Really, who would have thought it, something good coming out of the Private Finance Initiative for hospitals?
Hospitals built under Private Finance Initiatives (PFI) are so costly to run that they risk a permanent deficit, according to an economic analysis produced by the NHS in London and seen by The Times.
But they cannot be closed because the debts incurred would still have to be repaid, and a hospital that treats no patients generates no income.
The analysis, aimed at stemming a £65 million deficit in southeast London, concludes that savings can be made only by closures at older hospitals that have not yet been rebuilt under a PFI.
Two PFI hospitals in the area are technically bankrupt, with no realistic prospect of repaying their deficits — Bromley Hospitals NHS Trust, and Queen Elizabeth Hospital, Woolwich. But neither can be closed without making things worse, so cuts are more likely to fall on Queen Mary’s, Sidcup, which is also heavily indebted but which made a small surplus in 2006-07.
No, not that bit, that’s the evidence. This:
The paper, produced last month, says that there are already too many beds in southeast London and the excess will increase markedly over the next few years as lengths of stay shorten. This means that income will fall while costs at the PFI hospitals will not. The result will be a growing deficit unless something is done.
Yes, that. The PFI is, to my mind at least, grossly wasteful and the only reason it exists at all is to allow captial spending to be kept off Gordon Brown’s books so that he can meet his targets for the PSBR.
But look what one of the side effects is. By making clear what the actual costs are, in a stream of payments with a requirement for the hospitals to produce an accounting profit after said costs, it’s showing that we’ve actually built too many hospitals. If this was buried in the more normal public sector accounts we’d never have found this out.
I agree it’s an expensive and wasteful way to find this out but nice to find such a silver lining, eh?
Now, given the way in which this very limited fiscal transparency is showing up the gross waste of the system of public spending, which other areas shall we try to shine the same light on?
(Please note that if the hospitals had been built without the PFI, in terms of economic efficiency or wise use of the tax money, those hospitals would still need to pay back those capital costs. That under normal public finance rules we can’t actually see that they don’t is really rather the point.)
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