Ditherer Brown’s PFI U Turn
Seven private sector consortiums are to be given a form of quasi-monopoly on a potential £2bn-£3bn ($3bn-$4bn) market for building health centres, community hospitals and perhaps some local authority facilities.
The Department of Health is expected to announce the winners of the so-called Express Lift (local improvement finance trust) project soon in a move which could in time also open up more of the NHS’s community health services to competition from the private and voluntary sectors.
Under Lift projects, the private sector forms joint companies with primary care trusts – and sometimes local authorities – which finance, build and run GP surgeries and other health facilities. Contracts typically last for 20 years and the public sector owns a 40 per cent equity stake.
Some 47 Liftcos – which use some of the techniques of the private finance initiative – have so far been set up.
More than 220 buildings with a capital value of about £1.5bn are under construction or open, with more to come under the deals already signed.
Half of the country’s 150 primary care trusts, however, still do not have a Lift deal – chiefly those outside the big cities.
Under Express Lift they will be able to choose from the winners of the framework contract without the need for a full EU-style tender. The hope is to cut procurement time from a typical two years to a few months, massively reducing the costs and speeding up the programme.
Sir William Wells, a former regional health authority chairman, is now chairman of Ashley House, whose Odyssey Healthcare is expected to be one of the winners.
“We have been building these great palaces of PFI hospitals like they are going out of fashion, when in fact they are going out of fashion,” he said. “Even cancer care is now moving out of hospital and into people’s homes. This new approach should be far more flexible and – at a time when capital is going to be in very short supply – much more affordable for the NHS than PFI.”
Lift buildings typically cost £3m-£7m, and raising money this way was far easier amid the credit crunch than raising finance for big PFI projects, Sir William said. He added that in time Liftcos could take over a primary care trust’s entire property portfolio.
The National Audit Office has judged the Lift programme to have gone well, although MPs on the Commons public accounts committee have questioned the value for money and the rate of return Liftcos make.