PFI chickens coming home to roost…

For many, PFI was always a bill that would bankrupt the NHS.

Fugg it… makes me so angry. Plenty of people at the time pointed out the likely consequences – and were shouted down for their trouble.

Yep, I thought that would happen.

Not sure how such a stupid idea ever went ahead, stupidity or massive backhanders involving huge brown envelopes and a few winks, nods etc.

But with losses forecast to top £60m this year

Under the last government the trust signed two huge private finance deals – which cost the hospital more than £61m in interest charges this year.

The Great Genius strikes again.

Money you don’t have is always the most expensive type to spend.

massive backhanders

It’s a veritable industry in its own right.

gloat all you want, the problem is we are in the crap how do we get out. Do you see the tories telling the PFI consortia to take a hit? or will we just see cost cutting and the payments carrying on?

And why PFI, it is only borrowing if it is on balance sheet, leases aren’t borrowing.

Do you see the tories telling the PFI consortia to take a hit?

They bludy should – if they have any spine. Screw the lawyers.

No different to them that leased expensive cars, only buy what you’ve the cash for now.

It was always a case of when, not if, this ludicrous house of cards came down. I imagine what we’re hearing about now is the very tiniest tip of the mahoosive iceberg.

You have to ask, when you look at the detail, who the **** signed off these contracts. The private companies had them stitched up from the start, so they really couldn’t possibly lose! The whole principle of PFI was utter insanity from the off!

In the prevailing financial climate at the time, The labour government could have borrowed capital for infrastructure projects at minuscule rates of interest! Instead they effectively opted to go with the loan sharks. Utter economic madness!!

as a card carrying free marketeer, bastard banker, baby killing, kitten drowning tory voter…..

I completely agree with you comrade.

PFI: one of the dumbest ways of financing anything. Sell your government covenant for nothing and let someone else milk your AAA for 25 years. Duh!

baby free, kitten carrying, Tory killing

I knew we had some common ground, comrade. 😉

Instead they effectively opted to go with the loan sharks.

DoH/MOD is basically a revolving door – with seconded management con.sultants crayoning over everything.

Aye they are a stupid idea.
Have we actually found a STW political/economic consensus?

Interestinglly Andrew Marr wrote about PFI at some length in his ‘History of Modern Britain’ and concluded that it was a truly silly idea but that despite all the main parties having issues with it at one time or another the politicians all went along with it becuause they expected they would have to use it themselves if they ever made it into power and so it has come to pass.

Bizarrely Stephen Dorrell, a Thatcher cabinet minister did say today that the PFI companies SHOULD take a hit. Quite right they should but i fear it would not survive the courts.

We are all truly screwed.

reckon. where’s TJ?

The initial purpose of PFI albeit not its stated one was to essentially limit the civil service’s ability to change its mind which was causing massive cost overruns. (The stated one was risk transfer).

Unfortunately this initial purpose was somewhat forgotten when it was realised the Government could fund loads of capital expenditure off balance sheet.

It was not that profitable for a lot of the contractors either – because the bidding process was so complicated, the cost of each bid was huge, and the unsuccessful bid costs would need to be recouped from the successful ones.

Do we have a consensus? The one thing about PFI is that I can’t recall a single person outside the Blair/Brown axis of twatdom that thought it was a good idea.

I suspect that the nice folks who are charging £61 million PA to a south London NHS trust are also pretty keen, though I doubt they’ll be doing to many press conferences to trumpet their opinions as to why.

as a card carrying free marketeer

So were those who thought up these PFI schemes in the first place. Unfortunately all the main political parties were full of free marketeers at the time, and still are.

Do we have a consensus?

Only that it was a stupid idea. I’m sure there won’t be a consensus on how to deal with the problems arising from PFI, or more importantly how Langsley uses this situation to further his vision of the future for the NHS.

binners – Member
Do we have a consensus? The one thing about PFI is that I can’t recall a single person outside the Blair/Brown axis of twatdom that thought it was a good idea.

You’re right. They should have stuck with the PPP label introduced by……

Do we have a consensus? The one thing about PFI is that I can’t recall a single person outside the Blair/Brown axis of twatdom that thought it was a good idea.

