PFI: profits from illness

Kevin O'Brien, UNISON National Executive Council member, slams New Labour plans to introduce private capital into the NHS.

On 7th April the Labour Government announced that it had agreed a further ten Private Finance Initiatives (PFI) projects within the NHS. This is on top of the fifteen that it has already agreed in England with three underway in Scotland. This Government, a Labour Government, has already achieved more in eleven months than the Tories did in the previous five years. The PFI announcement came as UNISON delegates from the NHS were meeting at Brighton for their Health Service Group Conference. PFI and pay were top of the agenda. UNISON opposes PFI and has argued its case coherently.

Under PFI, a private group or consortium pays for a new hospital. The NHS trust pays fees covering construction costs, rent, support services and the risks being transferred to the private consortium.

The new hospital will be built, owned and run by the private group for at least 25 years, maybe longer. The trust may continue to employ some staff, mainly doctors and nurses. Porters, receptionists, domestics, secretaries, lab technicians and maintenance staff would almost certainly be employed by private contractors. This is a major step towards privatisation -- is the NHS safe in Labour's hands?

This Government believes that the Tories came up with a good idea, so it is continuing to privatise the NHS 'through the back door'. It will not end here -- next there will be increases in charges on the pretext of improving services. Big business is not setting up consortiums because it believes in the NHS or is feeling charitable. The shareholders and 'fat cats' want big profits and they will get them on the backs of taxpayers.

What makes it worse is that Labour is also committed to continue subsidising the consortiums to plan and negotiate PFI. In January 1997, eleven NHS trusts were offered access to annual subsidies ranging from £300,000 to £1.5m provided they signed contracts within three months, within the lifetime of the then Conservative Government. Labour is continuing these subsidies for the entire period of PFI contracts -- 25 years or more -- amounting to £24m on the first 15 schemes alone.

Health Minister Alan Milburn had a rough reception from UNISON delegates, who gave a clear message that continuing PFI was not on. Despite promising a review, the Government has done nothing to reassure health workers that conditions would be protected or union rights maintained.

The Health Minister has set up the NHS Capital Prioritisation Advisory Group (CPAG) within the NHS Executive to rubberstamp PFI schemes with a capital cost of over £25m, supposedly on the basis of health service need. But the traditional -- and cheapest -- method of paying for new hospitals is government borrowing. Why the Government is not sticking to this is unanswered in their propaganda.

Labour argues that PFI provides new capital without counting against the Public Sector Borrowing Requirement, so adding to government borrowing in the short term. The Accounting Standards Board (ASB) takes a different view. It believes the key accounting decisions centre on whether the property concerned is owned by the purchaser of the PFI services, such as a hospital, or the operator, the private sector consortium. It proposes a two-stage test. First any item relating to services such as cleaning should be stripped out, as according to ASB they do not matter when deciding who owns the asset. Then if all that remains is payment for a property, it is likely that the asset will appear on the NHS balance sheet and therefore count against PSBR. So much for their argument.

UNISON is continuing its campaign against PFI and has had national and regional conferences on the issue. We will continue to use every opportunity to challenge the fundamental weaknesses and highlight the damaging impact of this government policy. A national lobby of Parliament is planned to emphasise that a democratic government cannot act like a dictator and we will not let it ignore what is right and in the public's best interests.

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