By a Newsnet reporter

The well-publicised troubles facing South London Healthcare, which is struggling under the weight of its Private Finance Initiative (PFI) obligations, offers a stark warning of the dangers of PFI and the increasingly privatised health system south of the border.

The PFI system was enthusiastically promoted by the last Labour government as a way of attracting private investment into the public sector.  Critics at the time warned that the scheme was merely creating a mountain of unsustainable debt.  The travails of South London Healthcare demonstrate that the critics were correct in their suspicions of PFI.

The NHS Trust faces being dissolved after £150 million of bailouts over the last three years failed to prevent the trust making a loss of £69 million last year.  The South London Healthcare trust was already struggling under the weight of inherited debt, it was formed in 2009 by the merger of three London hospitals which had a combined debt of £69 million.  

The trust is unable to meet the cost of two ruinously expensive PFI arrangements which the UK government entered into in order to fund two new hospitals.  Now the true costs of the arrangements is becoming apparent.

In this financial year alone, the trust will have to find £61m in charges and interest payments on the PFI schemes, accounting for almost 15% of the trust's entire budget.

The trust has now been put into special administration by Tory Health Secretary Andrew Lansley, and may be dissolved if its debts cannot be paid.  It remains uncertain what will happen to local health services in the areas covered by the trust with concerns that the administration and delivery of health services may be contracted out to a private company.  Service mergers and job cuts are likely.

Speaking to the Independent newspaper, a spokesperson for Mr Lansley said:  "Labour turned a blind eye to these problems for years. They burdened [the trust] with two unaffordable PFIs worth £61 million a year and they crippled the organisation with debt from the beginning.

"The standard of care that patients receive at the hospital trust is not good enough, although there have been some improvements in recent months.

"It is crucial that those improvements are not put at risk by the challenge of finding the huge savings that the trust needs to make."

A further 21 NHS trusts in England are at similar risk as a result of their huge PFI debts and are thought to be "clinically or financially unviable" by the Department of Health.  About half of the trusts at risk are in or around London.  It is believed that Barking, Havering and Redbridge University Hospitals NHS Trust and Surrey and Sussex Healthcare NHS Trust are amongst those most at risk of entering administration.

Scotland has its own history of PFI under the previous Labour/Lib-Dem administration, but the schemes were stopped by the first SNP administration when it entered office in 2008.  The structure of the NHS in Scotland remains true to its publicly owned principles.

Commenting, Glasgow SNP MSP Bob Doris said:

"The dire situation facing South London Healthcare is a stark demonstration of the dangers of PFI.

"The SNP has consistently criticised the sustainability of PFI projects, warning of the dangers of situations like the one currently unfolding.

"Health is a classic example how decisions for Scotland are best made by those elected by the people of Scotland, rather than leaving matters in the hands of Westminster politicians.

"Scotland's NHS is already completely independent and remains true to its founding principles. The kind of terrible situation we are currently seeing south of the border could never be allowed to happen in Scotland."

Mr Doris, Deputy Convener of the Health Committee, said that it is the independence of NHS Scotland that offers it protection from what is happening south of the border and that independence is needed to protect other services in Scotland from Tory privatisation.

He added:

"There could scarcely be a greater contrast to the approach south of the border than the New Southern General Hospital in Glasgow, being delivered by the SNP Government entirely from public funds."


# UpSpake 2012-06-27 07:07
All PFI contracts should be scrapped, torn up and thrown away. This is another of Labour's rape's of Scotland amongst many.
Once the cost of construction plus a small profit have been paid the balance of the outstanding contracts should be terminated.
Will the consortia sue the Scots government, don't think so especially when its discovered who runs these consortia and if they are stuffed full of jobs for the boys.
My bet is you will find that they are. How Labour bleed Scotland dry for their own corrupt ends. Nothing is/was sacred.
Fictitious shelves !.
# X_Sticks 2012-06-27 08:40
Not only should all PFi contracts be scrapped, torn up and thrown away, but those responsible for them should be too. The profiteers who have made (and are MAKING) fortunes from these contracts should also be penalised. Their profits should be repatriated to the state and used for the common good.
# Roll_On_2011 2012-06-27 07:31
Whats the next on the list of toxic legacies that NuLabour have left us that will roll over… Schools?

Aye after all they have been built PFI brick by PFI brick.
# border reiver 2012-06-27 08:06
Labour consistently ignored their own guidlines when awarding PFI contracts they were supposed to be for when there was not another best value option for the taxpayer, however the department of health and dpt of communities etc were given no option but PFIs resulting in an alliance with the treasury and PFI contractors. This resulted in Alistair Darling having to pay a PFI £900 for the treasury's christmas tree and a £660 million overspend on widening the M25.
# J Wil 2012-06-27 08:55
Why this great rush to put all pubic property and services in hock to private companies when we know that these compnies in general do not have the public interest at heart?

