The terms and conditions revolution will come one day
- Peter Rhodes
Taxpayers will foot £10bn hospitals bill
Tuesday 9th February 2010, 11:30AM GMT.
The cost to taxpayers of building new hospitals in the West Midlands will come to £10 billion – four times what they are worth, it has emerged.
Latest figures from the Treasury have revealed the full cost to National Health Service trusts of paying private companies for the buildings. Russells Hall Hospital in Dudley, is worth £137 million – but it will have cost just over £2 billion at the end of a 37-year repayment deal.
Meanwhile, Walsall Manor Hospital is set to be worth £169 million but the overall bill will be £652m.
The new radiology unit at New Cross Hospital in Wolverhampton will be worth £13m but by 2033 will have cost £130m. Birmingham’s Queen Elizabeth Hospital will cost £2.58bn but will have a value of £627m.
The ambulatory care centre at City Hospital in Birmingham is valued at £26m but by the time bosses have paid it off in 2034 it will have cost £138m.
All the hospitals are being built under the private finance initiative (PFI).
It provides a way of funding major capital investments, without immediate recourse to the public purse.
Private consortia are contracted to design, build, and in some cases manage new projects.
Contracts typically last for 30 years, during which time the building is leased by a public authority.
The money pays for the building, insurance and security as well as a profit for developers.
The Department of Health has defended PFI by saying it had been able to undertake the biggest hospital building programme in the history of the NHS.
But Liberal Democrat health spokesman Norman Lamb said: “Hospitals all over the country are mortgaged to the hilt and there are serious concerns that these repayments will lead to cuts in vital services.”
Nationwide, PFI hospitals will cost £63bn for £11bn worth of buildings.
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Why new hospitals, we already have them, the money should be spent on new technology for patient’s, not brick’a and motar to make them look pretty.
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What??? How much???? What interest rate are they using? 100%?
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To Gordon Brown and New Labour, PFI has become a way of enabling the husband to borrow inordinate sums of money at ridiculous rates of interest in return for the loan shark agreeing not to tell the wife (who blithely assumes the new car and the foreign holidays must be down to all the overtime her hubbie has been working lately!).
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PFI was brought in by the Major government as a way of concealing the national debt from EU accountants. It has worked, in so far as no effective challenge has been made from that quarter to unstabilising economics. It has not worked, insofar as a secondary market in loan notes has developed which have allowed middlemen to make ey-watering profits e.g the Norwich Hospitals group.
The figures that I have for Russells hall Hospital are building cost £154m, PFI loan at 3% above LIBOR, projected cost at completion of contract (40y) £0.9bn.
This will be met by printing money i.e. inflation, and floating the foundation trusts
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If PFI was such a Conservative evil why have Labour embraced it so completely? The answer is simple, we live in a buy now pay forever society The brutal truth is that our country runs on 100%+ of its revenues and that politicians (of any party) regard our pockets as their spending money. The utterly disgraceful way SOME MPs have acted over expenses proves this and the number that have been able to pay thousands of pounds with a cheque immediately in the way some of us would pay a paper bill shows just how out of touch many of them are. The same politicians that complain (rightly) that rules cannot be back dated to suit the demands of the day bay like hounds to apply tax law retrospectively because “they” are using tax loopholes to avoid paying “their” dues. All this points to a “them and us” attitude to our finances and fuel the idea that public spending today to buy votes at any cost is OK as “they” (us) can foot the bill. And please if you are an MP don’t bother saying you pay tax too, it won’t help.
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PFI Agreements are like paying for your house with a credit card then paying for the credit card bill via a loan shark. Buy now (votes?) pay later has been the mantra of recent years.
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I need a little help here people, I might be a little confused…. we are effectively paying for buildings in the long run that are owned by private companies for th eprivallage of having them make up their value and then rent them back to us again? So we pay to be robbed twice? What happens after 30years?
honest to goodness this can’t be right.
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Please feel free to add your own,
PFI: Public fleeced Indefinately.
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It’s amazing how people bemoan the current quality of the NHS and in some cases yearn for it to be privatised – it already is, basically. It’s been a concerted effort by much of the media to keep people in the dark and lead them to assume that these problems can only be solved by privatisation, when it’s this privatisation by stealth which is bringing the quality of service down and masking borrowing.
The increased marketisation of the health service since the end of the Thatcher government (which drew conclusions that the Major government then implemented) has been nothing short of a scandal, particularly with regards to the restructuring of funding and hospitals having to compete for patients. Allyson M. Pollock’s ‘NHS plc’ offers statistics and realities which make you question why people haven’t taken to the streets about this anti-democratic, profiteering market-fundamentalism, which has proven not to be value for public money.
However, it must also be said that after many years of neglect, and with many other pledges to fulfill, PFIs were the only way in which the Blair government could rebuild the crumbling infrastructure of the NHS and simultaneously grow investment in health for consecutive years.
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