The National Health Service could save around £200 million a year through more efficient prescribing by GPs, a report by the think tank The King’s Fund has found.
While its extensive inquiry into general practice in England praised the majority of care, it found significant variation in prescribing across the country, and that substantial savings could be made if family doctors were more efficient in prescribing certain drugs, particularly statins.

The extensive review also other widespread variations in the quality of care and performance throughout primary care.

For example, one-third of patients with stomach or oesophageal cancer who needed an urgent referral to hospital were actually given a non-urgent referral by GPs.

In fact, overall, an eight-fold variation at which practices urgently refer patients with suspected symptoms of cancer on to specialists in secondary care was found.

Continuity of care continues to be an issue, as only just over a quarter of patients are able to see the doctor of their choice in the lowest performing practices.

Crucially, there were also wide variations in admission rates for patients that could actually be treated outside hospital, which is particularly important as the effective management of patients within the community could also save the NHS hundreds of millions of pounds a year, The King’s Fund said.

On a more general note, the inquiry’s report strongly backs the position of GPs as generalists rather than specialists, but also notes that the profession must embrace the radical changes laid out in the government’s reform of the health system – particularly new commissioning powers -  in order to “maintain its international reputation for excellence”.

In addition, in order to help meet the growing challenges in healthcare, such as the ageing population and increasing demand on service, by building on the changes already taking place within the system.

It calls on GPs to accelerate the trend for multi-professional teams that work closely alongside specialists outside the practice, move away from being ‘gatekeepers’ to ‘navigators’ who essentially co-ordinate care for people with complex needs, and place a greater emphasis on prevention of ill health.

There must also be a much stronger focus on improving the quality of care, the report notes, and also calls on GPs to take responsibility for driving forward progress through a stronger commitment to transparency, particularly on performance data, peer review and benchmarking, and better data capture and use of information.

“Although general practice in this country remains the envy of the world, there is no room for complacency,” warned The King’s Fund’s chief executive Chris Ham.

“While many practices have been at the vanguard of innovation and quality improvement, too many GPs remain unaware of significant variations in performance and do not give priority to improving quality,” he noted.

NHS Confederation acting chief executive Nigel Edwards said improving primary care and GP services is one of the biggest challenges facing the NHS, and that the report “highlights the need to address the major variations in the standards of care patients are receiving”.

He calls for the introduction of a national process to compare general practice standards which, he claims, would not only empower patients to compare the standard of care, but would also help “drive down variation in diagnosis, referrals and prescriptions, all of which are central to saving lives”.

According to the British Medical Association a “culture of self-scrutiny has existed for many years but now more than ever, given the increased intensity and complexity of general practice work nowadays, GPs need time off the treadmill so they can look critically at what they do and make improvements”.

“A reduction in bureaucracy would help them to do this, as would stopping the constant reorganisations within the NHS”, it stressed.

From: http://www.pharmatimes.com/NHS_could_save_millions_of_pounds_with_better_prescribing

Ministers have been accused of putting patient care and safety at risk by failing to endorse the concerns of the UK’s medical regulators over standards of doctors’ training across Europe.
The criticism of the government comes just after the General Medical Council claimed the present system of mutual recognition of training across the 27 member states was not working and might undermine public confidence in healthcare. It demanded an urgent review of all national medical qualifications to prevent migrant foreign doctors working outside their own country in health systems they may not understand.

An 18-page document from the Department for Business, Innovation and Skills (BIS) sent to the European commission this month on all professional qualifications covered by an 2005 EU directive did not specifically mention medical training. It did, however, raise concerns the present rules do not allow systematic language testing of EU doctors when they apply to join the UK medical register.

The issue of doctors’ training and their understanding of the differing health systems within the EU has come to the fore following the scandal over Daniel Ubani, a German doctor on his first UK shift as an out-of-hours GP, who accidentally killed a patient in 2008.

Labour’s shadow public health minister, Dianne Abbott, said: “David Cameron and Andrew Lansley are putting patient safety and standards of care at risk. The official government response on professional qualification does not include a single line about medical training, which is a travesty.

“To suggest that workers can operate in our healthcare system without proper training, assessments or being able to communicate with patients seems to me to be absurd.

