PFI/PPP Buyouts, Bailouts, Terminations and Major Problem Contracts

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:

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The NHS budget and how it has changed

From the King's Fund, updated 12th May 2017:  https://www.kingsfund.org.uk/projects/nhs-in-a-nutshell/nhs-budget

 

Department of Health budget (in real terms at 2017/18 prices)

Source: Department of Health annual report and accounts 2015/16; Central government supply estimates 2016-17, supplementary estimates and new estimates – Feb 2017; HM Treasury GDP deflators at market prices, and money GDP March 2017 (Quarterly national accounts, March 2017)

Planned spending for the Department of Health in England is approximately £123.7 billion in 2017/18 (at 2017/18 prices).

In the 2015 Spending Review the government announced that funding for the Department of Health would increase to £133.1 billion (or £126.5 billion at 2017/18 prices after adjusting for inflation) by 2020/21. The increase in health spending between 2015/16 and 2020/21 is less than the government has claimed, mainly because ministers have chosen to highlight the funding provided to NHS England only, rather than the Department of Health’s total budget.

Though NHS funding is continuing to grow, the rate of growth is slowing considerably compared to historical trends. The Department of Health budget will grow by 1.1 per cent in real terms between 2009/10 and 2020/21. This is far below the long-term average increases in health spending of approximately 4 per cent a year (in real terms) since the NHS was established.

Looking ahead, between 2017/18 and 2019/20 the Department of Health budget will increase by just 0.6 per cent on average each year in real terms. This will place increasing pressure on the NHS, as demand for services is continuing to grow.

 

10 charts that show why the NHS is in trouble

Nick Triggle, Health Correspondent - BBC News website 7th February 2017

Although this article is now four months old, it is still a useful summary of the overall problems besetting the NHS and social care in the UK.

What it does not address is (1) the impact of wasteful marketisation and (2) the massive reorganisation called "Sustainability and Transformation Plans" which the Conservative government and CEO Simon Stevens are currently promoting.

The charts are:

 

1. We spend more on the NHS than ever before

2. A bigger proportion of public spending goes on health

3. Key A&E targets are being missed

4. The UK's population is ageing

5. Care for older people costs much more

6. Increases in NHS spending have slowed

7. The UK spends a lower proportion on health than other EU countries

8. Demand for A&E is rising

9. Fewer older people are getting help with social care

10. Much more is spent on front-line healthcare than social care

Read more ...

STPs and Five Year Forward View – the case of the missing evidence - by John Lister

STPs and Five Year Forward View – the case of the missing evidence

This is a very important and thorough, but brief (16 pages) summary of the problems as at April 2017 by John Lister, head of Health Emergency and Health Campaigns Together, who has monitored the NHS for 30 years.

By way of praise I will borrow the following introduction by Eric Leach, of Ealing Save Our NHS, who edits "Our NHS in Crisis", as follows:

"I have read some excellent pieces of research and writing in the five years I have been trying to make sense of the cost cutting/service change plans for local, regional and national care services.

However one document now stands out in my mind as the most brilliant piece by piece, issue by issue, aspiration by aspiration shredding of the Government’s current plans and supporting evidence for delivering future financial savings and care services’ improvements.

The document is attached. It’s written by John Lister and can also be viewed at www.healthcampaignstogether.com

I realise it’s a long read at 16 pages, but I doubt anyone could cover the territory in fewer words/pages. His evidence base is authoritative, comprehensive and wide ranging. No sane person could conclude that there is any credible evidence that implementing the current plans will achieve either of the twin goals of extreme cost cutting and service improvement.

If journalism is "early history" then John has documented in his paper why the STP/FYFV/ACO/Next Steps failed way before 2021".

Can we afford to close any more A&E departments ? Evidence from North West London

Research paper by Dr Gurjinder Singh Sandhu, published by the Centre for Health and the Public Interest on 19th April 2017. You can read it here (14 pages).

The following graph shows that the closure of Hammersmith and Central Middlesex A&E departments in Sept 2014 caused a very serious decline in the performance of the remaining A&E departments, that they recovered only a little in the summer months and that the trend is downwards.

 

Dr Sandhu has provided unequivocal evidence using statistics from NHS and other public bodies (Jan 2012- Jan 2017) for the Mansfield Commission findings that SaHF, and by extension the NW London STP, can be shown to fall foul of (1) equalities (BME) legislation and (2) discrimination on grounds of age. 

 

"Conclusions

Since the closure of Emergency Departments in North West London in September 2014, each successive winter has seen deterioration in Type 1 A&E Performance. For some hospitals there has been no recovery over the summer months and emergency care has been in perpetual state of crisis. Ambulance response times are deteriorating, A&E units are unable to offload ambulances, and patients are waiting longer on emergency department trolleys to be assessed, treated and bedded where necessary. For time- sensitive conditions such as sepsis, respiratory failure, kidney failure and the unconscious patient, all this lost time equates to cellular death and eventually patient deaths. A lack of critical care and high dependency unit beds for the sickest patients is the greatest cause for concern.

In North West London A&E closures have also had significant effects on the performance of neighbouring A&E departments. STP footprints are not isolated: the STP for South West London also proposes to downgrade one of five A&Es, which will have a knock-on effect on North West London, and vice versa.

There has been a lack of equality impact assessment on the effects on deprived communities and the elderly in the NW London STP plan. Poverty is shifting from the centre of London to the outskirts, yet across London it is in these areas that clinical networks between a hospital, GPs and social care are being dismantled.

Whilst isolated deaths due to pressures on the emergency system have been reported by the media, disinvestment in NHS and social care services has been explored in one recent study as a factor contributing to nearly 30,000 extra annual deaths in 2015. The authors* expressed significant concerns that a pattern of rising mortality each year is emerging and called for further in-depth scrutiny of what caused this marked increase in mortality. Despite a dangerous deterioration in A&E performance since the closure of two local A&E Departments, the North West London STP still envisages closing a further two A&E units at some point in the future. Future planning needs to learn lessons from the reconfigurations that have already taken place and not continue with A&E closures based on assumptions which have not been borne out in reality."

 

* Prof Martin McKee, Lucinda Hiam, Prof Danny Dorling and Dominic Harrison.

 

 

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