Information Director, London Health Emergency A curiously inverted front page headline in the Financial Times on December 27 suggests that NHS costs are a threat to the Private Finance Initiative.
In fact the inflated costs of PFI schemes are a threat to NHS Trusts and local services.
The FT highlights the soaring costs of a number of hospital projects, including the Barts and The London scheme in East London, the University Hospitals Birmingham project (long touted at €520m but now nearing the £700m mark), the £1 billion projects planned for Liverpool, £800m in Hertfordshire, and massive schemes in Leicestershire and Plymouth.
The FT points out that ministers seem to nave nnally realised that that there is a huge question mark over the affordability of many of these schemes - especially under the new market-style system of "payment by results" which the government is roiling out across the NHS in Luvo. wita bokaowo results.
The H understates the cost of some of these projects, notably the Barts and Royal London project, which is now expectea to cost nol di.l DIllion, as the FT reports, but £1.89 billion (Full Business Case June 2005), requiring annual (index-linked) payments totalling £115m, £67m of which would be rent for the PFI buildings.
These payments over 35-40 years would amount around €5 billion - or more if inflation once again begins to increase. Market-style
We already know that Gordon Brown intends the big increases in NHS funding to end after 2008, and the new market-style system of NHS funding is designed to eliminate any form of security for hospital Trusts, forcing them into competitive cost-cutting.
So it makes sound sense to halt expensive and unaffordable projects now, rather than replicate the sorry financial fiascos of so many first-wave PFI hospitals - now apparently including the flagship £422m University College Hospital in London - which face large and unbridgeable deficits, with even bigger problems to come.
London Health Emergency has been warning for some time that the runaway costs of these schemes, which helped make them attractive to the private sector, have already exceeded the limits of affordability.
A £512m scheme in Central Manchester has gone ahead, despite warnings that the original £420m scheme could drain off funds from the wider nealth economy.
The continued constipated silence over the bloated cost of projects like Barts and the London and Birmingham -and many smaller PFI deals which were to have been signed off months or years ago - not only makes a nonsense of the claim that PFI delivers "on time and to budget", but may indicate that even senior NHS managers and ministers are beginSorry, sir, we are spending so much on PFI there's no cash left for anaesthetics ning to see the snags that