“Whilst patient groups, professional bodies and health experts are all uniting in opposition to the NHS reorganisation, the Tory-led government has already abandoned any substantive commitment to minimum standards for doctors.”

A statement from BIS defended the department’s stance. “The European commission are chairing working groups of experts in medical education across the EU to look at the current minimum training standards for the main health professions, as part of the broader review of the mutual recognition of professional qualifications directive,” it said.

“They will look at each of the five health professions for which minimum standards are laid out in the directive, with a view to updating the training requirements and ensuring transparency. We are awaiting the outcome of these groups in April and May before considering this matter further.”

From: http://www.guardian.co.uk/nhs-patient-care-risk-eu-training-standards

David Cameron will this week take personal charge of the Government’s health reforms, amid fierce criticism of the plans.
The Prime Minister will unveil a “listening exercise” to reassure the public, doctors and Coalition MPs that the NHS is not being privatised by the back door.

There will be a three month pause in the legislative process which allows Liberal Democrat opponents of the plans time to weaken them. The proposals will pass to the Lords in June, giving the Coalition time for further changes.

Mr Cameron, Nick Clegg, his Lib Dem deputy, and Andrew Lansley, the Health Secretary, will explain the plans to give power to GP–led bodies and let private companies treat more NHS patients at a series of meetings.

They have been forced into the move after criticism from health experts and politicians.

Stephen Dorrell, the former Tory health minister, said that the Government had lost control of the changes. The electorate had the impression the reforms were an abrupt departure from those followed by health secretaries over the past two decades, he said.

“There’s a danger that the politics is seriously getting in the way of the policy,” he said. “The Government needs to rebuild political support.”

Officials have signalled that the Government is prepared to make some changes to the legislation to appease the Liberal Democrats.

These include the dropping of a requirement to force GPs to take control of health budgets even if they do not want to. There will also be new protections so that private firms cannot “cherry pick” the most lucrative work. Any changes are expected to be made during the Bill’s passage through the Lords in June.

Lib Dem backbenchers will meet on Monday evening to discuss what Mr Clegg should ask for in his negotiations.

Today MPs on the Health Select Committee will issue a report likely to be critical of the contentious issue of GPs commissioning care.

From: http://www.telegraph.co.uk/David-Cameron-to-take-charge-of-under-fire-NHS-reforms

The last Labour government left taxpayers with a £60 billion PFI bill for the scores of new hospitals it built during its 13 years in power, new figures reveal.
They shine a fresh light on the profligacy of the party’s use of Private Finance Initiative (PFI) schemes.

Labour ministers only paid £5 billion of the £65 billion “spent” on building more than 100 hospitals between 1997 and 2010.

The rest of the money, some £60 billion, must still be repaid by the taxpayer – with some of the gigantic debt lasting for more than 30 years.

The highest profile case concerns Barts and the London NHS Trust project, signed by ministers 2006, which provided two new hospitals in the capital.

By the time the coalition took office four years later nothing at all had been repaid – leaving an outstanding bill of £5.3 billion.

Jesse Norman, the Conservative MP, accused Labour of “extraordinary hypocrisy”. Their PFI bill for hospitals will cost every working family in Britain £3,600, according to Mr Norman’s figures.

PFI schemes were started by the last Conservative government under John Major in the early 1990s. However, they mushroomed under Labour with Gordon Brown, as Chancellor, using them as a way of meeting his own public borrowing rules.

Under the schemes, instead of the government raising money upfront, a private company is given a lengthy contract to build a school or hospital and then provides related ‘services’ to the public sector.

The Government leases the building for the length of the contract before it goes back into public ownership.

Any change, however small, to the building or service provided can be charged at sky high rates, allowing the company to make a huge profit.

New analysis of official figures shows that Labour initiated PFI contracts to build 103 new hospitals between 1997 and 2010. The party proclaimed at the time of the last election it has been responsible for a “new generation” of hospitals in Britain.

The total “unitary charge” payments for these hospitals was £5.1 billion. However, many projects will not be fully paid off for more than two decades – with the last one not “completing” until 2048.

The total accumulated “unitary charge” payments for the hospitals will be £65.1 billion – meaning that only 7.8 of the total was actually paid for before Labour left office.