We have seen this too on a much larger scale in Greece, where everything that belongs to the Greek people is being given to the private sector to pay off their debts.

It is a dangerous road to be going down.
# Fungus 2012-06-27 09:27
Quoting J Wil:
Why this great rush to put all pubic property and services in hock to private companies when we know that these compnies in general do not have the public interest at heart?

Simple...greed, patronage and power. What has always driven Westminster and the British elite and what always will.
# cirsium 2012-06-27 09:37
Quoting J Wil:
Why this great rush to put all pubic property and services in hock to private companies when we know that these compnies in general do not have the public interest at heart?

Could it be "perfidious financial idiocy"? This is a quote from a great article which Professor Allyson Pollock wrote on PFI - the gift which goes on taking
# Mac 2012-06-27 10:42
The health services in England are heading for disaster. The Combination of Labour's PFI policy and the Coalition's austerity cuts will bring an end to the NHS in England. This will have a huge and negative impact on public health across the border.
# proudscot 2012-06-27 10:54
I recall reading that John Swinney tried to untangle the PFI web, to see if it would be possible to pay off, or re-negotiate some of the more costly of these contracts. However, he soon discovered that either solution was legally impossible, because the previous Labour/LibDem government had short sightedly signed PFI contracts which were non-negotiable for future amendment.

Not only that, but it was also then discovered that many of these PFI contracts were so lucrative, that they had been sold on between private speculators, making it extremely difficult to identify who actually owned them now. A lasting legacy of the financial wizard, Andy "PFI" Kerr.

I'm surprised no attempt has yet been made by the likes of Jackie Baillie or Richard Baker, aided by the Scottish press and BBC, to shift the blame for this expensive financial burden onto the SNP Government. After all, they tried to do exactly that over the unionist parties' Edinburgh Trams fiasco.
# J Wil 2012-06-27 11:32
Prior to the council elections, South Lanarkshire Council made great play of their claim that they had built many schools in East Kilbride. This was after the SNP came to power, denounced PFI and set up their new type of cheaper funding arrangements.

I have been unable to find out how these schools were financed. Did the council carry on with their PFI/PPP funding methods, even after they were shown to be a disaster for the public purse?
# rhymer 2012-06-27 11:48
Labour's PPI programmes were a disgusting scam,
a sort of Westminster "ponzi scheme ".

Glasgow's Labour council has their own version with all their ALEO
scams that gave their councillors thousands of pounds of extra income.

More like large crates than " little brown envelopes".
# Dundonian West 2012-06-27 12:15
It isn't only the South London Trust that's in trouble----merely the only one to date to 'come clean'.
Many others in England are in similair/identical straits.(Newsnight London).
I don't watch the Scotland edition----it's pathetic!

Labour have a lot to answer for,both in England and up here in Scotland.
Labour in Scotland? Power and Patronage, that's the name of the game---and let us not forget local government!!
# Robabody 2012-06-27 15:58
yes I wonder if the former labour Scottish parliament finance ministers would be so kind as to step forward and give us their view of PFI/PPP today? Well Lord McConnell, Mr Andy Kerr and Mr Tom McCabe (and if I've left anyone else out connected with the Scottish end please do forgive me) what do you think?

Value for money?
# J Wil 2012-06-27 13:00

It seems that Dr David Starkey has had his comeuppance.

For those who missed it, be enlightened:
# PrideoftheClyde 2012-06-27 13:16
The PFI fiasco is unfortunately just the tip of the iceberg when it comes to the mismanagement and sell-out of the NHS in England by Labour and Tory governments at Westminster.

I had the misfortune to work in a trust in England that was heavily in debt as a result of PFI. My colleagues and I struggled every day to provide the best care we could to patients with not enough resources to do our jobs effectively. Typically though, management always looked to blame nursing staff for short comings in the system rather than deal with the real causes of the problems. Our hospital LOST one hundred and fifty beds as a result of PFI as wards had to be closed to keep up payments. This was compounded with the ridiculous demands that achieving Foundation Trust status put on the service every day.

I almost choked on my coffee the other day when a Scottish nurse (who has only ever worked in Scotland) said she will always vote Labour as they were the ones who are protecting the NHS. I took great pleasure in telling her that the Labour party is responsible for some of the greatest crimes against our most beloved public institution.

