THE Octagon private sector consortium has been branded the ‘unacceptable face of capitalism’ by a House of Commons committee.
MPs on the public accounts committee say Octagon used a refinancing deal of the Norfolk and Norwich PFI (Private Finance Initiative) hospital project to boost the investors’ return by a gigantic £153 million, and to increase the liability of the hospital trust to £257 million if it needed to terminate the contract early.
The Norfolk and Norwich was one of the first hospitals to sign PFI contracts, only to see Octagon refinance the project, increasing its borrowing from £200 million to £306 million.
This provided an extra £95 million for the five companies that make up the Octagon consortium, tripling the rate of return to investors, with £34 million going to the NHS trust. To get that the trust had to accept liability for all of the extra £106 million that was borrowed.
The new borrowing was at a lower rate of interest and over a longer period, leaving the hospital committed to lease payments for 39 years instead of the original 34, while Octagon increased its rate of return from 19 per cent to 60 per cent.
This is not some exceptional example of the ‘unacceptable face of capitalism’. There have been 47 refinancings of hospital, school and other PFI projects up to the end of the last financial year.
These have seen rates of return, double, treble and even quadruple. Far from being the unacceptable face of capitalism, this is just finance capital at work, the real face of capitalism, exploiting health care as a commodity to be bought and sold, and gearing up for a completely privatised NHS.
That this is completely unacceptable and has to be dealt with is obvious.
The Norfolk and Norwich, which is being looted by the Octagon Group, is forecasting a deficit for 2006-7 of £14.8 million! No wonder!
It is paying millions annually to the Octagon company and is in hock to it for the next 39 years. In this situation of financial crisis it has also accepted its liability for Octagon being able to repay its debts.
The way out of the PFI crisis for the government and the management of the Norfolk and Norwich is to attack the workforce and to attack patient care.
The trust has announced they it may have to ‘lose’ 450 jobs this year.
The management is saying: ‘There is only one way that this jobs massacre can be lessened. The Trust is taking a range of measures to deal with this hugely challenging deficit; careful cost control, service redesign, and reducing an overall pay bill that accounts for 60 per cent of our budget. Naturally, there are very serious concerns about jobs. We believe that if we took no other action to reduce pay and other costs we would need to lose approximately 450 posts during this year.
‘To reduce this number we need to significantly reduce the pay bill; there are a number of ways of doing this including better management of sickness and greater flexibility around rosters, shift patterns and out of hours working for all staff groups. Inevitably there will also be job losses; we expect that a significant number of these will be lost through normal staff turnover but sadly some redundancies may be inevitable. We will endeavour to minimise these through other measures to reduce pay costs such as those set out above.’
It is to be pay cuts, ultra flexibility, and out of hours ‘unpaid overtime’, plus sending patients home early, plus compulsory redundancies.
But there is another way. This is to boot the PFI robbers out of the NHS, along with the rest of the private sector.
The way to deal with their claims for financial liability is to nationalise them under workers control without compensation.
The way to do this is for all health workers to demand that their unions stop all the job and bed cuts and the ward and hospital closures with industrial action to bring down the Blair government, the sponsor and protector of the PFI and private sector bandits.
To save the NHS we must go forward to a workers government. There must be a new leadership to carry this struggle forward. This leadership is the WRP.