PFI (Private Finance Initiative) is a way of funding public services and infrastructure that has been started in the days of John Major, as a means of pushing the cost of these services and infrastructure into the future, and so effectively keeping them off the balance sheets. In effect, they outsourced the services, to private companies, and then rented them back from these companies. It looks as if you save a lot of money, but in fact you only postpone the bills. And much worse than that, you end up paying at least ten times more than you otherwise would. A bit like living on your credit cards. Tony Blair, when he came into office, continued the practice, in spite of the fact that it was beginning to show its real, very expensive face.

Before May 2010 the Conservative Party denounced PFI as an expensive ruse, not value for money, and they promised they would scrap it when they got into government. Now they ARE in government, and while many public building projects, including hospitals and schools, have been scrapped, the ones that are given the go-ahead are mostly PFI projects.

In fact, while we, as taxpayers are, in a number of cases still paying millions every year for projects and buildings that have long been out of use, the government keeps approving new, expensive projects……

Recently the BBC has published figures showing that £11billion worth of PFI projects will cost the taxpayer in fact £65billion.

Presently the most prestigious PFI project in Liverpool is the Royal Hospital. During the public briefing for the project, in 2008 the Trust directors insisted the financial basis for the rebuilding was sound, but they refused to release the figures to prove it. It is just because of this secrecy that it is hard to estimate how individual PFI projects compare to publicly funded projects before they have actually been executed. But with the scheme in operation for some 15 years now, and the bill for the taxpayer adding up to billions of pounds, examples from all over the country are rife, and they make depressing reading.

The Merseyside branch of Keep Our NHS Public, the organisation that fights privatization of the NHS, has compared the Liverpool Royal project to PFI hospital projects countrywide, showing that the Liverpool Royal project rebuilding will cost us, the taxpayer, several times the actual cost – money that will end up in the pockets of project developers and banks.

They have now started legal proceedings against the Secretary of Health (Eric Pickles) to prevent the use of PFI for the rebuilding of the Royal.

Read the full brief from Keep Our NHS Brief

Payments to the PFI company will have to be made for 30 years, and will take priority over all other bills. Services, staff and treatments will be sacrificed to pay the PFI bills in case of deficits.

So in order to save money, the PCTs will try to move more work away from hospitals (‘into the community’ etc), undercutting the (compulsory) hospital tariff for the treatment. Whenever they do this it cuts down the hospital’s income so makes it even more impossible to make the PFI repayments. It is a crazy way to run anything – and certainly hospitals, putting the profits of project developers and bankers before the public health….

And the Liverpool Royal is not the only prestigious project executed with PFI funding: Last year PFI funding has been approved for the rebuilding of Alder Hey children’s hospital. Liverpool’s Green Party councillors brought an amendment to the motion, to try and secure public funding instead, which was rejected by the council.

A short history of PFI disasters

• PFI: Persistence of a Flawed Idea (Guardian August 16)
• Response to above by Sam Semoff, KONP (Guardian August 19)
• On the Brink: A Health Check of London’s NHS 2010
• Special Investigation: How the Government squaders Billions (Independent January 24)
• The Biggest, Weirdest Rip-off Yet: George Monbiot on Private Finance Initiatives
• Norwich University Hospital: Another Example Of Public Money Wasted