Apart from the Major government that introduced them, and the coalition government that is continuing to agree to them. I really have no idea why successive governments are so keen on them. They always seem to be far more expensive than if the government were to just borrow the money through the normal channels and complete the project themselves, so why do we keep signing up to them? Do they not count as central government borrowing or something this way? Allows the politicians to massage the figures and pretend they aren’t spending the money?

I don’t think the idea is necessarily stupid, the government underpriced big construction project risk, at least PFI put a price on it, albeit a high one. In its place it is perfectly sensible but I fear it was used because it allowed the expenditure to avoid scrutiny rather than for better reasons.

But creating PFI projects created jobs…and would boost the economy

Labour you pillocks.

hora, PFI was ‘invented’ under the Major government. 😉

But yes, It stank under the conservatives, it stank under Labour and it stinks under the present government.

I work in a PFI building. Back of beermat calculations say our is costing the taxpayer not far off twice what it would have cost the ‘find/borrow money and pay architects/builders’ way. (bit more complicated than that, but you get the picture) And then we have to give it back after being bummed for half a million pounds rent a year for 25 years 👿

PFI was the likes of Crapita under the Tories (i.e. outsourcing initiatives), it was grown and blown into huge capital projects…

Yep silly idea, however unless something has changed in the last couple of weeks it’s still going on, ask Boris how the London fire brigade intend to finance the building of a couple of new fire stations.

Must be the backhanders!

PFI has been a shackle on NHS Trusts for years. Sure, you get a shiny new hospital in place of your delapidated one, but if you want to tweak your services and require even the most minor facility change, the cost is exorbitant.

Major introduced it, but Blair really went to town, mainly because Labour politicians like opening new hospitals. One of the worst examples of an unnecessary and overpriced new district general just happened to be right next to Sedgefield. It’s now an expensive shell with many of its services shipped out to other, bigger towns.

its the ideal politicians tool- by the time the faeces hits the fan youve served your term and now sit as an exec ceo on various corps/ hedge funds – that probably still milk money out of the government via pfi

Back of beermat calculations say our is costing the taxpayer not far off twice what it would have cost the ‘find/borrow money and pay architects/builders’ way.

Scottish Parliament Building was ten times over budget so twice is pretty good value compared to that. Governments don’t spend money well, PFI was a method of achieving better spending, and without it we will need to find something else.

PFI in the broadest principle is a good think IMO.

You take a large capital project that forms part of the state infrastructure and you out source the whole project for a price lower than what you can deliver it for ‘in house’. You don’t need to look at many gov run projects to work out they are generally over budget, inefficient and disastrous. Incentivise the private sector to do it properly and at a lower cost – it should work.

Hasn’t worked in many cases though and the key factor is the risk of failure should have been transferred to the private sector although the contracts are so complex and the service delivery is so crucial that bail outs will be inevitable.

I don’t disagree with the concept of outsourcing projects, its the presumption that a government can outsource the supply of capital at a lower cost than themselves that is ridiculous.

Coalition is sticking to wasteful PFI funding

I hope something has changed since then, but I imagine nothing has. I guess they’re perfect for modern politics, you deliver new projects without any spending, and leave the next guy to pick up the pieces.

The awful thing is that these schemes are still going ahead. 2 such ones have recently started construction in my area, when all the costings prove them to be a complete money pit.

Unfortunately the NHS can’t win. Government policy dictates we have to do it, private industry knows the NHS have to do it so exploit it to the max. You would beleive some of the stupid contractual arrangements that are signed up to…. a quick example.

An existing PFI building was badly designed so is inherantly too hot all the time. NOTHING can be added to the building without the consent of the PFI company who owns the building. So when an air con unit was asked to be put in they said yes sure. That will be £*k charge for the unit, plus a monthly charge of £x for 25 years.

I’ve also worked from the other side though, working for one of the UK’s largest engineering/fitting companies and they would exploit the NHS where ever possible, whether through contracts or not paying invoices. So its not just the Governments fault, if people want a good vfm NHS then private industry should be prepaired not to exploit it.

And users of the NHS should be happy going to old out of date buildings, not expecting shiny new (cheaply built) buildings.

