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Public Finance Initiatives and the NHS

Letters, December 9 2006

Bidding for PFI contracts is very expensive
THE Centre for International Public Health at Edinburgh University is absolutely right in highlighting the funding problems PFI schemes will create for health boards across Scotland and, indeed, the whole of the UK. The article in Thursday's paper makes clear that health boards are going to have to pay out millions in rent for these vaunted new facilities. It is Alice Through the Looking Glass finance, the equivalent of having to run in order to stay in the same place.
But the cost implications were obvious from the start as, first, the private sector has shareholders who want profits and, secondly, the private sector has to pay a higher interest rate than a public body for finance.
Also, bidding for these PFI contacts is an expensive business for the firms who apply. I have a son-in-law in England who has handled his firm's bids for a number of hospitals and the success rate is less than one in three. The costs of failed bids then have to be factored in to subsequent ones. No wonder many construction companies are going under or amalgamating.
For its most recent bid, my son-in-law's firm was expected to design a hospital for mental health patients from scratch, which involved talking to service users, doctors, nurses and support staff, etc, about their requirements and concerns, all of which costs a lot of money, including travel from between the possible site and where the bidding firm is, which are at opposite ends of the country.
Now, a year later, being already one of the two "preferred bidders", his firm has been asked if it can lower the price and its rival has been asked to improve its design. This will add still more to the cost. There must be a more sensible way of doing this.
Ann Rayner, 22 Saughton Crescent, Edinburgh

ON THE radio on Thursday morning, I heard Andy Kerr defend PFI projects in the Scottish health service against the well-researched and legitimate critique of Mr Hellowell and Professor Pollock. He gave, as usual, the stock response – to deny the evidence and ridicule those who provide it. This is wrong. There has been no effective refutation of Professor Pollock's work on this, nor her conclusions that PFI is poor value for public money and locks health boards into decisions that prioritise private profit over public interest.
However much the executive tries to muddy the waters by rigging comparisons in favour of PFIs, the public can see the obvious. Borrowing money more expensively and having to double up on management by employing NHS staff to manage (and pay for) PFI contractors' managers increases the costs of providing services this way compared with public ownership. It also reduces the flexibility with which we can use premises we now rent and equipment we now hire rather than own.
Professor Pollock and her colleagues are providing necessary enlightenment to us all. They are to be commended, not traduced, for it. Their credibility with the public is much greater than that of politicians who prefer spin over substance.
George Venters, retired public health medicine consultant, 8 Biggar Road, Edinburgh

All about generating salaries and profits
IT IS patently obvious to any accountant that PFI is simply the public counterpart of running up private debt on dozens of credit cards. As Andy Kerr keeps repeating that the Edinburgh academics "didn't understand public finance", I felt obliged to inquire as to Mr Kerr's own qualifications to speak on the management of multi-billion-pound public budgets.
Following the award of a BA in social services Mr Kerr was a full-time "officer" of the National Union of Students before being employed by Strathkelvin and Glasgow councils for the next nine years and then aspiring to join the nation's leaders at Holyrood. It strikes me that Mr Kerr would better spend his time getting some advice on debt from the Citizens' Advice Bureau than defending such indefensible nonsense.
Mr Kerr is not alone in needing to be reminded that private finance is all about generating salaries and profits, and nothing to do with his job of providing public services and managing tax revenues.
The university study correctly looks ahead a few years and states the obvious – such debt is unsustainable. What happens then? The cost of bailing out the financiers will be so enormous that "there will be no alternative" but to hand over the entire bundle of public assets to the private sector to run as a "for profit" private insurance-based healthcare business. This may be the end game, but it's certainly nor what most of us voted for.
How gullible can you get? The SNP appears to be the only political party that can see where all this is heading
– let's hope it gets the opportunity to evict the foxes from the Holyrood henhouse and can field enough public-spirited accountants and business people to shed a bit of "enlightenment" on this financial honey-pot.
R F Morrison,
29 Colquhoun Street, Helensburgh.

ELEANOR Bradford's team (Frontline Scotland, December 6) exposed PFI ideology for the financial disaster it is. Examination of official Hansard reports reveals that approximately £6bn has been released through the refinancing of the many and various PFI deals in Scotland alone since 2000. Nobody knows where this money has gone, but the assumption must be that most of it has gone in dividends to shareholders.
The failure of Tim Davidson (chief executive of Lanarkshire Health Board) to produce any figures to refute the financial analysis of Professor Allyson Pollock suggests that there are no robust counter-arguments. Those he might have, he can keep from scrutiny under the cloak of commercial sensitivity. Limply holding up the PFI argument as a "red herring" in the Picture of Health Option Appraisal is simply not good enough. For his political master, Andy Kerr, to dismiss the Pollock report as "politically motivated" is the last refuge of someone who, on this issue at least, is intellectually and morally bankrupt.
Lanarkshire Health Board and others in a similar position are naive if they think that they can work in even partnership with the PFI companies to provide healthcare – the interests of patients will always come after the interests of shareholders.
It is time to open up the public accounts and disclose exactly what the cost of redeveloping the Hairmyres and Wishaw sites will be. This is public money that is being gambled, our public money. Waving a "politically motivated red herring" is not a substitute for reasoned argument.
Angus Macdonald, 74 Busby Road, Carmunnock, Glasgow

Reproduced with permission from The Herald (Glasgow) Newsquest (Herald & Times) Ltd © Newsquest Media Group Ltd.