NHS is paying for Labour’s dodgy deals
The NHS faces huge costs because of flaws in Private Finance Initiative (PFI) contracts agreed by the previous administration.Yesterday afternoon, the Queen opened the South West Acute Hospital in Enniskillen. She will doubtless have been impressed: the facility, the first to be built in Northern Ireland for more than a decade, is a gleaming shrine to 21st century healthcare.
What may not have been mentioned, however, was that the £276 million hospital was constructed not with public funds, but by a consortium under the Private Finance Initiative – and that the deal to build it included a 30 year “facilities management” contract for one of the firms involved.
The Enniskillen deal may be a shining example of value for money.
But many PFI contracts are not.
Ministers are on the verge of taking over the South London Healthcare Trust, after it proved unable to cope with a bill of more than £60 million a year in interest alone.
One of the trust’s three hospitals, the Princess Royal in Bromley, took £118 million to build, yet will cost roughly £1.2 billion. All told, Labour signed 103 PFI deals for the NHS, at a value of £11.4 billion and an eventual price of more than £65 billion.
The diversion of that money away from patient care will put inexorable pressure on budgets, to the point where some hospitals will crack under the strain.
PFI, in short, is not merely about £22 light bulbs and £875 Christmas trees – it is about budgetary incompetence on a monumental scale.
And it comes as little surprise that it can be traced back to Gordon Brown, who turbo-charged the Tories’ fledgling public-private partnerships in order to buy schools, hospitals and more on the never never.
This allowed him first to evade spending restrictions, and later to splurge on public-sector salaries; in the mean time, the credit card bills got higher and higher.
Many PFI deals delivered what was promised – but where things have gone wrong, as in Bromley, the contracts were often drawn up so poorly that there is little the Coalition can do. Ministers have renegotiated some deals to claw back costs, and should make every effort, and twist every arm, to do more.
They should also remind voters of the ignominious parts played in this debacle by Ed Miliband, Andy Burnham and Ed Balls.
But, above all, they need urgently to produce a way of funding infrastructure that draws on the private sector’s strengths rather than exploiting the public sector’s weaknesses.
Jesse Norman, the Tory MP who has led the way in exposing PFI’s flaws, points out that the state must spend more than £200 billion on new infrastructure over the coming decade, and cannot do so without private help.
The Treasury is beavering away on a new model of funding. If it repeats the errors made by Labour, the cost to the nation will be heavy indeed.
Tags: Andrew Lansley, Conservatives, labour liars, Labour shambles, Labour waste, nhs cash shortages, NHS charges, nhs cutbacks, PFI