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4 June 2011

The NHS hospitals that will have to cut services to survive

17 NHS trusts, more than half of which are saddled with extortionate PFI debts, face deep cuts to th

By Samira Shackle

Seventeen NHS trusts are so short of funds that they will have to impose deep cuts on services if they are to remain open, according to research by the Financial Times.

This lays bear the financial crisis facing the health service. The financial unsustainability of these trusts could see some local communities losing their maternity services or accident and emergency departments.

The FT notes that in the past six years, these 17 trusts (a graphic of the affected hospitals is here) have needed to be bailed out with £625m in as yet unreturned loans and other forms of cash support. This is the equivalent of the annual running costs of two entire hospitals.

Perhaps the most controversial fact in this report is the fact that more than half of these hospitals have buildings funded through private finance initiatives (PFI). Because these buildings are thought to be too expensive to close, neighbouring institutions — which may not have financial problems — could be closed to save them.

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George Monbiot, who has written extensively on the subject, explains that PFI debts are effectively ringfenced and index-linked:

In September 1997 the Labour government gave companies a legal guarantee that their payments would never be cut. Whenever there was a conflict between the needs of patients or pupils and private finance initiative (PFI) payments, it would thenceforth be resolved in favour of the consortia. The NHS owes private companies £50bn for infrastructure that cost only £11bn to build, plus £15bn for maintenance charges.

Indeed, Jonathan Fielden, chair of the British Medical Association’s consultants’ committee, has said that PFI debts are already “distorting clinical priorities” and impacting the treatment given to patients.

PFIs were introduced by the Conservatives, but were taken on with almost religious zeal by Tony Blair’s government. Saddling schools and hospitals with these enormous, long-term debts is surely one of New Labour’s most pernicious legacies for public services. To his credit, David Cameron has expressed reservations about PFIs. There have been indications that we may move towards a hybrid model, whereby PFI funding would allow a unit to open, followed by the government buying out that contract at a later stage. This would be at least a step towards freeing our public services of these ludicrous and extortionate debts.