How labour government squanders £300 billions with PFI schemes

On the face of it, PFI schemes does not sound like a good deal- decide what you want, find someone to supply it, then sign a contract that binds you into a legal straitjacket for decades, during which you pay them 37 times what the item is worth.

Such a deal makes even less financial sense in a country still struggling to escape the effects of the worst slump since the Great Depression. Yet this is what the labour Government's promotion of private finance initiatives (PFIs) to pay for public services has foisted on the taxpayer.

The taxpayer is, in effect, locked into making enormous annual payments for 667 school, hospital and other public-sector programmes with a capital value, or price, of around £55bn. The good news is that more than £37bn has been paid. 

But the overall bill for the contracts is more than £262bn, and this will not be fully paid off until 2047.

And that is not all. With a fresh catalogue of further projects valued at £11bn – in capital costs alone – currently under negotiation, Britain's liability for PFI projects since 1997 could exceed £300bn.

The PFI – the brainchild of the former Conservative chancellor Norman Lamont – was seized upon by Tony Blair in 1997, when he swept into power with a New Labour government determined to show that it could be the party of business. The Government committed itself to keeping the proportion of public debt to gross national product (GNP) below 40 per cent. Financing investment through PFI – with costs kept off the balance sheet – was seen as a way of achieving this, and led Alan Milburn, then health minister, to declare that PFI was "the only game in town".

PFI works on the principle of private firms building various forms of infrastructure – whether roads or bridges, schools, hospitals or prisons – then charging the public sector for using them over lengthy contracts that can run for more than 30 years.

But it has left a legacy of debt that will last a generation, according to unions who have slammed what they say is a credit-card approach to buying-in essential services. Calling for an end to the use of PFI to pay for public sector projects, Brian Strutton, the GMB's national secretary for public services, said: "PFI is building up a legacy of high-interest debt that will last for decades. The public is paying over the odds on PFI projects, with debt ratios in most areas at over 500 per cent. This is like paying for schools and hospitals by credit card."

Jean Shaoul, professor of public accountability at Manchester Business School, said: "They've mortgaged the future in the most profligate way... we have a government that acts in the interests of a financial oligarchy. Using the private sector as an intermediary to raise finance to build hospitals and to run them is extremely expensive and far more expensive than if the Government were to do it itself."

A case in point is the Norfolk and Norwich University Hospital, where the PFI consortium made tens of millions on a deal described by the Commons' Public Accounts Committee as "the unacceptable face of capitalism".

Firms have also made millions in profit by putting up the money for IT programmes that have become so expensive the Government now frowns on PFI being used to fund them. To take only one case: payments for the Crown Prosecution Service's Compass IT system come to £670m over the 10 years of the contract, 37 times the £18m capital value.

And the nature of PFI deals means that payments still have to be made even if the project is abandoned. Balmoral High School in Belfast closed six years after it was built, when pupil numbers halved. However, the Northern Ireland Department of Education owes the contractor £370,000 a year for the next 18 years.

Making changes to PFI-funded buildings and projects can cause costs to spiral. A 2008 National Audit Office report found that £180m a year is paid out for contractual amendments. And it highlighted extortionate charges for routine maintenance – such as £302 for an electric socket to be fitted, £47 for a key, and almost £500 to fit a lock.

Peter Dixon, chief executive of University College London Hospital – which pays some £43m in PFI charges a year – says that inflation is a real fear. "If we run into a bout of inflation, because all these payments are index-linked, then we are in trouble, all of us."

He described the arrangement as "expensive and inflexible", but added: "For the past 12 years the only way you were going to get a brand new hospital was by the PFI route... people knew they weren't cost effective but it was the only way they could get funding."

But a Treasury spokesman said: "PFI has a good record of delivering to time and budget, and represents good value for money over the whole life costing by telling us what it will cost to build and manage our assets."

Contracting out: Familiar faces with PFI connections

Alan Milburn MP
He famously described PFIs as the "only game in town" during a stint as health minister, and is now a director of Diaverum Healthcare – a company that is contracted to run the kidney dialysis unit at the PFI-funded Burnley General Hospital.

Quentin Davies MP
The Defence minister is a former director (he resigned in 2008) of Vinci UK and Vinci SA – firms involved in PFI projects with a total capital value of £223m which will cost £933m over the terms of their contracts.

