Listeners to ‘File on 4’ on BBC Radio 4 last month would have got an inkling of the vast river of money that is currently leaving the NHS and going directly into the coffers of big business.

The programme was about the ‘secondary’ market in equity in the many PFI schemes that were launched in the last six or seven years. PFI works like this: private capital is used to finance a ‘public’ building like a school, a hospital or a prison and then the ‘user’, ie the taxpayer, is locked into an agreement – for anything up to 40 years – to pay for (usually expensive) services like cleaning, maintenance and rent, after which time the building reverts to the ownership of the original private investor.

As one critic put it on the BBC programme, the PFI programme has become a “wealth machine” for the private sector. So lucrative have these schemes been that the private sector builders involved are returning a huge percentage profit on their original investment in only a few years: averaging 66 per cent for NHS programmes and at the lower end, 34 per cent for schools.

Cost

The BBC programme highlighted the example of the Queen Alexandria hospital in Portsmouth. This was built only a few years ago and is costing the trust running it £44m a year! The QA Trust is going to have to pay that amount, index-linked, for the next 29 years up to 2040! That amounts to £1.2 billion! And this is only one hospital!

No wonder that the Queen Alexandria has had to lose 700 jobs and 100 beds in the recent period. Despite local protests a specialist palliative care ward for the terminally ill was recently closed. It is clear that in this case clinical decisions are being determined by the Trust’s profound financial crisis.

The company that build the hospital, Carillion, originally put in only £12m and they have recently sold their ‘equity’ in the PFI hospital for £31m. A tidy profit, by any standards. There is now a booming ‘secondary’ market in PFI equity, extending to companies across the globe, the total value of which is around £10bn a year! New companies have been created just to manage PFI equity, which is extremely valuable property because it provides a guaranteed stream of money directly from the public sector and guaranteed by contract for anything up to 35 years. A small number of companies, like HSBC-Infrastructure are buying up a large amount of the equity so that already a handful of companies in effect ‘own’ most of the newly-built hospitals in the NHS.

Not that the taxpayer gets anything back from this looting – many of the companies owning the equity are registered in tax-havens so they are not liable for capital-gains or any other taxes. Because the PFI contracts and the secondary markets are all ‘private’ deals between companies, there is no legal obligation for public scrutiny of these transactions and, according to the BBC, even the Treasury is not able to monitor this burgeoning market.

Scam

The whole PFI programme is an out-and-out scam. The companies involved in the schemes are laughing all the way to the bank. It is almost a licence to print money at public expense. This whole scandal completely undermines the argument of the Lib Dems and Tories that the NHS is in dire financial straights. That is only true because the private sector is skimming off huge amounts of money from it. Their answer is to open up  the NHS to even more looting by private companies.
The greatest scandal of all for Labour Party members, is that the whole PFI ethos was sponsored by the governments of Blair and Brown, as an alleged ‘answer’ to the needs of the education and health system. It is yet another example of the previous Labour leadership swallowing the private market ethos launched the decade earlier by Thatcher.

The new Labour leadership ought by now to have learned lessons from this. The figures for the enormous haemorrhage of funds from the NHS are there for them to see. Labour should demand that the new NHS hospitals be taken back fully into public ownership – in all likelihood, the companies that built them have already had their whack – and a proper, fully integrated and publicly owned NHS should be Labour policy. A socialist policy for hospital and school buildings  should also include the nationalisation of the building industry and banks to develop a coordinated policy for all public building, including schools, hospitals and homes.
You can still listen to the programme on:

http://www.bbc.co.uk/iplayer/episode/b011vf2f/File_on_4_PFI_Profits/