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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Voters are turning against Brexit but the Lib Dems aren't benefiting

Labour's pro-Brexit stance is not preventing it from winning the support of Remainers. Will that change?

More than a year after the UK voted for Brexit, there has been little sign of buyer's remorse. The public, including around a third of Remainers, are largely of the view that the government should "get on with it".

But as real wages are squeezed (owing to the Brexit-linked inflationary spike) there are tentative signs that the mood is changing. In the event of a second referendum, an Opinium/Observer poll found, 47 per cent would vote Remain, compared to 44 per cent for Leave. Support for a repeat vote is also increasing. Forty one per cent of the public now favour a second referendum (with 48 per cent opposed), compared to 33 per cent last December. 

The Liberal Democrats have made halting Brexit their raison d'être. But as public opinion turns, there is no sign they are benefiting. Since the election, Vince Cable's party has yet to exceed single figures in the polls, scoring a lowly 6 per cent in the Opinium survey (down from 7.4 per cent at the election). 

What accounts for this disparity? After their near-extinction in 2015, the Lib Dems remain either toxic or irrelevant to many voters. Labour, by contrast, despite its pro-Brexit stance, has hoovered up Remainers (55 per cent back Jeremy Corbyn's party). 

In some cases, this reflects voters' other priorities. Remainers are prepared to support Labour on account of the party's stances on austerity, housing and education. Corbyn, meanwhile, is a eurosceptic whose internationalism and pro-migration reputation endear him to EU supporters. Other Remainers rewarded Labour MPs who voted against Article 50, rebelling against the leadership's stance. 

But the trend also partly reflects ignorance. By saying little on the subject of Brexit, Corbyn and Labour allowed Remainers to assume the best. Though there is little evidence that voters will abandon Corbyn over his EU stance, the potential exists.

For this reason, the proposal of a new party will continue to recur. By challenging Labour over Brexit, without the toxicity of Lib Dems, it would sharpen the choice before voters. Though it would not win an election, a new party could force Corbyn to soften his stance on Brexit or to offer a second referendum (mirroring Ukip's effect on the Conservatives).

The greatest problem for the project is that it lacks support where it counts: among MPs. For reasons of tribalism and strategy, there is no emergent "Gang of Four" ready to helm a new party. In the absence of a new convulsion, the UK may turn against Brexit without the anti-Brexiteers benefiting. 

George Eaton is political editor of the New Statesman.