So like state pensions, politicians come up with wheezes to spend money but effectively shift the cost/financing off balance sheet. Quelle surprise, especially Brown’s love affair with the idea! And these charlatans have the cheek to criticise banks for doing the same thing (after they held interest rates artificially low and encourage banks to lend money to people who couldn’t afford to pay it back). How is that for hypocrisy? Then they show their business savvy that comes from years of experience outside the Westminster Village in negotiating contracts! And people want to give these buffoons more tax payers money to spend. The mind boggles.

It will be interesting to watch the Milliband, Burnham and Balls trinity comment on this today! Perhaps Balls will sober up from his leak posturing over the fuel duty yesterday. Why does such a bright guy feel the need to behave like a little kid?

hora – Member

PFI was the likes of Crapita under the Tories (i.e. outsourcing initiatives), it was grown and blown into huge capital projects…

Indeed, but the precedent for buildings as well as the running of services was set under the Major government: 15 pfi projects (as in actual buildings) at a capital value of £709 million were agreed before Nulab came into power. These were mostly government/local government offices, but also included 5 prisons and Derbyshire Police HQ. Hiding in there were also some offices (a snip at 1.6 million and a mere 16 year contract) for my own former employer Leicestershire and Rutland NHS trust.

What equally interesting with all the shake up of the NHS of late ie demise of PCT’s is that there are a number of PFI buildings that currently are leased by PCT’s from the PFI provider, but NHS Trusts are refusing to take them on as they will bankrupt them.

It looks like yet another suedo NHS organisation is having to be set up just to take on a portfolio of properties that no one wants.

It’s not just the NHS who are PFI dependant. Education, military, Ambulance, Search and Rescue, Police, Fire. They’ve all got liabilities under them.

Stupid idea from the very start. Wonga.com financing but on a national scale.

And users of the NHS should be happy going to old out of date buildings, not expecting shiny new (cheaply built) buildings.

I’d rather be treated in one of the old anderson huits that used to make up our local hospital by happy well paid staff than have to go 50 miles away to the thoroughly miserable superhospital.

Wonga.com financing but on a national scale.

TBF wonga pricing is based on the not unlikely chance of default. PFI pricing on the extremely unlikely chance of default. Its just that the government dont pay a rent based on that likelihood, but the contract owners finance on that basis. And take all the honey in between.

Wonga is more ethical than PFI IMO 😉

There was an interesting program about the pfi companies years ago (think it might have been a panorama investigation), was before I left the UK so must be at least 5 years ago. Revealed how these companies operate at every level, they are absolutely morally corrupt.

especially Brown’s love affair with the idea!

Did the tories start them ? Are the coalition still doing them?
Why score really cheap party political points here? They all did it even your beloved Tories

Why does such a bright guy feel the need to behave like a little kid?

Perhaps you and he should compare notes?

JY – you missed your smiley, otherwise you would think that those comments, especially the personalised ones were meant to be taken at face value!! (or are you just missing the IB on this thread?) Inconveniently I started by talking about (all) politicians rather than parties (ie, cross party politics, sorry if that needed to be spelt out better 😉 ) before highlighting one of the breed who had a particular affinity with off balance sheet tricks and dodgy accounting. I think it is you that (at least here) is showing the party political bias especially with the final comment – any reason why Balls went on a media frenzy yesterday morning???

I think that in a non-partisan way, it will be very interesting to see Mill/Burn/Balls response.

Politicians of all parties (clear enough? 😉 ) have been keen on the PFI idea largely for supposed financing reasons and (guess what) the notion that taxpayers would be protected from financial risk and increasing costs. And the result?

Hence, the non-party political conclusion that “And people want to give these buffoons more tax payers money to spend. The mind boggles.” [edit: read Ourman’s comments below to see that]

When I qualified (as a lawyer), I had a choice of jobs: Projects or Corporate.

I chose corporate (i.e. mainly M&A, blue book and PE work), as I felt it had fewer ethical issues than working on PFI projects..!

(And the fact I have a short attention span: a couple of months on a deal was always better than taking 3 years to get to financial close on a schools project.)

EDIT – couple of extra things. I used to do corporate structuring work on PFI deals (easy way to rack up the chargeable hours = end of year bonus). The most notable was a £4.5bn waste project that took up nearly 4 years of my life. Another – and this is where the lack of ethics comes in – was negotiating a joint venture agreement on behalf of both JV parties. Only in PFI….