Hospitals ‘On Brink Of Collapse’ Over PFI

[dutchman]

University Hospitals Coventry & Warwickshire among more than 60 hospitals that can’t afford the rising cost of private finance initiative schemes and are “on the brink of financial collapse”, according to the Health Secretary.



Andrew Lansley has said 22 health trusts, which run 60 hospitals, have contacted him saying they face spiralling costs running into billions.

The private finance initiative (PFI) – introduced under Labour – meant private capital could be used to fund public infrastructure projects, like schools and hospitals.

The public sector body then repays the private firm with interest over an agreed time period, in some cases the costs of maintaining the buildings.

But the trusts say they are now unable to pay for their schemes – believed to be worth more than £5.4bn in total – because the payments of their “NHS mortgages” have inflated during the recession.

Mr Lansley told The Daily Telegraph: “Over the last year, we’ve been working to expose the mess Labour left us with, and the truth is that some hospitals have been landed with PFI deals they simply cannot afford.

“Like the economy, Labour has brought some parts of the NHS to the brink of financial collapse.

“Tough solutions may be needed for these problems, but we’ll help the NHS overcome them.

“We will not make the sick pay for Labour’s debt crisis.”

The Department of Health is expected to detail plans to resolve the problem in coming months after meeting with executives whose trusts are in difficulty.

Proposals are expected to include the renegotiation of PFI contracts and cost-cutting.

Shadow health secretary John Healey said: “Andrew Lansley is trying to offload blame for the present problems his policies are causing in the NHS.

“The reality is that all hospitals are being forced by the Tory-led Health Bill to make deeper cutbacks, as billions are wasted on new bureaucracy in their huge NHS reorganisation.”

In total, the UK has around 700 PFI contracts.

The initiative was originally devised by John Major’s Conservative government in 1992 as a way of enabling private investors to take on the financing, construction and operation of infrastructure projects.

Last month, the Commons Treasury Committee said the cost of PFI projects should be included in national accounts, even though this would add £35bn to the deficit.

Its report said PFI offered poor value for money and needed substantial reform.

The 22 trusts whose PFI contracts are said to be putting them at financial risk have been identified as:
:: St Helens and Knowsley.
:: South London Healthcare.
:: University Hospitals Coventry and Warwickshire.
:: Wye Valley.
:: Barking.
:: Havering and Redbridge.
:: Worcester Acute Hospitals.
:: Oxford Radcliffe and NOC.
:: Barts and the London.
:: University Hospitals of North Staffordshire.
:: Dartford and Gravesham.
:: North Cumbria University Hospitals.
:: Portsmouth Hospitals.
:: Buckinghamshire Healthcare.
:: West Middlesex University Hospital.
:: Mid Yorkshire Hospitals.
:: Walsall Hospitals.
:: North Middlesex.
:: North Bristol.
:: Mid Essex Hospital.
:: Maidstone and Tunbridge Wells.
:: Sandwell and West Birmingham.
:: Royal National Orthopaedic Hospital.

[rebbonk]

Many were against PFI from day 1. I think Dave Nellist spoke out against it.

The problem is that we're now saddled with it. If we're in trouble with it now with the artificially low interest rates we're seeing, what the hell will happen when these rates rise, as they're bound to do at some point in the not too distant future?

"There may be trouble ahead".....

[dutchman]

There's no possibility of a 'renegotiation' of the loans as some have suggested. The original investors sold out to the banks for double what they initially paid on day one. They are since long gone along with their profits. There's no way the banks now are going to take a voluntary loss on an investment they made in good faith, especially when they know the government is duty-bound to bail out the NHS-Trusts when they fail. The government could easily have borrowed same the money from the same banks to begin with and it would only have cost the taxpayer half as much but for political reasons chose not to.