The folly of PFI exposed

The cost of hospital building will put huge pressure on the NHS at the worst possible time.

The time to say "I told you so" might have arrived for Public Finance Initiative naysayers. The BBC reports today that due to some cunningly engineered PFI contracts, the health service in England will end up paying £65bn to private contractors for hospital building.

This figure is shocking, given that the actual value on completion of the 103 hospitals was just £11.3bn. This means that, in effect, private companies are charging the state a premium of more than £50bn for building and mainaining these hospitals.

Those versed in the skulduggery of PFI -- whereby a private company builds public infrastructure and then leases it back to the state -- will cast a weary eye over these figures. As George Monbiot pointed out over a year ago, the way the contracts are put together is unnecessarily complicated, and primarily aimed at keeping these liabilities off the state's balance sheet (though this no longer holds).

As Monbiot notes, the "public-sector comparator" used to assess the relative cost of public and private finance for these projects was deeply flawed. This is particularly galling, as the one of the main arguments in favour of using PFI was that it was more efficient than the public sector.

These huge NHS bills for patient care could have dire consequences for patient care. As the British Medical Association notes:

The inflexibility of PFI contracts means that it is more likely that hospitals will make cuts to services to meet their PFI repayments.

The whole sorry saga ought to make us look with trepidation on the government's cheerleading for the role of the private sector in a revamped NHS. It is yet more evidence of the reduced accountability that goes hand in hand with greater private-sector involvement -- a gap that David Cameron's "big society" is yet to address.

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Why the Labour rebels have delayed their leadership challenge

MPs hope that Jeremy Corbyn may yet resign, while Owen Smith is competing with Angela Eagle to be the candidate.

The Eagle has hovered but not yet landed. Yesterday evening Angela Eagle's team briefed that she would launch her leadership challenge at 3pm today. A senior MP told me: "the overwhelming view of the PLP is that she is the one to unite Labour." But by this lunchtime it had become clear that Eagle wouldn't declare today.

The delay is partly due to the hope that Jeremy Corbyn may yet be persuaded to resign. Four members of his shadow cabinet - Clive Lewis, Rachel Maskell, Cat Smith and Andy McDonald - were said by sources to want the Labour leader to stand down. When they denied that this was the case, I was told: "Then they're lying to their colleagues". There is also increasing speculation that Corbyn has come close to departing. "JC was five minutes away from resigning yesterday," an insider said. "But Seumas [Milne] torpedoed the discussions he was having with Tom Watson." 

Some speak of a potential deal under which Corbyn would resign in return for a guarantee that an ally, such as John McDonnell or Lewis, would make the ballot. But others say there is not now, never has there ever been, any prospect of Corbyn departing. "The obligation he feels to his supporters is what sustains him," a senior ally told me. Corbyn's supporters, who are confident they can win a new leadership contest, were cheered by Eagle's delay. "The fact even Angela isn't sure she should be leader is telling, JC hasn't wavered once," a source said. But her supporters say she is merely waiting for him to "do the decent thing". 

Another reason for the postponement is a rival bid by Owen Smith. Like Eagle, the former shadow work and pensions secrtary is said to have collected the 51 MP/MEP nominations required to stand. Smith, who first revealed his leadership ambitions to me in an interview in January, is regarded by some as the stronger candidate. His supporters fear that Eagle's votes in favour of the Iraq war and Syria air strikes (which Smith opposed) would be fatal to her bid. 

On one point Labour MPs are agreed: there must be just one "unity candidate". But after today's delay, a challenger may not be agreed until Monday. In the meantime, the rebels' faint hope that Corbyn may depart endures. 

George Eaton is political editor of the New Statesman.