Costs have escalated because of rising fees and additional charges for maintenance, cleaning and catering.

According to official figures, the NHS currently pays back £1.25 billion each year – but this figure will increase until 2030 when it is expected to hit £2.3 billion.

The Barts and the London NHS Trust project, to develop Barts into a “centre of excellence” for cancer and cardiac treatment and to build a new hospital at The Royal London , was started in 2006 – but payments will not even commence until 2013-14 and will not be finished until 2048.

By that time, it will have cost £5.3 billion despite only having a “capital value” of £1 billion, according to the Treasury.

Poorly negotiated PFI contracts have already led to examples of waste including Queen Elizabeth Hospital in Woolwich having to have 64 visits a year from pest controllers even if there are no pests to control. When there are pests, the trust must pay for further visits.

In another example, officials at the Central Middlesex Hospital in north west London said that, on average, contractors charged it £210 to install an electric socket.

Senior Labour figures including Gordon Brown strongly defended using PFI schemes while in power but, more recently, leading shadow ministers have admitted errors.

John Healey, the shadow health secretary, said earlier this month: “There is definitely a case for saying we were poor at PFI, poor at negotiating PFI contracts from the outset.”

Andy Burnham, a former health secretary who is now shadow education secretary, said last year: “We made mistakes. I’m not defending every pen stroke of the PFI contracts we signed.”

Mr Norman, a member of the Treasury select committee, said: “This shows extraordinary hypocrisy. The last Government claimed to be investing in public services.”

“In fact their true investment was less than less than one tenth of what they claimed. Labour didn’t manage to pay for even one new PFI hospital on their watch.”

“Labour maxed out the nation’s credit card with a £60 billion bill for new hospitals, loading future generations with staggering debt repayments.”

“After bringing the country to the brink of bankruptcy, they now have no credible plan to clear up the mess they left us with.”

“Their approach – to spend less without making any reforms at all – would leave the NHS in crisis.”

From: http://www.telegraph.co.uk/Labour-left-taxpayer-60billion-bill-for-new-hospitals

The British Medical Association (BMA) has renewed its call for England to abolish prescription charges, after it was announced that they will rise from £7.20 to £7.40 on April 1 and Scotland abolishes them altogether.
The government in England  “should be following the lead set by the three other nations in the UK and making plans to abolish them,” said Hamish Meldrum, chairman of council at the BMA.

The current system is “a chaotic and unfair mess – patients in England have to pay, while those in Wales and Northern Ireland do not,” and from April 1 Scotland will completely scrap its charges, “a move that further exaggerates the absurd postcode lottery that exists in the UK,” said Dr Meldrum.

“The bureaucracy needed to administer prescription charges is cumbersome, many of the exemptions are confusing and unfair. Patients with disabling long term conditions still have to pay them, despite a recent report recommending they be phased out,” he added.

The BMA accepts that these are financially difficult times, said Dr Meldrum but, he added: “this is a tax on the sick that contributes only a modest amount to the NHS budget and does not offset the unfair disadvantage of asking the ill to pay for their medicine.”

Responding to the BMA’s charges, a Department of Health official claimed that around 90% of prescription items in England are already dispensed free of charge, and that the price of the 12-month prescription pre-payment certificate is to be frozen for the second year running, allowing patients to get all the prescriptions they need for an average of £2 a week.

Moreover, abolishing prescription charges in England would lead to a shortfall for the NHS of more than £450 million a year, equivalent to the salary costs of nearly 18,000 nurses, or 15,000 midwives or more than 3,500 consultants, the official added.

The Scottish National Party (SNP) pledged to scrap prescription charges during its election campaign in 2007, and since then the price has dropped each year. Last week, the Scottish Parliament’s health committee voted to finally remove the charge, which now stands at £3, defeating a last-minute attempt by Scottish Conservative Member of Parliament (MSP) Mary Scanlon, -  with the sole support of Liberal Democrat MSP Ross Finnie – to retain it.

Scottish Public Health Minister Shona Robison described free prescriptions as “a long-term investment in improving health” and dismissed allegations that the measure “will only help those people who are described as rich.”

