PPP

  • by Allyson Pollock, who is professor of public health and director of the Institute of Health and Society at Newcastle University, and the author of "NHS PLC"; Published on 18th January 2018 in the "New Statesman"

    See Prof Pollock's TED talk "Privatisation of the NHS" - 29th April 2014 - in "Videos"

    Proposals for the health service will put billions of pounds of contracts into the hands of similarly structured organisations.

    It increasingly looks like the collapse of Carillion will not only cost the UK many millions of pounds but also endanger the delivery of vital public services and projects. And yet, even as the government scrambles to clean up the mess left by the contractor’s failure, it is currently proposing to allow NHS services to be put into the hands of companies which operate in the same way.

    Carillion already has a raft of NHS Private Finance Initiative (PFI) and Local Improvement Finance Trust (LIFT) contracts in the NHS, including owning and operating 11,000 hospital beds in a dozen NHS hospitals in England and Scotland as well as several General Practitioner (GP) surgeries and community services.

    Under the PFI, builders, bankers and service operators like Carillion, rather than government, raised money and entered into long term 30-year contracts with public bodies to pay back the debt. The extortionate costs to the taxpayer of this private borrowing are well documented. In the case of the NHS, which has been paying consortium members including bankers and shareholders a high annual charge for private finance, this is fueling serious financial difficulties in many hospitals and across the NHS. With money diverted to private pockets, beds and services have closed and staff have been reduced.

    [for more on "Accountable Care Organisations" - the "next big thing" for the NHS]

  • Further reading: Prof Allyson Pollock and David Price: "PFI and the National Health Service in England" June 2013

     

    https://www.european-services-strategy.org.uk/wp-content/uploads/2017/02/pfi-ppp-buyouts-bailouts-and-terminations.pdf

    ESSU Research Report No 9, Dexter Whitfield - Published February 2017

    Details 11 buyouts, 20 terminations and 43 projects with major problems, plus many bailouts, accounting for 28% of PFI/PPP contracts by capital value. The public cost of buyouts, bailouts, terminations and major problem contracts is £27,902m, when combined with the additional cost of private finance, interest rate swaps and higher PFI transaction costs. This could have built 1,520 new secondary schools for 1,975,000 pupils, 64% of 11-17 year old pupils in England. The UK’s 6.8% ratio of buyout and terminated contracts is higher than the 5.4% average of World Bank projects in developing countries for terminated contracts. This ESSU Research Report explains the causes and fundamental flaws in the PFI/PPP model.

    Databases of buyouts, terminations and major problem contracts.

    "Neoliberalism and the state-business partnership: the PFI/PPP model

    PFI/PPP projects are a product of neoliberalism. The Design, Build, Finance and Operate (DBFO) model has increased the commodification and financialisation of public infrastructure to provide new opportunities for accumulation; created new markets for finance capital, construction and facilities management companies, consultants and lawyers; reduced the role of the state; and ultimately widened the potential for privatisation of buildings, transport and utility networks and public services.

    Incomplete and complex contracts

    A large and complex contract is at the centre of every PFI/PPP project. A standard draft contract is amended and developed as procurement proceeds up to the point of financial closure. The final contract or project agreement can range from a few hundred to several thousand pages. But no matter how comprehensive they are, virtually all contracts are incomplete in practice (Hart, 2003), because they cannot predict future events and changing economic and social needs. Tirole (1999) identifies three reasons for incomplete contracts: