Friday, 20 April 2012
The Shame Of PFI
The Royal Infirmary of Edinburgh (pictured) is a major teaching hospital which provides a full range of acute medical services for patients from across Lothian and specialist services for people from across the south east of Scotland. It also provides services from many from as far a field as Perthshire. Quite a few people of my acquaintance owe their lives to the skill of the cardiac unit in RIE and speak highly of the medical and nursing teams.
It is one of Scotland's largest hospitals, cost £190m and was opened in 2003. It was funded, along by schools and other public buildings at that time, by Labour's pet finance system the Private Finance Initiative (PFI).
All governments have to borrow to pay for infrastructure projects, but the shame of Labour's PFI system is that instead of paying up front with borrowed money, it agreed to pay private companies an annual fee to take on the entire construction and management of hospitals and schools.
The contract with Consort, who won the £60m annual PFI contract to build and operate the RIE, is due to run until 2028 but the lease of the land is for 130 years. Consort has been criticised for poor performance since the opening of the hospital and the latest incidents have sparked NHS Lothian into consulting their lawyers.
I've never totally understood Labour's PFI contracts. I see PRI as like purchasing a car on credit, with the condition that only the credit company employees can drive it and maintain it at excessive cost to the purchaser. That's the shame of PFI contracts.
Murdo Fraser, the tory MSP for Mid Scotland and Fife, thinks 'it would be wrong to use this one incident to try to damn all PFI projects and that many have an excellent record of delivery. Publicly-funded institutions are not without problems as we have seen in the all too recent past such as at the Vale of Leven hospital'.
I agree publicly funded projects may have problems, but the difference is the people feel they 'own' these buildings. With PFI there is no sense of public ownership.
According to the Scottish Government website there are currently 31 projects funded by PPP/PFI and NPD finance systems at a cost to the public purse of £1.332 billion, totaling 21% of capital value. No detail is given on contract lengths or values.
Fortunately the current Scottish Government have decided to use a Non-Profit Distributing (NPD) finance system for future projects because they quickly saw the exorbitant overall costs of the PFI system, but that is little comfort to the taxpayer who will be paying for projects like the ERI most of their working lives.
Let's hope Lothian NHS's lawyers can find some loophole in Consort's contract to allow them to either cancel it or renegotiate it to ensure that patient safety is paramount and value for money is also considered.