Private Finance Initiative – chickens come home to roost!
As the cuts in public
spending, jobs, wages, benefits, services etc., resulting from the crisis of
over-production, still only in the early stages, begin to bite harder, the lie
machine of social democracy (the agents of imperialism within our ranks who
seek always to lead us down the road of voting for the Labour Party in
bourgeois elections as the only cure for all the ills that afflict us) kicks
into action.
We are being told that these
‘evil’ cuts are the work of the Con-Dems, whereas Labour would have only
initiated ‘nice’ cuts that we would hardly have noticed and certainly wouldn’t
have harmed us in any way. The bogus nature of this line, which assumes we are
all morons with the memory of retarded goldfish, is being mercilessly held up
for scrutiny and ridicule by this paper and the CPGB-ML, among a few others.
But if anyone should
entertain any doubts that the Labour Party in office is just as ruthless in
protecting the interests of the ruling bourgeoisie as its accomplices in the
Tory and Lib-Dem parties, we would ask them to ponder on the disastrous PFI
contracts that were thought up, and forced upon, the NHS and education services
(not to mention prisons and fire stations etc.) by the previous Labour
governments, and which are playing their part in the present cuts by taking
much-needed cash in large amounts and handing it to the private financiers of
these exceedingly dodgy schemes.
The Private Finance Initiative (PFI) was the
brain-child of the Labour Party in government. While many workers in both the
NHS and education predicted disaster as a result of this very weighty albatross
that was being hung around their collective neck, the Labour government, with
the backing of the majority of trade union leaderships (even some of those who
raised timid doubts at the time), won the day against the anti-PFI campaigns
which were usually run by those workers, many rank and file trade unionists
among them, and other interested parties. This is the beginning of the PFI
scandal, whereby many school and NHS buildings, that perhaps only required a
couple of thousand pounds of renovation work, were instead pulled down and
replaced by new buildings paid for by private money and which, in the long
term, would cost up to ten times the amount it would have cost to build them
with public money. There are some variations to the scheme, one of which is
privately to build the school/hospital on private land and then tie the
appropriate authority into a contract whereby they rent it (at an escalated
price of course) forever even if they stop using it. Most, however, were
‘sold’ to the relevant authorities under a sort of hire-purchase (HP) scheme,
under which after paying over the odds for around 40 years, during which time
many varied and unusual clauses in the contracts keep the haemorrhage of cash
running from the public purse into private pockets, the hapless authorities
become the proud owners of the school/hospital just as, owing to poor building
techniques, shoddy materials and poor maintenance, it becomes fit only to be
pulled down so that the whole scandalous process can start again.
The Daily Mail and Daily Telegraph,
for the purpose of keeping the Tory versus Labour farce running, have both been
carrying some very good reports lately on the cash-draining results of various
PFI schemes to council education departments and Health-Authorities.
According to Andrew Gilligan (‘PFI: £70m bill for
schools that had to close,’ Daily Mail 26 January 2011), “At least
three PFI schools have closed because of falling pupil numbers. But education
authorities must continue to pay the contractors millions of pounds each year
for them until 2035”. One of these schools, Bishop’s Park in Clacton, had only been open three years before closing. “About £10 million has already
been paid for the school but the PFI contract still requires payments of £1.8
million to be made for the building each year until 2035. In total, taxpayers
will have to repay about £55 million for the school, more than twice what the
building would be worth even if it was in full use”.
Gilligan’s article, aimed more at the Daily Mail’s
lower middle class readership, raged that “taxpayers were having to pay more
than £200billion for schools, hospitals and other projects whose capital value
was little more than £50billion.” Of course, the money does come
originally from taxes, but these swindles are not only the concern of these
‘tax-payers’: the long-term sick, low waged, the unemployed and their children
are just as affected by the flood of cash from public need to private greed.
However, despite his one-sided view, the examples he gives are a good
reflection of the state of the PFI schemes.
He cites many minor cases of contractual
strangulation whereby a school cannot alter its heating without giving three
days’ notice, meaning that often children sit in classrooms with no heating
while it is freezing outside or where the heating is blazing away on hot days,
with the schools paying for heating they don’t want.
Another example is given of a headmaster unable to
adjust the lighting in his school affecting the showing of films and
after-hours activities/clubs. He also wrote of a school in Birmingham which “was
refused permission for an after-school club after parents were told the
caretaker would cost £70 an hour and the playing field could only be used for
seven hours a week.”
These contractual provisions seem small compared to
the PFI schemes themselves, yet even these can be disastrous in the present
climate. Gilligan quotes one headmaster as saying “In the old days if I
needed to save some money, I’d cut back on painting to save a teacher. Now I’d
have to cut the teacher and keep the painting.” And this drain on the
schools’ resources is relentless, as any change to the buildings or the
timetable as set out in the contracts can be costly in the extreme.
One school in Merseyside is reported as having had
“to pay £302.30 to install a plug socket – more than five times the cost of
the appliance, a DVD player, that it wanted to plug into it”. In Bradford, which has three PFI schools, an NUT branch Secretary complained that “Our new
schools are already starting to look shabby because the builders didn’t
understand the robustness needed in facilities used by children,” he said.
“Kids bang doors, they run up stairs. There have been several million pounds
of remedial work needed in schools which have only been open two years.”
The Bradford experience also shares with other PFI schools the inability to
turn off lights which burn all summer, with schools picking up the tab.
The Daily Telegraph the following
day, 27 January, notes that; “Since 2007, more than a fifth of England’s hospital trusts with active PFI hospitals have closed casualty departments, or
published proposals to do so. In the same period, only four per cent of trusts
without PFI hospitals have closed, or proposed to close, A&E units. Fewer
than a quarter of England’s 168 NHS hospital trusts have significant PFI
hospitals in operation. But these trusts account for almost two-thirds of
A&E closures or proposed closures.” The link then is very clear
between PFI contracts and reduced services and jobs and increased payments into
private hands for poor value returns.
The article on the 27th continues, “The
Daily Telegraph has disclosed how some PFI hospitals – built and operated by
the private sector, and effectively rented back to the taxpayer – will end up
costing the public purse more than 10 times their capital value.
“The new Princess Royal University Hospital in Bromley, south London, cost £118million to build. It will end up costing
taxpayers £1.2billion, including facilities management. South London
Healthcare, the NHS trust responsible for the Princess Royal, has a second PFI
hospital, the Queen Elizabeth in Woolwich.
“The trust’s annual deficit was raised
to £100million by the two deals. It has closed the A&E unit at one of its
non-PFI hospitals, Queen Mary’s in Sidcup.
“In internal documents seen by The
Daily Telegraph, the trust stated that the ‘occupation costs’ of the PFI
hospitals were roughly double those of its non-PFI hospital”.
Just like the school PFI rip-off mentioned
earlier, the hospital contracts have money draining clauses such as: “Under
its PFI contract, Queen Elizabeth Hospital, Woolwich, must have 64 visits a
year from pest controllers, even when there are no pests to control. When there
are pests, the hospital must pay for further visits, which it did 10 times last
year.” And “Food served at the Queen Alexandra PFI hospital in Portsmouth is cooked in south Wales, then driven 100 miles to Hampshire.” But the
bottom line has to be the service to the community, which we are told is the
reason for the existence of the hospitals, but, as this article exposes: “Early
PFI hospitals had on average 20 per cent fewer beds than the hospitals they
replaced, according to research. Because of high service charges, several PFI
hospitals cannot afford to keep even these reduced numbers of beds fully open.”
On 10 February the Telegraph
Kindle edition (not on website) carried an article by Martin Beckford
(‘Hospitals told to end private finance contracts to safeguard patient care’),
which strongly advises local authorities to try and buy out of these contracts
as, despite the high cost of doing so, it would be cheaper in the long run in
financial terms and in terms of the service they will be able to provide. The
article quotes Prof Allyson Pollock who claims that “NHS bodies are laying
off staff, reducing services and providing lower-quality care because they have
to spend so much in interest payment on their privately-constructed
buildings. She says interest payments on the 101 PFI hospitals built
under Labour now total more than £40 billion and are increasing as public
spending is being cut back”. The article continued disclosing that “a
mental health trust had become the first to get out of one of its PFI contracts
and will save an estimated £14 million by ‘paying the mortgage off early’”.
Tees, Esk and Wear Valleys Mental Health Foundation Trust recently reviewed
the costs of one of its PFI deals and decided to take advantage of a break
clause. It paid £18 million to the private firm that built and
operated West Park Hospital in Darlington, Co Durham, to get out of the
contract, but would have paid £32 million in interest and maintenance payments
over the next two decades.
Prof Pollock, who is
based at the Centre for International Public Health Policy at the University of
Edinburgh, in a paper published on Bmj.com, the website of the leading medical
journal, claims that “Cuts in NHS funding and the high cost of PFI debt
charges translate into staff redundancies, service closures and reductions in
access to and quality of care for patients”.
She and her colleagues calculate that 101
of the 135 new hospitals built between 1997 and 2009 were paid for with PFI
deals. They say the deals should be reopened as “interest rates
have risen since the banking crisis and are exacerbating the financial
difficulties of PFI hospitals and the NHS as a whole”.
In another Telegraph article on
Kindle 8 February 2011, by James Kirkup (‘Civil servant in £1bn roads project
joins the contractors’), it is revealed that a report by MPs criticised the
Highways Agency officials who oversaw the PFI contract to upgrade the M25 for
waste when it cost around £1 billion over the already excessive agreed
estimate. “The report also found that it took nine years to finalise the
contract for the PFI, a period described as wasteful. The agency
spent an ‘excessive’ £80 million on consultants and advisers, firms that
directly benefited from delays in the process.” On top of this it seems
that the leading civil servant who oversaw the project now works for one of the
main contractors on the project, Balfour Beatty.
The last Labour Government oversaw a huge
feeding frenzy of capitalist leeches sucking dry public money, supposedly there
to pay for vital services. They may not be carrying out the present cuts but
through the PFI robbery they have played their part in making them bite
harder. Of course, when we say that they are not carrying out the present
cuts, it should be noted that there are Labour-controlled councils who will
carry through these cuts, while pleading that they are being made to do it by
central government. Heaven forbid they should step off the gravy train in
opposition, if indeed, they really are opposed to cuts in services to try to
save capitalism.
We must fight against
the cuts to our services, jobs etc., but we must remember that all the
bourgeois parties have had a hand in them and not one of them is better than
another. Overthrowing capitalism and putting socialism in its place is the
only way we shall make sure that we get the services we need and that no one is
creaming off the cash meant to pay for them.