“If people are put off seeking appropriate care for financial reasons their health will not improve, but if patients can get the treatment they need it will not only help their health but ultimately help to reduce the longer-term costs to the health service as well,” said Ms Robison. “Importantly, abolition will help all those people who have long-term health conditions which don’t currently entitle them to exemptions,” she added.

From: http://www.pharmatimes.com/Doctors_slam_UK_prescription_charge_lottery

One in four NHS trusts has cut spending on out of hours care, new figures disclose.
At least 20 trusts have reduced their budgets for doctors to visit patients in the evenings and at weekends by a total of £4million.

The cuts in after-hours budgets led to warnings of a repeat of the case of Daniel Ubani, the incompetent German locum who killed a Cambridgeshire man with a morphine overdose in 2008.

About 78 of England’s 152 primary care trusts released information on their out-of-hours spending after Freedom of Information Act requests by the magazine GP. Twenty said they had cut their budgets.

The cuts, made in the trusts’ 2010-11 budgets, come before the start of the next four-year spending round, which will require the NHS to find efficiency savings worth £20 billion.

Across the remaining trusts that released information, total spending on out of hours care rose by only £3.6 million.

Health experts said some trusts might have been able to make savings without affecting services, by renegotiating inflated contracts.

However, doctors and patients’ groups said that in many cases lower spending would add to concern about the quality of care.

A study commissioned by the Department of Health last year found wide variations in the quality of care provided by out-of-hours contractors, including GP groups and private health care firms.

Katherine Murphy, the chief executive of the Patients’ Association, said the latest cuts would reduce the quality of care, risking “a repeat of the case of Dr Ubani”.

She said: “By pressuring providers to look for ever cheaper options, the Government is forcing them to enter a race to the bottom.

“Out-of-hours services need to be staffed by doctors who are as trained and experienced as their colleagues who work during the day. Cutting funds to pay for them will mean fewer and possibly less able doctors.”

Dr Fay Wilson, who chairs an out-of-hours group in Birmingham, said cutting out-of-hours care was a “false economy” for trusts because more patients would be forced to seek care from accident and emergency wards.

“If you are going to reduce the cost, then you will be reducing the number of clinicians you have on,” she said. “That leaves gaps. You also don’t get the same level of supervision and support.”

Richard Vautrey, of the British Medical Association, said cutting costs could harm services.

“There is a concern that you can pare a service down to such a level and reduce funding to such a level that you put patient safety issues at a higher risk,” he said.

The Department of Health said the Coalition was improving out-of-hours care. A spokesman said: “This is not about cutting costs – we are investing an extra £10.7 billion in the NHS – it’s about ensuring GPs, not bureaucrats, are responsible for securing safe and appropriate out-of-hours care.”

The BMA also published a poll which it said showed that most GPs opposed government plans to give them control over £80 billion of NHS budgets.

About 65 per cent of family doctors believe competition between providers, including NHS and private companies, will reduce the quality of patient care, while 61 per cent said the Government’s reforms mean they will spend less time with patients.

The Department of Health said the survey showed some doctors had “misconceptions” of the planned reforms. Andrew Lansley, the Health Secretary, said there was no alternative to his reforms to make the health service more efficient.

“Unless we modernise, every year the relative costs of running the NHS will go up,” he said. “Demand will grow, the bureaucracy will expand and inefficiencies will become entrenched.

“There is no easy option. Sticking with the status quo and hoping that a bit more money will be enough to meet the challenges ahead is a complete fiction.”

From: http://www.telegraph.co.uk/Patients-at-risk-as-health-trusts-trim-out-of-hours-care

Nursing homes are to be told to submit to new “excellence tests” or risk losing public funding under new plans.
Homes will be assessed on staff training and turn-over, daily activities for residents, and the quality of care they offer.

Only those which professionally register all their staff are expected to be allowed to take part and the results of the tests will be published to give families information on what they can expect from individual homes.

Ministers have warned that only those institutions which meet the new standards are likely to be funded in future by local councils.

But critics of the plan said small independent care homes might not be able to afford the cost of registering for the new scheme and could go bankrupt, forcing residents to move even if the home was offering outstanding care.

The Independent has been highlighting the neglect of elderly residents in some homes, which campaigners say will get worse as public-sector cuts start to bite. More than half a million elderly people are in nursing homes and the number is expected to rise to 1.3 million by 2050.

