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Doc Dave’s Blog

AYE, AYE PFI

13-10-2008

The knock-on effects of the current banking crisis could be profound. Pensions and job prospects are bound to be affected, and as Dr David Nicholl observes, the cornerstone of the government’s hospital building programme could be affected.

With the government committing potentially £500 billion to stave up the collapse of the banking sector what effect will have on the public sector?

It is inevitable that all the political parties will have to rewrite their policies.

You cannot offer half a trillion pounds in loans without their being a significant knock-on effect to public services. For example, the NHS has seen a huge growth in spending over the last 10 years, but that cannot be sustained in the current economic climate without a radical change in taxation policy.

Both the government and the Tories are totally committed to the use of PFI (private finance initatives) to finance new hospitals and other infrastructure.

PFI has literally led to billions of investment in the NHS, yet little of this has appeared on the treasury balance sheets, although it is estimated that there are around £200 billion in liabilities - the ultimate in creative accounting.

Given the credit crunch, how confident can we be regarding the basis of this financial model? In my view, PFI could well turn out to the NHS what Northern Rock was to mortgages. One senior medic, a high-ranking official in a Royal College, described PFI to me “as the financial millstone around Trusts necks”.

If the banks are currently unwilling to lend to each other, they will be even less likely to lend out to commercial PFI projects, and the taxpayer will be stuck with the bill.

Why is it all our politicians are so keen for PFI and why is there so little debate? One academic has suggested that at least 15% of the total NHS budget is spent on keeping the NHS as a market.

David Cameron has confirmed that he supports the continued use of PFI, and a recent review of the list of interests of MPs reveals some interesting reading.

Patricia Hewitt must surely rank as one of the worst Ministers of Health ever, yet why is it she can earn over £150,000 per annum in consultancy fees from AllianceBoots, Cinven (both involved in PFI projects) and BT (involved in the NHS IT programme) and still get paid as an MP. Why on earth would any company employ this woman when she was so singularly ineffective as a minister?

Given that she was so useless, the only reason they can be employing her, has to be her list of contacts in government.

I would have to add that she is not the only one, there are a whole list of her colleagues, Alan Milburn, Lord Warner, Baroness Morgan also on the privatisation gravy train. Shouldn’t we as taxpayers deserve both politicians who avoid such blatant conflicts of interest and a proper debate about the financing of the NHS and the role of the private sector?

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