John Reid MP
The former home secretary is (since November 2009) a paid consultant to G4S UK and Ireland. G4S is involved in PFIs, mainly in prisons, with a total capital value of £330m; they will end up costing £3.6bn.

Steven Norris
Once Conservative Transport minister under John Major, he is now the chairman of Jarvis, a major PFI player which has a number of contracts, worth £721m, with government. The total capital value of PFI programmes funded by Jarvis comes to £175m.

Adam Ingram MP
A defence minister for six years under Tony Blair, he now gets paid more than £50,000 a year as a consultant to Electronic Data Systems – an MoD contractor responsible for the PFI-funded Tafmis IT system which cost £171m over its 10-year contract.

Patricia Hewitt MP
During her tenure as health secretary, BT won IT contracts from the NHS. The former minister is now a director of BT Group and was paid £59,475 for 140 hours' work over the past six months – a rate of £424 an hour.

PFI initiatives - the Lords' inquiry

The continuing flaws in the PFI option have been exposed in evidence to a House of Lords inquiry into the system.

A consultant, T Martin Blaiklock, said the Government had used the PFI option "like a credit card". He added: "It allows payments, which would normally be due to be paid today, to be paid at some future date. The key is to know when to use it, for what, and for how much."

The British Medical Association said: "PFI appears to be an unnecessarily costly and short-sighted means of building new hospitals."

But the Confederation of British Industry claimed that PFIs had helped to deliver a broad range of modern projects with "high-quality services and maintenance activities".

It added: "Without this long-term investment, the UK would not have the infrastructure required to support our economy, nor the public services that are needed."

The soaring cost to taxpayers

Queen Mary's Hospital, Roehampton Cost £73.5m to build, but will cost taxpayers in excess of £340m by 2034.

John Radcliffe hospital, Oxford Taxpayers will have to pay back £832m for key developments at a hospital which cost £134m to build.

Queen Elizabeth Hospital, Greenwich Trust is locked into a PFI deal costing £9m a year more than if it had borrowed money from the Government. Last year it admitted its PFI contract is "underfunded" by £8m to £10m a year, and it was also carrying debts of £65m.

Norfolk and Norwich University Hospital The 953-bed hospital will cost not £229m, as announced in 1998, but £16bn, including PFI charges, staff and equipment. Rent costs are £800m until the end of the contract in 2037.

Paddington Health Scheme £900m super-hospital abandoned in 2007; costs rose £300m to £894m and finish date slipped to 2013.

Leicester hospitals Pathway Project Costs up from £711m to £921m; scrapped in 2007.

University College London Hospital PFI project, rose from £120m to £430m or so in the three years prior to signing off on the deal.

From:

http://www.independent.co.uk/news/uk/politics/iiosi-special-investigation-how-government-squanders-billions-1877276.html

Pressure to reveal ex-ministers' outside pay

Pressure is mounting on the authorities at Westminster to overhaul the rules that allow MPs and peers to avoid disclosure of earnings from outside interests.

The "revolving doors" between parliament and business have come under increased scrutiny in recent weeks with former ministers such as Patricia Hewitt, former health secretary, taking lucrative outside jobs.

About 30 former Labour ministers - and scores of MPs and peers - have won posts in the private sector in the past two years but only a handful declare their remuneration.

Lord Warner, the former health minister, is now chairman of UK HealthGateway, a health business; Richard Caborn has joined Amec; Ian McCartney is at Fluor Corporation; John Reid, former home secretary, is at Celtic Football Club, and Denis MacShane is at United Utilities.

Almost half of these are still sitting MPs, such as Ms Hewitt, who has taken jobs at BT, Cinven and Alliance Boots.

Paul Flynn, Labour MP and member of the Commons public administration committee, has called for a ban on former ministers taking jobs in industries related to their former roles.

Although the appointments are vetted by parliament's advisory committee on business appointments, the group has only ever prevented one MP and two civil servants from taking up their new roles.

Many individuals do not say how much money they are earning from their extracurricular activities.

MPs have only to say how much they earn from directorships and other jobs if they are "providing services in their capacity as an MP", according to the House authorities.

Peers, who have a separate register of interests, have to disclose only how much they earn from "advice in relation to parliamentary matters".

However, Sir Alistair Graham, former chairman of the Committee on Standards in Public Life, said parliamentarians should disclose all their interests in detail.

"If you're playing an active role in politics, speaking in debates or trying to amend legislation, people should be able to see what your interests are and do you have a private - as opposed to public - interest in legislation," he told the Financial Times.