Local councils spend around 50 per cent of their budgets on social care, the bulk of which is for the elderly. As a result of the public-sector funding cuts highlighting the neglect of elderly residents in some homes, which campaigners say will get worse as public-sector cuts start to bite.

More than half a million elderly people are in nursing homes and the number is expected to rise to 1.3 million by 2050.

Local councils spend around 50 per cent of their budgets on social care, the bulk of it on the elderly. As a result of the public-sector funding cuts announced in October’s comprehensive spending review, the same councils will have their budgets cut by up to 9 per cent a year for the next four years.

At Christmas, the Care Quality Commission (CQC) carried out spot inspections of 234 health and social-care institutions, including nursing homes, which revealed significant lapses in standards in more than a third of cases. Ten reviews resulted in the highest form of censure, which could to lead to the commission withdrawing licences to operate.

After one review, a nursing home in Luton – run by Southern Cross, Britain’s largest care-home provider – was closed immediately because conditions were so bad. The commission found that 26 other institutions were not meeting required standards in all areas and ordered improvements.

Later in the year, the Government will unveil its long-term plans for reforming the care sector. These are likely to include the introduction of a new “insurance model” to pay for care in later life. People without insurance forfeit their assets when they die to pay for care they have received.

Speaking before a consultation to decide how the excellence rating will be assessed, Paul Burstow, the Care Services minister, said good-quality care was not always about money. “Compassion, common sense, treating people with dignity and respect are not simply about spending more. They are about the way you do things. We want to look at what’s being done [in nursing homes] to add life to the years you’re having rather than just adding years to the life you’re leading.

“The new ratings will provide further pressure within the sector to improve. So it creates another lever for the commissioner to pull, to say we are only going to place people with you if you are excellent.”

The scheme will start out as optional and the cost of the inspections will be borne by the care homes. The commission’s chief executive, Cynthia Bower, said: “CQC’s role is to identify and react to signs that people may be at risk of receiving poor care. But this is not the same as saying other provider are offering ‘excellent’ care.

“An excellence award can recognise best practice, be a spur to improvement for providers who already meet CQC’s essential standards, and can help people who need longer-term care to make choices.”

Under the plans, all staff working for “excellent” nursing homes will likely have to be registered with a new Health and Care Workers Professions Council. This means care workers could be “stuck off” for poor practice and eventually the body could require minimum qualifications for registration.

“We want to see if we can work it on a voluntary basis but you probably won’t be able to have an excellence rating unless you employ people who are registered,” said Mr Burstow.

His long-term intention was to make the care system much more transparent and clear for both residents and their families,” he said.

From:  http://www.independent.co.uk/excellence-ratings-for-care-homes

Warning labels on medicines should be simplified because words such as “drowsiness” and “avoid” are too confusing for modern patients, experts claim.Research by the British National Formulary (BNF), which advises doctors, nurses and pharmacists, found labelling that has been around for decades is now too difficult for members of the public to understand.

It found phrases such as “may cause drowsiness” are no longer “readily understood” and should now be simplified to say “this medicine may make you sleepy”.

Likewise, the phrases “avoid alcoholic drink” and “take at regular intervals” caused indecision among modern takers.

The report recommends the labels should now read “do not drink alcohol while taking this medicine” and “space the doses evenly throughout the day”.

The research was carried out by Professor Theo Raynor, and colleagues at the University of Leeds.

He said: “Most medicines do contain leaflets which provide detailed information for patients.

“However the leaflet may get lost, which means that the label on the medicine plays a very important part in guiding people’s behaviour.

“It is vital therefore that wordings on labels are simple and straightforward.”

Prof Raynor’s team tested a selection of instructions on almost 200 people aged 20 to 80.

The experts reworded phrases that people found confusing, and then retested them in several sittings, including one-to-one interviews.

Prof Raynor said “avoid alcoholic drinks” was a good example.

“Our user tests have shown that the word “avoid” can cause confusion and that some people think it only means they should limit their alcohol intake.

“This phrase will now be replaced by the instruction: ‘do not drink alcohol while taking this medicine’, which is far clearer.”

