, but not necessarily all of the private sector service
providers rather than the public sector.
The above article was
reproduced from the ACCA's own website at:
http://www.accaglobal.com/research/summaries/2270443
and a PDF version is
available for downloading at ACCA
PFI - Please note that it is 864K in size.
Please note-
we give respect where respect is due.
Whilst we applaud and respect the NHS staff that work and deliver incredible
results to patients under pressure from ridiculous amounts of red tape
in adverse conditions, we deplore the armies of paper pushers that the
Labour government is creating in their desperate attempt to justify
the huge amounts of tax that they are wasting on the NHS.
We are a "not for profit" organisation who believes that in
the new era of openness under the Freedom of Information Act that it
is in the interests of all parties to be open and honest about the value
for money that the new Labour reforms are achieving for all of the billions
of pounds that they are costing.
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