a_s_i_m_o
10.05.07, 15:45
O partnerstwach publiczno-prywatnych w Wielkiej Brytanii
By George Monbiot. Published in the Spectator 10th March 2002
The government can’t pretend that it lacked advice. In 1997, before
construction had begun, the doctors who had seen the plans for the proposed
Cumberland Infirmary warned that it looked “more like a doss-house” than a
hospital. Carlisle’s consultants’ committee pronounced the scheme “clinically
unworkable”.
But selective hearing is New Labour’s primary sense. In June 2000, when Tony
Blair unveiled the plaque, he announced that “this magnificent new hospital …
symbolises what we have been trying to do for the health service”.
Within weeks the magnificent new hospital began falling apart. Pipes split,
flooding the wards with water and the operating theatre with sewage. Power
cuts left nurses ventilating patients on life support machines by hand.
Ceilings collapsed and windows blew out of their frames. By August, all the
beds were full and doctors were being asked to move patients into armchairs to
make way for people recovering from surgery.
All new hospitals encounter problems, but those plaguing the Cumberland have
proved to be both persistant and systemic. Both in design and in execution,
the people who built it appear to have cut corners. Though the new hospital
contains 75 fewer beds than the buildings it replaced, there is so little
space in the wards that the doors have had to be removed to make room, and the
trolleys redesigned to fit in the aisles. The hospital was built with a glass
atrium but no air conditioning, with the result that temperatures have reached
110 degrees in the summer.
All this might sound like a classic tale of NHS mismanagement. But this case
is different. The Cumberland was the first privately financed hospital to open
in the United Kingdom, the flagship for a whole new fleet, which would cruise
past the squalls and doldrums of public funding. For the past six years, I
have been investigating the private finance initaitive, particularly in the
health sector. My research suggests that problems of the kind infesting the
Cumberland are likely to emerge in almost all the new hospitals built by this
means.
Because the private finance initiative mobilises private capital, ministers
have argued, it allows the government to start more schemes than it would
otherwise be able to commission. Private companies provide the money for
public infrastructure the state can’t afford, and the government pays it back
over a number of years. Because the private sector is more efficient, they
insist, PFI schemes offer better value for money than public funding. And
because private companies, rather than the government, provide the capital,
the money spent on new projects does not contribute to the public sector
borrowing requirement.
The reality is that PFI, or “public private partnership” as the government now
prefers to call it, is a scam. It works for neither socialists nor free
marketeers, as it offers neither effective public provision nor business
efficiencies. Far from introducing market disciplines, it has become an
official licence to fleece the taxpayer. Far from reducing the public sector
borrowing requirement, PFI is, as the Accounting Standards Board has noted,
simply an “an off-balance sheet fiddle”. Most alarmingly, the ministers I have
spoken to simply do not understand how it works.
The initiative was a Conservative experiment. In opposition, Labour fiercely
contested it. But as soon as the party came to power, it resolved that PFI
would become the means by which most of our new public infrastructure would be
built. By the time it became obvious that the experiment was failing, Labour
had waded in too far. Awestruck by its glittering new friends in business, but
baffled by the complexities of the scheme it supports, it has been
consistently outwitted and outmanouevred.
The first of the problems Labour has failed to grasp is the process by which
the private investors are chosen. The government announces a new scheme,
companies make their bids, and the government selects the bid which appears to
offer best value for money. The chosen consortium is named the “preferred
bidder”, and the government starts to negotiate the contract.
The consortium then has the government over a barrel. In theory, the contract
is still open to competition. In practice, preferred bidders have been
deselected only, as far as I can discover, in two of the hundreds of PFI
schemes the government has launched. Once the consortium has its foot in the
door, it starts to raise its price and reduce its services. It will discover
costs which weren’t envisaged before. It will price the likely inflation of
labour and materials as generously as possible. In some cases, I have found,
companies have simply slipped extra figures into the spreadsheets.
Most importantly, value for money in PFI contracts is a function of the extent
to which the projects’ risks are transferred to the private sector. Because
the government is hopelessly outclassed, during negotiations companies
routinely transfer most of the key risks back to the taxpayer. As a result,
PFI, from the corporate point of view, is a far better deal than
privatisation. The consortia get the assets but not the liabilities. In some
cases, they carry no greater risk than ordinary contractors for the public
sector, but they are rewarded as if they were the most reckless entrepreneurs.
Last summer I received definitive evidence that Octagon Healthcare, the
private consortium building the Norfolk and Norwich hospital, was in a
position to extract £70 million from the scheme, before it had taken a single
patient. The money, which would have taken the form of a “refinancing” of its
bank loans, represented just part of the difference between the presumed
transfer of financial risk on which the contract had been based and financed,
and the actual transfer of risk. The consortium could, quite legally, have
withdrawn the money (which was enough, by itself, to build a medium-sized
hospital) by renegotiating the terms of its borrowing.
When I broke the story it caused a minor scandal, and Octagon appears not to
have taken advantage of its position. But deals of this kind are now routine.
In one case—the PFI prison built by Group 4 and Carillion in
Liverpool—refinancing has allowed the companies to double their rate of
return: they will break even just two and a half years into the 25-year contract.
These problems are compounded by the lack of effective competition between the
private and the public sectors. When Alan Milburn, the health secretary,
warned the NHS that “it’s PFI or bust”, hospital trusts began redesigning
their projects to attract private money.
In Coventry, for example, the NHS had originally intended to renovate the
Walsgrave Hospital, on the outskirts of town, at a cost of some £30 million.
Built in the 1970s, it appeared to be structurally sound, but it was in need
of modernisation. But in 1997, after the Labour government indicated that no
substantial public funding would be available, the NHS submitted a new plan:
for the privately financed demolition of both the Walsgrave and the city
centre’s Coventry and Warwick Hospital, and the construction of a new hospital
on the Walsgrave site. This would provide 25 per cent fewer all-purpose beds
and 20 per cent fewer staff than the two hospitals it replaced, and it would
cost £174 million to build. The NHS would pay the consortium £36 million a
year for 25 years, plus a one-off equipment grant of £25 million, and it would
give the companies the land on which the city centre hospital stands. Since
then, the cost of c