Among those who do not disclose their earnings is Lord Cunningham, the former Labour "cabinet enforcer", who is a partner at two political and public policy consultancies. He refused to comment.

Lord Truscott, who has just taken a job as a consultant to Gavin Anderson, the public relations group, said there was no reason why he should declare his pay because he advised the company and not its clients.

Many MPs and peers have enjoyed earlier careers in professions such as law, which they want to resume in later life.

But Adam Ingram, former defence minister, said it was hard to disentangle whether or not a politician had won a job because of his or her political contacts and experience.

Mr Ingram has just taken a £48,000-a-year job at a company called Signpoint Secure.

He said he was surprised by the lack of disclosure by other peers and MPs. "Some MPs do it in a way that they don't disclose what they're earning," said Mr Ingram.

There was nothing wrong with MPs having outside interests, he said. But there was a lack of transparency in both the Commons and Lords.

"My view is that all of that has to change," he said.

Norman Lamb, MP for North Norfolk, said peers should not have to disclose income from their business interests where these had no relationship with politics.

But it should be a "matter for public interest" where MPs and peers had work that could draw on their political experience.

"I think we are moving into a new era where transparency has become the order of the day," said Mr Lamb.

"You shouldn't have a situation where people are simply appointed and can use their position to earn money through contacts they have had in government - the whole system is unattractive and unsustainable," he added.

Mr Lamb has complained to the authorities about Lord Cunningham's failure to disclose his clients or remuneration on the register of interests.

Lord Woolf, chairman of the sub-committee on lords' interests, is carrying out a preliminary investigation, which may lead to an inquiry by the committee.

However, one MP voiced the attitude of many of his contemporaries when he told the FT: "I don't see why we should have to tell the whole world how much money people are making from jobs which may have nothing to do with their parliamentary roles."

http://www.ft.com/cms/s/0/54a9a00c-fad6-11dc-aa46-000077b07658.html

Health Direct asks the question of the last shameless MP vulture- would any of these incompetent, lying MPs have been offered these roles in the private sector if they did not have the experience of being elected an MP and then running government departments? If the answer is no- then tax payers have the right to know how much these MPs are supplementing their tax payers income.

Climb down over junior doctor fiasco MMC MTAS IT system

The Labour govt backed down yesterday and agreed to an immediate review of a flawed selection system that has left thousands of able young doctors without the prospect of a job and many threatening to leave the NHS. The independent review will start today and may recommend changes to the system before the current interview round has been completed.

Patricia Hewitt, the Health Secretary, has come under increasing pressure from within the medical profession to review the new, online system, the selection methods and the questions candidates had to answer. In some hospitals half of junior doctors did not even get interviews for posts at the next level of their training.

Concerns about the Medical Training Application Service, (MTAS), which was introduced in January, came to a head at the weekend after The Daily Telegraph gave a voice to angry and dismayed junior and senior doctors.

On Monday night Mrs Hewitt met members of the powerful Academy of Medical Royal Colleges. She agreed that the review should take place and that the academy, which represents 14 royal colleges, would lead it.

The decision gives back to the royal colleges powers they lost over regulation of specialist medical training when Modernising Medical Careers, the new training scheme for hospital registrars, was introduced.

Prof Dame Carol Black, the academy president, said: "The academy welcomes the decision to carry out an immediate review of the Medical Training

"Shortcomings in this critical element of the Modernising Medical Careers have caused dismay and much distress. We will work with the department to ensure action is taken to remedy faults and to restore confidence."

The review will be led by Prof Neil Douglas, the vice-president of the academy and president of the Royal College of Physicians of Edinburgh.

The senior doctors have been given the power to identify what action is needed and when it should be taken - either before the end of the current round or before the start of the next round of job applications at the end of next month.

The British Medical Association said Mrs Hewitt had not gone far enough.

"The Government has finally been forced to address the appalling problems with this system," said Dr Jo Hilborne, the BMA junior doctors' committee chairman.

"We have been warning since last summer that these reforms were being rushed through too quickly. From the point of view of the thousands of doctors who've been messed around, given incorrect information, or denied job opportunities that they deserved, it's a shame the Government didn't listen then.

"Not only is this response too late, it also does not go far enough. While we welcome a review, the only fair solution now is for the interview process to be suspended until it can be clearly shown that no doctor has been disadvantaged as a result of the Government's mistakes".

