It was the Labour party that decided to involve private finance in the NHS. It must pick up the pieces. Photo: Getty
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To save the NHS, Labour must face the ugly truth of PFI debts

Labour is right to focus on rescuing the NHS from the harm done by this government, but must face the truth that it was the party that introduced private finance into the health service in the first place.

Ed Miliband has said that this is going to be an “NHS summer”. He has sensed, rightly, that there’s something in the air, a tension over the precarious health service.

Strain on services is rising, the number of hospitals in the red is surging up, patient concern is growing and doctors are quitting in disgust at the ominous developments from the top. As much as the coalition would love to suppress them, the figures point towards a potential full-blown crisis before the parliamentary term is through. In August, campaigners will march for 300 miles, through 23 towns from Jarrow to London to press home these fears, and there are activists up and down the country straining just to get the same message across to the public: the NHS is in danger.

Labour has already made some firm commitments to undoing some of the harm done by the coalition. Andy Burnham has said in public, and behind closed doors to NHS activists, that he will repeal the Health and Social Care Act, and work to “scrap Cameron’s NHS market”. And the party has brought forward Clive Efford’s private member’s bill to rewrite rules forcing NHS contracts onto the market.

Labour should be commended for this. But if Miliband is serious about rescuing the NHS, there is an ugly truth to face. The NHS is riddled with extortionate debt from decades of misguided PFI deals. NHS hospitals owe £80bn in PFI loan unitary charges – in other words, the ongoing costs of maintaining PFI hospitals and paying back the loans. Next year alone, trusts will make some £2bn in repayments. Trusts like Peterborough and Stamford Hospitals NHS Trust, which is locked into making £40m in repayments a year on the PFI it took for Peterborough City Hospital, or Sherwood Forest NHS Trust, which is spending 15 per cent of its annual budget on the annual repayments on a PFI loan it took to expand the King’s Mill Hospital, and so on.

But there are plenty who do gain. The initial investment made by PFI companies is paid back in spades. As Joel Benjamin of Move Your Money points out: “Typically the unitary charge is three to five times the capital cost, and on more egregious PFI projects as high as seven times”.

The even uglier reality for Miliband is that the New Labour era was a golden age for the PFI. The modern PFI is the child of John Major’s Conservative government, but it was adopted and thrived under Tony Blair and Gordon Brown. Between 1997 and 2008, 90 per cent of all hospital construction funding was under PFI agreements, which paid for 75 per cent of all hospitals built.

The only positive, of course, is that 101 new hospitals were delivered in this time. New Labour invested heavily in the NHS, even if it did bring in some marketisation at the same time. Unlike this government, which has replaced marketisation with full-blown privatisation, and effectively cut budgets, especially for those with PFI debts, whose repayment rates are tacked to inflation.

Yet through a sustained campaign of attrition, the coalition has managed to shift the blame for “shortfalls” onto beleaguered health service staff and the principle of public care, and totally ignored the devastating role of the private finance cancer at the heart of it all. The next step is to present that same finance as the cure, and drive trusts that have been forced to cut back services just to balance the books straight into the waiting arms of private providers.

Figures published by the Nuffield Trust out today reveal the true extent of austerity’s toll on the NHS. In its report, Into the Red, the Nuffield Trust spells out how hospitals and trusts faced with austerity were just keeping their heads above water until last year, when “cracks” began to show. In 2013/14, a further 21 trusts had sunk into the red from the previous year, and overall trusts recorded a deficit of £100m. And the report reveals another sobering figure: of the health and social care leaders surveyed, 70 per cent said that they think more providers will be forced into the red to continue to provide high-quality care, if current levels continue.

Miliband has a real opportunity now: to rescue the NHS from another five years of this, and make huge political gains in the process. He could pledge to reform the PFI system, renegotiate the terms of existing loans agreed under duress to get payments down to “fair value”, which could even lead to a refund for some hospitals, or as has happened in selected cases, use public money to bail out hospitals crippled by debt. After all, it was good enough for the banks.

Not only would it free dozens of trusts like Peterborough and Sherwood Forest from the abject spiral of debt they’re in – and the negative impact that debt is having on healthcare – it would undermine the odious and transparently ideological argument that cuts to frontline services are needed to reduce the deficit. But that will involve facing up to the fact that it was his party, albeit under a very different leadership, that was so keen to get private finance involved in the first place. It would be a gutsy move, but a potential high earner. And it might just save the NHS.

Benedict Cooper is a freelance journalist who covers medical politics and the NHS. He tweets @Ben_JS_Cooper.

Photo: Getty
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The Home Office made Theresa May. But it could still destroy her

Even politicians who leave the Home Office a success may find themselves dogged by it. 

Good morning. When Theresa May left the Home Office for the last time, she told civil servants that there would always be a little bit of the Home Office inside her.

She meant in terms of its enduring effect on her, but today is a reminder of its enduring ability to do damage on her reputation in the present day.

The case of Jamal al-Harith, released from Guantanamo Bay under David Blunkett but handed a £1m compensation payout under Theresa May, who last week died in a suicide bomb attack on Iraqi forces in Mosul, where he was fighting on behalf of Isis. 

For all Blunkett left in the wake of a scandal, his handling of the department was seen to be effective and his reputation was enhanced, rather than diminished, by his tenure. May's reputation as a "safe pair of hands" in the country, as "one of us" on immigration as far as the Conservative right is concerned and her credibility as not just another headbanger on stop and search all come from her long tenure at the Home Office. 

The event was the cue for the Mail to engage in its preferred sport of Blair-bashing. It’s all his fault for the payout – which in addition to buying al-Harith a house may also have fattened the pockets of IS – and the release. Not so fast, replied Blair in a punchy statement: didn’t you campaign for him to be released, and wasn’t the payout approved by your old pal Theresa May? (I paraphrase slightly.)

That resulted in a difficult Q&A for Downing Street’s spokesman yesterday, which HuffPo’s Paul Waugh has posted in full here. As it was May’s old department which has the job of keeping tabs on domestic terror threats the row rebounds onto her. 

Blair is right to say that every government has to “balance proper concern for civil liberties with desire to protect our security”. And it would be an act of spectacular revisionism to declare that Blair’s government was overly concerned with civil liberty rather than internal security.

Whether al-Harith should never have been freed or, as his family believe, was picked up by mistake before being radicalised in prison is an open question. Certainly the journey from wrongly-incarcerated fellow traveller to hardened terrorist is one that we’ve seen before in Northern Ireland and may have occurred here.

Regardless, the presumption of innocence is an important one but it means that occasionally, that means that someone goes on to commit crimes again. (The case of Ian Stewart, convicted of murdering the author Helen Bailey yesterday, and who may have murdered his first wife Diane Stewart as well, is another example of this.)

Nonetheless, May won’t have got that right every time. Her tenure at the Home Office, so crucial to her reputation as a “safe pair of hands”, may yet be weaponised by a clever rival, whether from inside or outside the Conservative Party. 

Stephen Bush is special correspondent at the New Statesman. His daily briefing, Morning Call, provides a quick and essential guide to British politics.