Investment for hospitals, but questions over PFI
The Health Secretary has announced that he has given the green light for 15 new hospital developments, worth £4 billion.
But opponents have sought to focus on the continuing use of Private Finance Initiative (PFI) agreements. Under the agreements, companies raise the construction costs of the new buildings, then rent them to the Government under long term deals, meaning that the Government does not have to raise the finance up front.
However, critics claim that the taxpayer ends up paying far more in the long term, and that one way the private companies make profits is by slashing the pay and conditions of staff.
Dr John Reid said: “The NHS is in the middle of the biggest hospital building programme in its history. After years of under-investment, the infrastructure of the NHS is at last being modernised and made fit for the 21st Century.”
“I am delighted to receive such good quality proposals and I will be encouraging local health organisations to progress these rapidly through the next important stages of their development.”
Key PFI developments include an £880 million redevelopment of Bedfordshire and Hertfordshire, including a new cancer centre, a new cardiothoracic service at Papworth Hospital and new facilities at West Birmingham Acute Trust.
Liberal Democrat treasury spokesman, Dr Vince Cable, called for PFI projects to be made more transparent, arguing: “Spending on hospitals using PFI is to be welcomed if building is completed on time and on budget. However, the current and unresolved problems with Jarvis underline the precariousness of PFI contracts.”
At the beginning of July, Jarvis, one of the leading PFI contractors, admitted that its debts could soar to £230 million as a result of it quitting the rail business. It insisted that it was placed to continue trading in the future, but many analysts believe the company is in serious trouble. It is not clear what would happen to building projects Jarvis is involved in if the company collapsed.
Continuing, Dr Cable said: “Many PFI contracts are entered into for the wrong reasons and often undertaken to keep borrowing costs off the balance books.
“PFI contracts are surrounded by secrecy and confidentiality clauses. It is essential that the Government ensure that contracts are transparent so that we can judge whether they are good value.”
The PFI plans were also criticised by UNISON, who described the announcement as “great news for patients, bad news for taxpayers”.
General Secretary Dave Prentis said: “Of course UNISON welcomes the Government’s continuing commitment to investment in the NHS, but taxpayers are yet again expected to pay through the nose for these projects.
“PFI is still the only show in town and today big business will be cheering all the way to the bank. The private sector is carving up this very lucrative PFI market despite wide ranging concerns that they are not good value for money.
“The public is being kept in the dark about the true cost of PFI and the huge profits being made by private companies at their expense. The public has a right to know their money is being spent wisely. The Government should carry out an independent inquiry into all PFI schemes as a matter of urgency.”