Dr Hilborne said they were disappointed that they had not been invited to take part in the review panel.

Prof Gus McGrouther, professor of plastic and reconstructive surgery at the University of Manchester, has described the new system as the "biggest crises to hit British medicine since the start of the NHS".

He said the process should be stopped altogether.

"How can we carry on interviewing in a system that they now admit is flawed? It is likely that this first round of interviews will fill most of the jobs up but it may be excluding some doctors who are better. This is unfair," he said.

On Monday senior surgeons on an interview panel in Birmingham refused to interview 80 candidates because they said the system was not fit for purpose and they could not be confident they would be choosing the right doctors for the jobs.

The Government has promised that there will be enough jobs for British-trained graduates but there were 30,000 applications for 22,000 posts.

From:
http://www.telegraph.co.uk/news/main.jhtml?xml=/news/2007/03/07/ndocs07.xml

Health Direct first warned over a year ago (6 Mar 06) that the MMC's computerised application was in meltdon in Junior Doctors' new IT MMC MTAS recruitment system is a disaster.
http://www.healthdirect.co.uk/2006/03/junior-doctors-new-it-mmc-recruitment.html

As it has therefore taken the labour govt a year to wake up to the IT disaster that it created, how can we be confident that it will be sorted quickly?

About as likely as John "not fit for purpose" Reid's spin yesterday about sending text messages to illegal immigrants asking them to leave. How can anyone have any confidence when the labour govt doesn't know how many people there are, what their names and addresses are let alone their correct phone numbers. Pathetic.

Doctors who ban surgery for smokers are right, says nanny Hewitt

Patricia Hewitt, the Health Secretary, has given her blessing to the policy of denying operations to smokers until they kick the habit. Endorsing a position adopted by some health trusts, the minister also voiced support for doctors who order patients to lose weight before treatment.

Mrs Hewitt said she backed the increasing number of doctors who make decisions about whether it is appropriate and safe to operate on smokers, or patients who are significantly overweight.

"What I've been seeing. . . is more and more health centres and GP practices focussing on that kind of support," she told The Sunday Times. "They will say to patients, you shouldn't have this operation until you've lost a bit of weight and stopped smoking."

However, she added that it would be "dreadful" to deny treatment on the basis that patients were to blame for their condition. Hip and knee replacements are among the operations likely to be denied to those who are overweight, while smokers could miss out on heart bypasses.

The Health Minister's views on the issue, which mirror those of a growing number of medical experts, are based on what she describes as "best practice" – because operations are less likely to be successful when the patient is very fat or a heavy smoker.

However, some doctors have expressed concern that the stance could be used by some NHS trusts as a means of saving money, while others have questioned the criteria that will be used to judge an appropriate weight for surgery.

The two sides of the argument were outlined in a debate published last month in the British Medical Journal.

Prof Matthew Peters, the head of thoracic medicine at the Concord Repatriation General Hospital, Sydney, Australia, claimed that five non-smokers could be operated on for the cost of four smokers, and that their outcomes would be better.

However, Prof Leonard Glantz, of Boston University School of Public Health, in Massachusetts, said: "It is shameful for doctors to be willing to treat everybody but smokers in a society that is supposed to be pluralistic and tolerant."

A policy of encouraging smokers to give up the habit before they are granted operations was put forward last year by hospital managers in Norfolk and Newcastle-under-Lyme, Staffordshire, where Health Service trusts are millions of pounds in debt.

The Norfolk trust explained the move by saying that smokers are at increased risk of complications and take more time to recover from surgery, meaning they have longer and more expensive stays in hospital.

Smokers, however, described the policy as blackmail, pointing out that they pay taxes along with non-smoking citizens.

From:
http://www.telegraph.co.uk/news/main.jhtml?xml=/news/2007/02/12/nsmoke12.xml
(If anyone is reading from the Times, your website update last week is painfully slow and content updates lost.)

The intrusion by the politically correct nanny Hewitt to find more ways of rationing NHS services had an unusual result last year.

Health Direct posted on Wed 30 Aug 06 in Call for IVF ban for obese, but young, smoking lesbians may win IVF postcode lottery when very obese women should be denied IVF fertility treatment, experts say. The British Fertility Society is recommending women with a body mass index of 36 and over should not be allowed access to fertility treatment.