I fear for the future of the NHS in England under the tories as much as I would never trust Labour with its stewardship ever again. We may think that the NHS in Scotland is safe but, given time, we will slowly creep along to the type of NHS being created south of the border. Independence is the only way to ensure that we have an NHS which is a wholly public owned service that puts care above profit.
# Dundonian West 2012-06-27 15:57
"Independence is the only way to ensure that we have an NHS which is a wholly public owned service that puts care above profit."
This quote above,deserves repeating again and again.
IF and it's a very big IF an independent Scotland ever found itself in dire financial straits the NHS SCOTLAND would remain sacrosanct,to PFI or any other highfalutin terminology!
The People in Scotland would rather suffer hardship in other ways----but look upon their NHS SCOTLAND as something that does it's best to save/improves health of their bairns and old folk.
# Legerwood 2012-06-27 13:22
It should also be remembered that the banks have done very well out of PFI via the loans they gave and the fees they earned for processing said loans. In case anyone has forgotten we actually own some of these banks.

O/T but news about a £102 million stimulus for the Scottish economy from Mr Swinney.

Also it looks as if Iain Bell's column in the Herald is worth a read. Sorry no link.
# Old Smokey 2012-06-27 15:45
Link for the Ian Bell article
# tartanfever 2012-06-27 14:27
What about the future ?

The current tory/lib dem govt. have announced that they want more privatisation of the NHS (because they are skint) and can't afford staff costs let alone any capital investment in infrastructure.

Labour also want to encourage a greater portion of private business investment in the NHS, whcih will only mean more funding being spent on interest and charges as these companies and their shareholders will be looking for a generous return.

So what about Labour in Scotland ? I know our NHS is a separate entity but surely pressure would be applied from the controllers in Westminster to adapt to their way of thinking. Then Westminster could use this as an excuse to reduce further the Scottish block funding.

We need reassurances from lamont that the NHS in Scotland will remain true to it's founding principles and not be sold off in a lottery to the highest bidder.
# gopher3 2012-06-27 14:42
If we don't vote YES, the NHS in Scotland will end up in the same dire condition.
# Mad Jock McMad 2012-06-27 15:17
Having personal experience working with Trusts across the UK with problems caused by PFI contracts in the NHS the funding issue is amongst the least of the legacy.

There is the major problem that many PFI Hospitals are not fit for purpose, have major design and contractual flaws both of the latter are important factors in post operative infection rates. Heard about the PFI hospital where the operating theatre roof collapsed forcing the surgeons into portacabins in the car park? How about one where the designers failed to put in any hazardous waste store facilities for the wards? Then there is the hospital trust whose PFI contracts means there are insufficient cleaners to deal with hazardous spills and wards have to wait up to two hours to get blood / urine/ faeces spills cleaned (the nurses have been told by the Trust 'management' if they clean up the spill they could be liable to face disciplinary action - I kid you not).

It is not too far from the truth to consider PFI contracts are causing unnecessary deaths amongst patients as staff morale plumets due to ward closures, failure to replace key staff and the constant complaint of patient's relatives about the filth and unkemptness. This is on top of the leaking roofs, plaster falling off walls, failure of air conditioning and most recently the shutting off of power to an operating theatre in the middle of an operation.

This is New Labour's legacy to the NHS across the UK - New Labour's Union - safe with the NHS ..... you must be pulling my leg.
# Alathia 2012-06-27 15:58
I have always been of the opinion that the Westminster Government relaxed banking regulations to allow the banks to lend huge sums of money to private companies so that these large infrastructure projects could be funded.

Normally massive costs like this would be funded by government borrowing but this would have appeared on the balance sheets thus destroying Browns golden rule.

Of course this excessive lending then stretched the banks to their limits making them all the more liable to collapse when the proverbial hit the fam...
# Mad Jock McMad 2012-06-27 16:16
It appears NHS Lothian have staff shortages at St John's in Livingston which means the closure of their peadiatric unit for three weeks.

I looked at the currently advertised posts in peadiatrics for NHS Lothian and the only job advertised is for a consultant peadiatrician for Edinburgh Sick 'Chicks'.

Three training posts in peadiatrics removed from St John's, Peadiatric Departmental staff posts frozen / reliant on locums maybe there is a serious question of why is this department being run with a skeleton staff ... nah it couldn't be the arm and a leg that NHS Lothian cough up for their PFI builds ... ?
# sid 2012-06-27 16:51
evening MJM ,nhs lothian is not the only health board to have problems they are taking the decision to hit front line services because they MUST pay the interest on the PFI projects that they took on.
GG&C Are also hitting front line staff anyone leaving the district nursing service in renfrewshire is not being replaced and jobs that used to be done by District nursing Sisters are now being done by staff nurses. sisters posts have been cut by 60% with those left being put into management positions with no patient contact
it was bad enough when Glasgow refused to pay sisters the going rate for the job but what they are doing now is a disgrace. sid
# From The Suburbs 2012-06-27 18:41
[quote name="Mad Jock McMad"]It appears NHS Lothian have staff shortages at St John's in Livingston which means the closure of their peadiatric unit for three weeks.

