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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Commons Confidential: Sleepy Zac is too laid-back

Lucy Allan's "threat", Clean for the Queen and the case of the invisible frontbencher.

After six years as a minister for Europe, David Lidington’s profile remains low. But the invisible frontbencher might be useful in a pub quiz, if not a referendum. A Tory snout muttered that David Who? has been boasting that he can name 20 of the 28 European commissioners currently parked in Brussels.

Lidington admitted that he will be history, should the UK decide to quit the EU. “If Britain voted to leave,” he nervously told a Tory gathering, “I think I’d let somebody else have a go in this job.” David Cameron is presumably thinking the same thing. Incidentally, can anybody name Britain’s EU commissioner?

“I wanted to get in touch to let you know about a fantastic initiative to help clean up the UK in advance of HM the Queen’s 90th birthday,” trilled the Banbury Tory Victoria Prentis in an email to fellow MPs. “‘Clean for the Queen’ brings together all the anti-litter organisations from the UK and aims to get people involved in the largest community-inspired action against litter . . . I will also be holding a drop-in photo opportunity . . . We will have posters, litter bags and T-shirts. Please do come along.” I await the formation of a breakaway group: “Republicans for Rubbish”.

Tory colleagues are advising Zac Goldsmith, I hear, to invest a slice of his inherited £300m fortune in speaking lessons to help him stop sounding so disinterested. Laid-Back Zac appears to lull himself to sleep on public platforms and on TV. My informant whispered that cheeky Tory MPs have been cooking up a slogan – “Goldsmith: head and shoulders above Labour” – ahead of the tall, rich kid’s tussle with the pocket battleship Sadiq Khan to become the mayor of London.

The Telford Tory Lucy Allan has finally received help after inserting the words “Unless you die” into a constituent’s email that she posted on Facebook, presumably to present herself as the victim of a non-existent death threat. Allan has since become embroiled in accusations of bullying a sick staffer. “The House has offered me a three-hour media training session,” the fantasist said in an email to colleagues. “There are two extra slots available . . .” How much will this cost us?

Oh, to have been a fly on the wall when the Injustice Secretary, Michael Gove, shared a drink with Chris Grayling and informed his predecessor that prisons would be the next piece of his legacy to be reversed. Chris “the Jackal” Grayling, by the way, is complaining that Gove’s spads are rubbishing him. And with good reason.

The Tory lobbyist Baron Hill of Oareford is the UK’s chap at the European Commission. He puts the margin into marginalised at the Berlaymont.

Kevin Maguire is the associate editor (politics) of the Daily Mirror

Kevin Maguire is Associate Editor (Politics) on the Daily Mirror and author of our Commons Confidential column on the high politics and low life in Westminster. An award-winning journalist, he is in frequent demand on television and radio and co-authored a book on great parliamentary scandals. He was formerly Chief Reporter on the Guardian and Labour Correspondent on the Daily Telegraph.

This article first appeared in the 11 January 2016 issue of the New Statesman, The legacy of Europe's worst battle