£300 TO CHANGE A SOCKET! – unions slam ‘obscene’ PFI profits

NHS trade unionists marching in London on November 3rd to defend the NHS against the privateers
NHS trade unionists marching in London on November 3rd to defend the NHS against the privateers

Public sector unions yesterday condemned the huge fees being charged for making ‘operational changes’ to contracts by PFI privateers.

This followed a National Audit Office (NAO) report which found that PFI main contractors have been charging widely varied fees for simple maintenance tasks, with examples of the cost of fitting electrical sockets ranging from just over £30 to over £300.

UNISON General Secretary Dave Prentis, said: ‘This latest National Audit Office report reveals how PFI companies continue to rake in the cash by charging unjustifiably high fees for making changes to contracts.

‘These companies are abusing their position by overcharging hospitals and schools for small changes and basic maintenance.

‘It’s time for the government to face the fact that PFI is a fundamentally flawed system.

‘Instead of attacking the wages of low paid public sector workers, the government should tackle the obscene profits being made by these private companies at the public’s expense.’

GMB national officer Sharon Holder told News Line: ‘Private Finance Initiative companies are taking advantage of the public sector when writing contracts. As a result the public sector is being taken for a ride.’

She added: ‘We don’t agree with PFI, but if the government intends to pursue this policy, it needs to ensure consistency across the various contracts.’

Examples of cost differences given by the NAO included the cost of replacing an electrical socket: highest, £302.30, Wirral Schools; lowest, £30.81, Kirklees Schools.

The cost of supplying and fitting a data point varied from: highest, £398.30, Blackburn Hospital; lowest, £95.74, East Ridings School.

The PFI contractor for Calderdale Royal Hospital charged £149.71 to fit a notice board, while the cost to Defra offices, Cambridge, was nothing.

The NAO report found that fitting a lock could cost anything from £15.09 to £486.54, while the cost of a key ranged from £4.26 to £47.48.

The NAO ‘Value for Money Report’ said in its Executive Summary: ‘There are now over 500 operational projects (nearly 400 of which are in England) with a combined capital value of £44 billion.

‘Future payments across all PFI projects up until 2031-32 amount to £91 billion in today’s money.’

It added: ‘An estimated £180 million was paid by public authorities to PFI contractors to undertake changes in 2006.’

The report noted: ‘In addition to mark-ups to cover overheads and profit added by service providers, the Special Purpose Vehicle (SPV – a company set up by a consortium of contractors to design, build, finance and operate the asset) often charges a fee, typically 5 to 10 per cent of the cost of the change.

‘In total, an estimated £6 million was paid in such fees in 2006.

‘Usually, this fee was not specified in the contract, although the most recent Treasury guidance requires that this is clear at the outset.

‘Although in principle, the private sector should be able to charge an appropriate fee to cover the overhead cost and profit for work that they have not already contracted to do, we found that this fee often related to work that was carried out by sub-contractors rather than the SPV and was very often not justified.’