Other recommendations include changing “do not take indigestion remedies at the same time of day as this medicine” to “do not take indigestion remedies two hours before or after you take this medicine”.

Another phrase, “do not stop taking this medicine except on your doctor’s advice”, becomes “warning: Do not stop taking this medicine unless your doctor tells you to stop.”

The revised phrases are included in a new, updated version of the BNF.

“The software used by large pharmacy chains and independent pharmacist to print instruction labels is updated regularly, so we would expect to see these new phrases appear within the next six months,” Prof Raynor said.

Professor Nick Barber, a pharmacologist at London University, said: “When serious errors occur which cause harm to patients, it is often as a result of a series of minor failures at various stages.

“Therefore in taking more care about the wording of detailed instructions we can help improve the safety of medicines.

“With two million prescriptions being issued every day, a small percentage improvement through labels being more understandable could make a significant impact”.

Duncan Enright, publishing director at BNF publications, said: “It has never been easier to change labels on medicines given current computerised systems and therefore we hope that the large pharmacy chains and independent pharmacies will adopt these recommendations.”

The words “drowsiness” and “drowsy” are thought to date back to 1520 probably from the word drusan or drusian “to sink,” also “become languid, slow, or inactive” which are related to dreosan “to fall”.

From: http://www.telegraph.co.uk/May-cause-drowsiness-too-confusing-for-modern-medicine-labels

Under Labour’s Private Finance Initiative schemes, British taxpayers are committed to pay £229 billion for new hospitals, schools and other projects with a capital value of just £56 billion.
Several contracts are due to run for 60 years, documents released under freedom of information requests show, meaning taxpayers will be paying for the projects for generations to come.

Private contractors who agreed PFI deals with the Labour Government are set to make billions of pounds in profit, with some due to see returns of up to 71 per cent.

In the first of a series of reports, The Daily Telegraph discloses the heavy costs and administrative burdens caused by PFIs. The deals are a way of building large public projects using private finance, which were relied upon by the Labour government. The disclosures will lend weight to MPs calling on PFI companies to refund a share of their profits to the taxpayer.

The PFI deals include:

• A hospital which charged £52,000 for a job that cost £750. Demolishing a shelter for smokers resulted in the PFI contractor charging £2,600 a year for the “extra cleaning”.

• A hospital in Bromley, south London, which will cost the NHS £1.2 billion, more than 10 times what it is worth.

• Military dog kennels which would have ended up costing more per night than a room in the Park Lane Hilton, London. The deal to replace facilities at the Defence Animal Centre in Melton Mowbray resulted in the sacking of the contractor and the scrapping of the contract.

Under a PFI, a private contractor builds a school, hospital or other asset, then owns it for typically between 25 and 35 years, effectively renting it to the taxpayer for that time. In exchange, the contractor has responsibility for maintenance.

Treasury papers suggest that payments on PFI contracts already signed run until 2048. The Daily Telegraph has uncovered deals, signed in the late 1990s, which include special clauses meaning that they last for up to six decades.

So a 21 year-old leaving university this year will pay taxes for the PFI until they are almost 70. By then, some of the facilities will have been obsolete for years. Political pressure on the PFIs, introduced by John Major but greatly expanded when Gordon Brown was chancellor, was mounting last night after The Telegraph established the scale of profit-making by some of those involved.

An almost unknown City company, Innisfree, with only 14 staff, is the largest single player in the PFI market, owning or co-owning 269 PFI schools and 28 hospitals.

According to accounts filed at Companies House, Innisfree’s profit margin was 53 per cent last year. A successful FTSE 100 company makes margins of around 6 per cent. David Metter, the founder and chief executive of Innisfree, owns almost three-quarters of the company and collected pay and dividends of £8.6 million last year.

“Innisfree have made money like it is going out of style,” said Jesse Norman, the Conservative MP for Hereford. “A tiny number of individuals have made more money for less work than any other group of people I can think of.” Innisfree said its directors were at a conference in Chamonix yesterday and unable to comment.

Mr Norman heads a new cross-party group of MPs demanding that Innisfree and other PFI beneficiaries return a portion of their profits to the taxpayer. “It’s a scandal that so many projects have been so expensive to the taxpayer,” he said yesterday. “There is a great deal of excess value in the PFI which should properly be shared with taxpayers.”