Underweight women and those classed just as obese (BMI over 29) should be forced to address their weight before starting treatment, the society said. NHS guidelines say overweight women should be warned of the health risks, but do not impose any ban on treatment.

Bed closures healthy sign for NHS, says Hewitt

Patricia Hewitt, the Health Secretary, was criticised yesterday for claiming bed closures were a sign of "success" as new figures showed NHS trusts will end the year more than £1 billion in the red. The scale of the health service's financial crisis emerged as Miss Hewitt delivered a presentation to the Cabinet on NHS "reconfiguration" — plans which will lead to the closure of dozens of maternity units, casualty departments and community hospitals.

Tony Blair tried to rally support for his embattled Health Secretary during yesterday's meeting by hailing her proposals as the "biggest change in the NHS since its foundation". He added that better care and value for money could go "hand-in-hand".

But the Prime Minister's spokesman admitted later that ministers were free to oppose proposals to close hospitals or cut services in their own constituencies. His comments came as research showed that frontline NHS trusts which run hospitals and GP clinics across England are on course to finish the year £1.05 billion in the red — only a fraction below last year's record deficit.

The figure is drawn from a Conservative analysis of the deficits being forecast by each of England's 10 strategic health authorities.

While front line trusts are deep in the red, the strategic health authorities themselves are on course to end the year with a huge £920 million surplus — almost twice last year's figure. This allows ministers to say the overall deficit across the whole NHS is only £132 million.

However, the Tories claimed that health authorities have only been able to produce such a big surplus by slashing the amount they spend on crucial services, including training for doctors and nurses.

The figures were released as Miss Hewitt was accused of living on a "fantasy planet" after defending the proposals to overhaul services across the country.

She claimed the planned changes would allow more people to be treated closer to home by their family doctor or local health centre, rather than having to go into hospital.

"That will mean fewer emergency admissions, so you need fewer beds. Fewer beds are a sign of success — not a sign of failure," she said in a newspaper interview.

Miss Hewitt took up the theme during yesterday's presentation to the Cabinet. She argued that NHS reconfiguration was being driven by both patient demands and changing medical practices.

It was increasingly possible to treat more minor conditions in local health centres rather than the local hospital, she said. At the same time, specialist care for conditions such as heart disease were increasingly being concentrated in regional centres of excellence.

Andrew Lansley, the shadow health secretary, said Miss Hewitt's remarks would be greeted with incredulity at a time when many trusts were struggling to cope with huge deficits.

"The Health Secretary is living on a fantasy planet, far removed from the reality of the front line cuts that are having a daily adverse impact on NHS staff and patients," he said.

"Despite this year's savage job losses, bed cuts and service closures, the NHS organisations providing front-line care are no less in the red than they were last year."

The Patients Association said it did not see bed closures as a sign of success.

"What we hear about from patients is inappropriate discharges with patients being sent home too soon," said Katherine Murphy, a spokesman for the association.

"We heard from one patients due to be discharged on a Wednesday who was away from her bed for 50 minutes, the night before to take a bath. When she went back to the ward someone was in her bed.

"Beds are being closed because of financial deficits. I would not call this a mark of success," she said.

From:
http://www.telegraph.co.uk/news/main.jhtml?xml=/news/2007/02/09/nhs09.xml

A split and indecisive labour government looks in the offing. The first two blogs that Health Direct posted at the beginning of this year look to encapsulate Labour’s dilemmas.

On Wed 3 Jan 07- in NHS hospitals told to delay operations to ease health service's debt underfunding Health Direct warned that the New Year has only just begun but it is clear that the next three months are not a good time to become ill as the NHS can not cope with Labour's underfunding of the health services as patients in some parts of the National Health Service are for the first time facing minimum waits to be seen and treated as managers attempt to balance their books. Suffolk, Hertfordshire, North Yorkshire and Kingston are all imposing various forms of minimum wait, with some primary care trust chiefs saying their organisations may follow suit as the NHS battles to recover from last year's £536m plus overspend.

On Tue 2 Jan 07 Health Direct noted that Labour leader defends hypocritical charges over NHS closures in her constituency - Cabinet minister Hazel Blears has defended her decision to take part in a protest over plans to close part of a hospital in her constituency. The proposals for Hope Hospital in Salford, Greater Manchester, are part of the controversial NHS shake up throughout the country.

Ms Blears, Labour chairwoman, said: "My first and foremost job is to represent Salford and the people of the area." It is very damaging for a minister to directly oppose labour government policy.