Yes Lothian has huge bill to pay for PFI. For example annual repayments of £228 million will be made over the next 5 years for Edinburgh Royal Infirmary, worth £206 million.

And I heard ultimate Labour hypocrisy from Leader of West Lothian Council. If it had been up to Labour most of St John's functions would have been closed down in 2007.
# ButeHouse 2012-06-27 16:19
Once again the SNP Government is shown to be on the right track over PFI type financing of major projects as Westminster follows them down the track, albeit some years later.

Well done Alex, Nicola, John and co.

VOTE YES in 2014
# John Souter 2012-06-27 16:19
Part of the acceleration towards privatisation of health care.

Not too subtle. but you cannot expect the Cons to attack the nub of the problem when it means taking their privateers to task for outflanking incompetent politicians.
# freeussoon 2012-06-27 21:41
Am I being cynical? Is the following:

Hiding this one:
# Marga B 2012-06-27 23:48
OT, but have people seen this new organisation: European Partnership for Independence (Scotland, Catalonia, Flanders, Basque Country):

“Working together to exercise the Universal Right of Self-Determination”

Subscribe to newsletter and get independence news in English.

By the way, latest figures for Catalan independence support - over 51% yes (up 5% since February), 21% no, around 21% abstension/refuse to vote and only 5% "don't knows".

It's amazing what a crisis can do.
# oldnat 2012-06-28 00:24

Apologies for the Google translation from Catalan!!!

Independence is the first choice of Catalan politics. This includes for the first time the barometer of the Center for Opinion Studies. The survey reveals that 51.1% of Catalans would vote 'yes' to independence in a referendum. That is, the state itself to win an absolute majority of 21.1% which is pronounced against it and 21.1% abstained. In the previous study, in February, supporters of the 'yes' and 44.6% were on, opponents, 24.7%.
Also for the first time, in addition, the Barometer shows that the majority of citizens believe that Catalonia would be an independent state. 34% of respondents have made this choice in priority ahead of the Catalan state within a federal Spain, which became the second political organization preferred by 28.7%.
Thirdly, 25.4% considered that Catalonia should be maintained as an autonomous region of Spain. Only 5.7% to become advocates for a "region" of Spain

The coverage of this poll that I have seen here, omits any mention of the vote in a referendum, and simply quotes the constitutional preferences - 34% independence : 29% Catalunya in a federal Spain : 25% status quo : 6% just a Spanish region.

Selective publication of the stats over here!

I've just found this Wiki article, which includes both polling questions.
# oldnat 2012-06-28 00:59
Bad news for those of you living in Caithness and Sutherland.

The BBC says you are "ageing faster than the rest of the Highlands and Islands".

You may have fewer young people, but I doubt that your lifestyle is actually making you older than your years.

On the other hand - John Thurso?
# tilly 2012-06-28 16:31
On the other hand, perhaps they can draw their old age pension when they are 45.
# wisnaeme 2012-06-28 15:24
Ah yes, the great PFI swindle.Perhaps I shoud reiterate a few choice quotes on the subject from myself and George Monbiot in chapter two of his excellent book, Captive State. But we shall begin with a quote from a PFI advocate, shall we.
Coventry Evening Telegraph 30th June 1998. "The chief executive of the local hospital furiously dismissed and rejected my claims (and others)that the Walsgrave hospital's planned PFI scheme would lead to massive staff cuts and fewer beds." I wonder if Mr Furious would care to comment on his past comment now?
But with this hospital being in New Labour MP Bobit Ainsworth's patch and serving New Labour's beeznessman's pal Geofrey Robinson's patch. Who was Paymaster General of the Treasury and incidentally was in charge of smoothing the way for PFI scams. The imposition of this particular PFI "Sheds for us"scam was a foregone conclusion.
The then New Labour Health Minister Alan Milburn's announcement in July 1997 was absolutely priceless..."It's PFI or bust", say's he. Aye, I nearly agreed with that sentence, it was the "or" word that I had the extreme disbelief, discomfort and difficulties with.
Perhaps PFI and bust would have been much better together. Aye,not a lot changes under the sun from the degenerates. So it's Westmidden "or" bust and we're better together then? Thanks but no thankyou. Then as now, I have the exstreme disbelief, discomfort and difficulties with Westmidden politicos with their spoken word sentence contruction, their self serving, devious platitudes and their mouth musak. Time decent folk had a flitting from folk that certainly have a proven track record of being untrust worthy and very economical with the truth and fact.

Tom McAllister.

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