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3i Group appoints new CEO

Changes afoot for the UK private equity investor after posting annual loss of £783m.

The 3i Group has reported a loss of £783m for the year ended 31 March 2012 – down from a profit of £186m for the same period last year.

The company's total return fell £656m, compared to a £324m gain the previous year. Diluted earnings per share were 82.8p (2011: 19.5p), while net portfolio return was £425m (2011: £449m).

As of 31 March, net debt was £464m (2011: £522m), while liquidity was £1.65bn (2011: £1.85bn).

In a bid to reverse its falling share price, the British private equity investor has appointed Simon Borrows as its new chief executive officer, replacing Michael Queen. According to 3i, Borrows will focus on shaping the company’s future investment strategy and ensure that the group's operating costs are kept in check.

Adrian Montague, chairman of 3i, said:

We are delighted to announce the appointment of Simon as chief executive. He has already made a significant positive impact as chief investment officer, bringing a fresh focus and discipline to 3i’s investment processes.

Meanwhile, 3i's proceeds from the sale of investments totalled £771m (2011: £609m). Income from the portfolio was £146m (2011: £152m), while the gross portfolio return for developed markets private equity was £263m (2011: £411m).

The debt management business line generated a gross portfolio return of £1m (2011: £39m).

Montague said:

This has been a challenging year for 3i and the stability of the eurozone remains central to the outlook. Whatever the environment, we have a clear set of measures to maximise shareholder value and the returns to our co-investors in our funds.

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Is anyone prepared to solve the NHS funding crisis?

As long as the political taboo on raising taxes endures, the service will be in financial peril. 

It has long been clear that the NHS is in financial ill-health. But today's figures, conveniently delayed until after the Conservative conference, are still stunningly bad. The service ran a deficit of £930m between April and June (greater than the £820m recorded for the whole of the 2014/15 financial year) and is on course for a shortfall of at least £2bn this year - its worst position for a generation. 

Though often described as having been shielded from austerity, owing to its ring-fenced budget, the NHS is enduring the toughest spending settlement in its history. Since 1950, health spending has grown at an average annual rate of 4 per cent, but over the last parliament it rose by just 0.5 per cent. An ageing population, rising treatment costs and the social care crisis all mean that the NHS has to run merely to stand still. The Tories have pledged to provide £10bn more for the service but this still leaves £20bn of efficiency savings required. 

Speculation is now turning to whether George Osborne will provide an emergency injection of funds in the Autumn Statement on 25 November. But the long-term question is whether anyone is prepared to offer a sustainable solution to the crisis. Health experts argue that only a rise in general taxation (income tax, VAT, national insurance), patient charges or a hypothecated "health tax" will secure the future of a universal, high-quality service. But the political taboo against increasing taxes on all but the richest means no politician has ventured into this territory. Shadow health secretary Heidi Alexander has today called for the government to "find money urgently to get through the coming winter months". But the bigger question is whether, under Jeremy Corbyn, Labour is prepared to go beyond sticking-plaster solutions. 

George Eaton is political editor of the New Statesman.