In June the New Statesman magazine published a study of hospitals funded through Private Finance Initiative between 1997 and 2018, and headlined the fact that some have been spending more on PFI annual payments than they spend on clinical supplies.
Tucked away in a table at the end was a list of Trusts with PFI contracts, beginning with those paying 10% and more of their income on their PFI “unitary charge” covering the cost of the building, support services, and interest in 2019.
Top of the list was Sherwood Forest Hospitals FT, forking out a painful 13% of income, followed by St Helens and Knowsley Teaching Hospitals and University Hospitals Coventry and Warwickshire. North West Anglia (Peterborough and Hinchingbrooke hospitals) and Great Western Hospitals (Swindon) are each on 11%, with Dartford and Gravesham, Portsmouth, Barking Havering and Redbridge and Dudley Group on 10%.
Also on 10% was the Norfolk and Norwich Hospital, built in 2001, which will not make its final payment until 2037. The trust paid £66m unitary charge in 2019 – equivalent to 10 percent of the Trust’s income.
Mid Yorkshire Hospitals Dewsbury, Wakefield and Pontefract) were recorded as paying £53m in 2019, which the researchers calculate as 9 percent of Trust income. However £53m is considerably (25%) more than the most Treasury figures expected the Trust to be paying in 2019.
According to the Treasury, the total cost of the PFI contract covering Pinderfields and Pontefract hospitals, which cost £311m to build, should have been £1.6 billion by the time of the last payment … in 2043, and the Trust has still got most of that (£1.2 billion) to pay, with annual payments set to rise to £73m in 2041.
But the New Statesman figures for actual payments suggest this total cost will be much higher.
Even more worrying, these payments were always set to increase each year – by 2.5% or inflation, whichever is the higher. So the soaring rate of inflation is driving up the unitary charge payments in every trust with large PFI contract.
If the calculations are right, and the Mid Yorkshire charge was £53 million in 2019, it will be at least £57m this year: so another 10 percent increase would see it leap by £5.7 million this year into 2023, £4.3 million more than expected. This is another hefty extra burden on the Trust going forward, as finances get tighter than ever.
That inflated figure then becomes the basis for the following year’s calculation, and so on, so the impact will be considerable and long-lasting.
With unitary charges for NHS projects adding up to at least £2.3bn per year, the total extra headache for 100 or so trust finance chiefs will add up to an extra cost of upwards of £170 million, at a time when budgets are already squeezed till the pips squeak.
Far from PFI being a device to stabilise costs and transfer risks to the private sector, all of the costs and risks remain firmly in the public sector, while the profits flow not just out of the NHS but all too often out of the country, to shareholders in tax havens.
Now a new article in the Guardian (October 25) has revealed that nearly half a billion pounds a year (almost £1 in every £5 spent on hospital PFI charges) is creamed off in interest payments. In four trusts almost half of their payments were interest paid to private companies and shareholders.
So PFI is the rip-off that just keeps on taking: as the NHS faces a tightening financial regime the private sector just keeps laughing all the way to the bank.
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