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.

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Is Labour really as doomed as it seems? The polls have got it wrong before

Pollsters often overrate Labour's performance. But in two elections, the opposite happened. 

Few moments in the Labour Party’s history can have felt as gloomy as this one. Going into a general election that almost no-one expects them to win, their overall opinion polling is appalling. Labour seems becalmed in the mid-20s; the Conservative Party has rocketed into the mid- to high-40s, and has even touched 50 per cent in one survey.

The numbers underlying those voting intention figures seem, if anything, worse. The Conservatives have huge leads on leadership and economic competence – often even more reliable indicators of election results than the headline numbers. High turnout groups such as the over-65s have turned against Labour in unprecedented numbers. Working-class Brits have swung towards the Conservative, placing once-safe Labour seats in danger. There are limited, but highly suggestive, hints among the data that the swing against Labour is higher in its own marginal seats – a potentially toxic development for any party seeking to hang on to MPs, as Conservatives defending apparently impregnable majorities under John Major in 1997 would attest.

All the while, Labour seems confused about what it is really for. Try as he might, Keir Starmer’s term as Labour’s shadow Brexit secretary has been marred by a fatal confusion and indecision about the extent of the UK’s future engagement with the European Union’s single market. Labour seems neither the party of Brexit nor of Remain, but one determined to irritate as many voters as possible. A similar situation reigns in Scotland, where nationalists under Nicola Sturgeon face Conservative Unionists led by Ruth Davidson, and Labour struggles even to gain a hearing.

Many Labour policy offers – free primary school meals for all, the promise of free university tuition, nationalising the railways, upholding the triple lock of pensions, opposing National Insurance rises for the self-employed – are pleasingly universal, while in isolation appealing to different electoral groups. But together, they represent a massive shift of resources to higher-income Brits that would take huge tax rises to offset. Labour is dangerously close to offering a regressive package under the guise of left-wing radicalism. This is pretty much as far from the British people’s electoral sweet spot as it is possible to imagine.

It is therefore little wonder that Labour lags so far behind Theresa May’s Conservatives. Even some Labour strongholds appear likely to fall - regional polls from London and Wales suggest that many Labour seats will be lost in the party’s remaining citadels. Brutal stories are already coming in from the campaign trail. Rumours fly of truly epochal losses - though it is important to note that other anecdotes seem much less dramatic.

Still, there are other indicators – all too easily missed in the heat of the moment – that point in the other direction. Labour’s performance in local by-elections has been dire for the main opposition party, but the swing towards the Conservatives has been running at "only" just over 2 per cent. The party has certainly suffered some big swings against it, and it has lost wards to the Conservatives in local authorities as varied as Hertfordshire, Harrow and Middlesborough. But there is no evidence that its vote has collapsed on the scale that some of the polling suggests.

Relatively recent history should also give us pause before we write Labour off altogether. Consider the last two general elections in which Labour had near-death experiences, in both 1983 and 2010. Britain’s third party - first the Liberal-SDP Alliance, and then the Liberal Democrats - seemed about to overtake Labour in the popular vote, and steal scores of seats from the bigger progressive party. On both occasions, Labour was able to draw on hitherto unguessed-at wells of cultural identity and strength to pull away right at the campaign’s end. These are in fact the only elections in recent times when the polls have underrated, rather than overestimated, Labour’s likely score. It might be that the same phenomenon emerges this time.

The Conservatives’ huge lead right now has not resulted from a sudden collapse in Labour support, but rather from the United Kingdom Independence Party’s well-publicised implosion. If anything, after about a year of steady decline, the last week or two has seen Labour’s twelve months of slow deflation grind to a halt. Labour’s numbers have even ticked up a point or two as some voters appear to rally around "their" flag. It might be that, as you squeeze the Labour vote down, it becomes more resilient to further shrinkage.

As the Conservatives try to push into Labour’s heartlands, they might find it harder and harder to persuade voters across, from Ukip as well as from Labour. The Conservatives’ image is still far from good in such communities, whatever the underanalysed and separate appeal of PM May as a strong, considered leader in need of a negotiator’s mandate in Europe. Voters might be attracted to May, and repelled by Corbyn - that does not necessarily mean that they will actually vote Conservative. There is little evidence, so far, of any realignment in how voters see themselves – whether they "are" Labour or Conservative, rather than the more ephemeral question of whether they will simply vote for those parties.

Humans always look for patterns. Experts are no exception, while journalists and commentators can always jump to rapid – but wrong – conclusions in the overexcited heat of an election campaign. So it is with the threat of a Labour catastrophe on 8 June. The danger of just such a result is definitely there. But some of the data points we already have, and two recent elections at which Labour walked close to an abyss, cast a little bit of doubt on the inevitability of such an outcome. There are still just over six weeks to go. A Conservative landslide is still quite likely. But it is not certain. We should keep an eye out for the many hints that May’s gamble might end in a rather less crushing victory than we have been led to expect.

Glen O’Hara is Professor of Modern and Contemporary History at Oxford Brookes University. He blogs, in a personal capacity, at Public Policy and the Past. He is the author of a series of books about modern Britain, including The Politics of Water in Post-War Britain (Palgrave Macmillan: forthcoming, May 2017).

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