Labour’s last health secretary, Andy Burnham, who was in charge of 221 PFI projects, admitted last year: “We made mistakes. I’m not defending every pen-stroke of the PFI contracts we signed.”

Innisfree co-owns the Princess Royal University Hospital in Bromley, opened in 2003, which cost an estimated £118 million to build and equip according to Treasury figures. However, Treasury calculations seen by The Daily Telegraph indicate the NHS will have paid Innisfree and its PFI partners a total of £1.21 billion for the hospital over the 35-year life of the contract, but this does include support services.

The National Audit Office says the deal will produce a return for the PFI contractors of 70.6 per cent.

Jean Shaoul, a professor of public accountability at Manchester University Business School, said using the private sector as an intermediary to raise finance to build hospitals and to run them is “far more expensive than if the Government were to do it itself”. Carl Emmerson, the acting director of the Institute for Fiscal Studies, said: “Where you can be very confident about the service you want for the whole period of the contract, as with a road, it can work. In schools and hospitals, where needs change, it’s much harder to get value for money.”

In Belfast, a school closed after seven years but the PFI contractor must be paid £370,000 a year for the next 16 years.

From:  http://www.telegraph.co.uk/Private-Finance-Initiative-hospitals-will-bring-taxpayers-60-years-of-pain

A hospital trust will save £14million after becoming the first in the country to buy its way out of a Private Finance Initiative (PFI) deal.
The NHS body was due to pay £2m a year for the next two decades to the private firm that built West Park Hospital in Darlington, County Durham.

But after reviewing the costs, Tees, Esk and Wear Valleys Mental Health Foundation Trust decided to take advantage of a break clause in the deal.

It paid £18m upfront to get out of the PFI contract 23 years early, but it now owns the hospital outright and expects to save £14m over the course of the deal once maintenance and inflation is taken into account.

The move, disclosed in the Health Service Journal, comes after The Daily Telegraph uncovered evidence that hospitals are closing accident and emergency departments in order to pay the interest on PFI deals for new buildings.

Some PFI hospitals – built and run by private firms and effectively rented back to the state – will end up costing taxpayers more than 10 times their capital value.

“We concluded that the best option was to exercise what exists in the PFI projects, which is a clause called ‘voluntary termination’,” said Colin Martin, Director of Finance at the Tees, Esk and Wear Valleys trust.

“It effectively means we pay off the mortgage early.”

However he added that the trust – which runs mental health services in County Durham, the Tees Valley and along the North Yorkshire coast – did not regret the original deal and was committed to two other PFI deals.

“We wouldn’t have had the hospital if we’d waited for the traditional financing route,” Mr Martin said.

PFI deals became the preferred way of paying for public sector infrastructure projects under Labour, as they allowed new buildings to be constructed while avoiding large initial outlays of money.

Under the complex deals, private contractors carry out the building work then own the structure for up to 35 years, while the public sector body gives them annual interest and repays the capital sum as well as paying for maintenance.

However because of the length of the deals and the amount of interest involved, taxpayers end up paying several times the original value of the project.

In the first known example of an NHS hospital buying its way out of a PFI deal, the North-East mental health trust decided to purchase West Park Hospital outright.

It had agreed a 32-year deal with Norwich Union Public Private Partnership Fund to build the 116-bed facility, which opened its doors in 2004.

The hospital – which is also home to the trust’s headquarters – cost £16m to build but under the deal, the trust was paying the contractors £1.4m a year in interest payments and a further £600,000 in maintenance and paying back the principal.

In 2009, the trust reviewed its PFI deals and decided it had enough cash in the bank to pay the £18m break clause and so buy West Park outright. It gave the project company the required statutory notice and after the legal process was completed, the deal ended in December.

Treasury figures suggest it would have the remainder of the deal would have cost a further £32m, so it has saved £14m by getting out of it.

However it is unlikely the pioneering move will be copied by many other trusts, as most PFI deals are so large as to make early repayment impractical.

Aviva, the company that now runs the PFI firm that built West Park, was unavailable for comment.

From: http://www.telegraph.co.uk/Hospital-saves-14m-by-getting-out-of-PFI-deal