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PFIs bleeding NHS - time to buy them out

The independent Centre for Health and the Public Interest (CHPI) has today released a devastating analysis of accounts showing how PFIs are bleeding money from the NHS, and calls for public sector loans to be used to buy-out PFI contracts.

Staggering pre-tax profits

Over the past 6 years, companies which run PFI contracts to build and run NHS hospitals and other facilities have made staggering pre-tax profits of £831m – money which has thereby not been available for patient care over this period.

The findings show that If the NHS had not been paying profits on PFI schemes, deficits in NHS hospitals would have been reduced by a quarter over this 6 year period.

Over the next 5 years, almost £1bn of taxpayer funds (£973m) will go to PFI companies in the form of pre-tax profits – equivalent to a quarter (22%) of the additional amount of money (£4.5bn) that the government has promised the NHS over this period.

A number of PFI schemes are generating particularly high pre-tax profits for their operators. The company which holds the contract for the hospital at University College London has made pre-tax profits of £190m over the past 11 years. This is out of £527m paid to the company by the NHS. The total value of the hospital is £292m.

Bleeding the NHS

A small number of companies are bleeding the NHS of much needed funds.

The report finds that only 8 companies own or have equity stakes in 92% of all the companies holding PFI contracts with the NHS – meaning that there is very little competition between the companies bidding to build and run NHS PFI hospitals.

The report calls for public sector funding buy-out PFI contracts. It also recommends taxing PFI companies to recoup some of the profits which have been made and capping the amount of profit which can be made by a private company which has an exclusive public-sector contract with the NHS.

Lack of transparency

The report also calls for greater transparency of equity sales to prevent the unnoticed consolidation of market power by a small number of investors and renegotiation of contracts with the private companies to reduce the amounts the NHS has to pay.

Commenting today on the report, Dr Chaand Nagpaul, BMA council chair, said:

“NHS providers and commissioners are being pushed to breaking point because of unprecedented financial pressures so it is outrageous to see over £800m of much needed money being leaked out to private companies for profit alone.

“Private Finance Initiatives are an extortionate drain on the public purse, with private companies scandalously gaining at the expense of taxpayers and patients. The government should instead be properly funding new NHS capital projects to ensure money remains in the NHS in the long term. Ideally the government would either renegotiate lucrative PFI contracts or enable existing PFI schemes to be bought out by the NHS so that vital resources are available for frontline patient care.

“Looking more broadly at the role of private and independent providers in the NHS, a trend is emerging - independent sector provision of NHS healthcare has increased every year for the past five years. More attention needs to be paid to whether it provides."

See also Devestating NHS cuts 'shrouded in secrecy'

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