Schools and hospitals used to be built and paid for by public money. In 1992 the Conservative government introduced the Private Finance Initiative, later expanded under a Labour government, which replaced public money with private finance from a consortium of private banks and construction firms who own, operate and lease them back to the government at a high rate of interest.
UK taxpayers now owe £305 billion in PFI repayments across 700+ projects – including the building of hospitals -for the next 30 years[xxiii]. PFI is significantly more expensive than Government funded projects with the cost of borrowing at least two times higher than Government financed works according to a 2011 HM Treasury Report.
PFI deals have been universally criticised as extremely poor value for taxpayers and likened to “paying for a hospital on your credit card” by BBC Panorama. In effect, such a debt based system means that our public services are no longer owned by and accountable to us.
Those hospitals with large debts as a consequence of Private Finance Initiative deals are especially vulnerable as they have no obvious means of reducing their repayments. If this situation persists many will soon become “bankrupt”, creating pressure to recommend extra fee-generating services (e.g. tests, imaging, inpatient procedures, and consultant appointments). Few patients are equipped to identify decisions made in the interest of the hospital rather than themselves, so would generally accept them. The American experience has shown that hospitals not infrequently profiteer from this activity. CCGs must pay the bills submitted by providers, or query them and negotiate reductions.