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In Reply To Midlands Health Trust Defend Themselves


I came across Midlands Health Trust Defend Themselves have I decided to do it justice by enclosing this article before I give a response:

Midlands Health Trust Defend Themselves

FOUR Midland NHS trusts identified as struggling to pay for their hospital rebuilds under the private finance initiative have defended their schemes. Sandwell and West Birmingham NHS Trust, Walsall Hospital NHS Trust, Worcestershire Acute Hospitals, and University Hospitals Coventry and Warwickshire NHS Trust have been included on a list of 22 NHS organisations in trouble released by the Andrew Lansley, Health Minister.

They run nine hospitals across the region. Birmingham’s Queen Elizabeth Hospital, the biggest Hospital PFI in the Midlands, and the second biggest in the NHS is not on the list.

Mr Lansley said the 22 trusts were unable to afford their PFI schemes, in which private capital was used to rebuild their hospitals, due to the recession.

The programmes, expanded by the Labour government, can take up to 35 years to pay off and can include lengthy maintenance contacts. Mr Lansley said: “Some hospitals have been landed with PFI deals they simply cannot afford. “Tough solutions may be needed for these problems, but we’ll help the NHS overcome them.”

The health department is currently assessing the financial position of every hospital on the list.

The PFI costs have emerged as a leading factor in poor patient care in some areas.

Yet the four Midland trusts have defended them. A spokeswoman for Sandwell and West Birmingham NHS Trust said: “We welcome this independent review and look forward to seeing the results.” Shahana Khan, Executive Director of Finance at Walsall Healthcare NHS Trust, said:

“The Department of Health did not have any concerns about our clinical and financial stability.” Chris Tidman, Deputy Chief Executive and Finance Director of Worcestershire Acute Hospitals NHS Trust, said: “There have been longstanding financial challenges for the Worcestershire health economy that pre-date the opening of Worcestershire Royal Hospital in 2002.

“These related more to the funding formulae for rural areas as well as the overall configuration of health services across the county. “Worcestershire Royal Hospital is a relatively small PFI scheme and the annual unitary payment accounts for about five per cent of the Trust’s total budget. “In the absence of the PFI initiative, it is unclear how the NHS would have achieved its aim of modernising its acute hospitals.”

A spokesman for the Coventry and Warwickshire NHS Trust, said: “It is misleading to compare PFI projects as each contract differs as to what services it includes. “An advantage to our contract is that patients benefit from some of the most advanced medical equipment in the NHS because our PFI contract provides for its regular replacement. “It also enabled us to provide one of the most modern facilities in Europe. “Although the current national economic climate is proving challenging, this has not affected our day-to-day running.”

My Observations:

There is no doubt that Health Secretary Andrew Lansley is happy to dance on new Labour’s grave, blaming its commitment to Tory policies for current economic problems.

The Labour front bench is unable to combat Lansley’s tirade about the weaknesses of private finance initiatives (PFI) because it knows the truth and, worse, it hasn’t yet developed a critique of new Labour economic policy.

Let us not forget Compulsory Competitive Tendering (CCT) was introduced in the UK by the Conservative Government throughout the 1980s, in an attempt to bring greater efficiency to local government and health services through the use of competition.

While it is generally recognised that strong incentives were needed to stimulate reform, compulsion resulted in resistance by local authorities and health trusts, an immature market and poorly-conducted procurements which focused on price at the expense of quality and employment conditions.

In 1992 PFI was implemented for the first time in the UK by the Conservative government of John Major. It immediately proved controversial, and was attacked by the Labour Party while in opposition.

Labour critics such as the future Secretary of State for Health, Patricia Hewitt considered that PFI was really a back-door form of privatisation (House of Commons, December 7, 1993), and the future Chancellor of the Exchequer, Alistair Darling warned that “apparent savings now could be countered by the formidable commitment on revenue expenditure in years to come”.[3]

Nonetheless, the Treasury considered the scheme advantageous and pushed Tony Blair’s Labour government to adopt it after the 1997 General Election. Two months after the party took office, the Health Secretary, Alan Milburn, announced that “when there is a limited amount of public-sector capital available, as there is, it’s PFI or bust”.[3] PFI continued and, in fact, expanded under Labour, resulting in criticism from many trade unions, elements of the Labour Party, the Scottish National Party (SNP), and the Green Party,[4] as well as commentators such as George Monbiot and academics such as Prof. Allyson Pollock, Mark Hellowell, Prof. Jean Shaoul and Dr Adrian Bell. Proponents of the PFI include the World Bank, IMF and (in the UK) the CBI [1] Both Conservative and Labour governments have sought to justify PFI on the practical[5] grounds that the private sector is better at delivering services than the public sector. This position has been supported by the UK National Audit Office with regard to certain projects.

However, critics such as Pollock and Monbiot claim that many uses of PFI are ideological rather than practical. In her book NHS plc Allyson Pollock recalls a meeting with the then Chancellor of the Exchequer Gordon Brown who could not provide a rationale for PFI other than to “declare repeatedly that the public sector is bad at management, and that only the private sector is efficient and can manage services well.”[6] By October 2007 the total capital value of PFI contracts signed throughout the UK was £68bn,[7] committing the British taxpayer to future spending of £215bn[7] over the life of the contracts. The global financial crisis which began in 2007 presented PFI with difficulties because many sources of private capital had dried up.

Nevertheless PFI remained the UK government’s preferred method for public sector procurement under both Labour and the present coalition.

In January 2009 the Labour Secretary of State for Health, Alan Johnson reaffirmed this commitment with regard to the health sector, stating that “PFIs have always been the NHS’s ‘plan A’ for building new hospitals … There was never a ‘plan B’”.[8] However, because of banks’ unwillingness to lend money for PFI projects, the UK government now had to fund the so-called ‘private’ finance initiative itself. In March 2009 it was announced that the Treasury would lend £2bn of public money to private firms building schools and other projects under PFI.[9]

Labour’s Chief Secretary to the Treasury, Yvette Cooper claimed the loans should ensure that projects worth £13bn — including waste treatment projects, environmental schemes and schools — would not be delayed or cancelled. She also promised that the loans would be temporary and would be repaid at a commercial rate.

But, at the time, Vince Cable of the Liberal Democrats, subsequently Secretary of State for Business in the coalition, argued in favour of traditional public financing structures instead of propping up PFI with public money.

But that wouldn’t explain Labour chancellor Gordon Brown’s swallowing of this Tory policy hook, line and sinker in 1997, rejecting any scheme that did not fit his public-private partnership mantra.

This obsession was taken to the extreme of refusing to allow London Labour mayor Ken Livingstone to assume responsibility for the Tube network until deputy Prime Minister John Prescott signed it over to profit-hungry privateers.

Nothing was spared as NHS hospitals, school buildings, prisons, roads, the Channel Tunnel rail link, the Croydon Tramlink and the Docklands Light Railway extension to Lewisham were all processed through the PFI sausage machine.

New Labour approved nearly 450 projects, costing £20 billion, in its first government until 2001.

The chorused claim of ministers, contractors and civil servants was that PFI equalled value for money, even though the House of Commons Library published a research paper in September 2001 recognising that the public sector would have to pay the privateers almost £100bn between then and 2025-26.

Many trade unions, not least Unison, which was deeply involved in opposing this disastrous economic policy, published its own research revealing that PFI was wasteful and a burden on the taxpayer.

But the so-called Iron Chancellor would brook no criticism and dismissed all advice from the labour movement. Brown rejected the palpably more efficient and cheaper option of Treasury loans to finance public-sector modernisation on the grounds that PFI projects were not classified as government debt, allowing him to keep Britain within the EU Maastricht Treaty provisions to control state borrowing and accumulated debt levels.

To achieve this he was prepared to see hugely extravagant schemes reward private-sector consortiums handsomely by making the public sector absorb risk and allowing the privateers to boost profits through refinancing their sweetheart deals.

The banks and a small number of conglomerates reaped a bountiful harvest from this dedication to neoliberal dogma, so there was a cruel irony in the Labour government’s ultimate failure to curb national debt as a result of having to bail out the very banks it had hand-fed since 1997.

This history of the 1997 landslide electoral victory being frittered away on bankers’ agenda, together with Tony’s Blair’s penchant for illegal US overseas wars, holds lessons for the current Labour leader.

He can cling to the unsustainable official line that Labour was right on the economy, being finally derailed only by an international crisis beyond its control.

The alternative is to ram Lansley’s jeers down his throat by pointing out that the Tories, despite their criticism of Labour’s PFI madness, are continuing down this line and by declaring that, under his leadership, Labour will kick PFI into touch. Labour can only build itself as an alternative to the Con-Dem slash-and-burn brigade by criticising its own homage at the profits altar and advancing a more pro-working class agenda.

Labour must up its game by highlighting it was the introduction of a conservative Govt under Cameron’s friend John Major who introduced the policies before Labour enhanced it.

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2 responses to “In Reply To Midlands Health Trust Defend Themselves

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