Private investors are benefiting from Private Finance Initiative debts which are damaging the NHS, said the British Medical Association this morning.
The BMA was responding to today’s report by the House of Commons Public Accounts Committee (PAC) on PFI debt refinancing.
Chairman of the BMA’s Consultants’ Committee, Dr Jonathan Fielden, said: ‘This report confirms what the BMA has been saying for many years – that PFI is an expensive way of borrowing money which stores up debts for the future and drains funds away from the NHS into the pockets of the private investors.
‘We can see just how damaging this is as so many NHS trusts are currently crippled with debts and are struggling to meet PFI repayments.
‘This is already directly affecting patient care.
‘It is appalling that the government let these negotiations go ahead allowing the private sector to fleece the NHS.
‘Such huge scale financial projects should have been managed to get the best deals for the NHS, patients and for taxpayers.
‘We warned the government that this would happen and they are reaping the consequences.
‘The BMA will be urging the new cabinet to move away from wasting large sums of money in private sector deals which have been shown to offer poor value and can leave hospitals heavily in debt for decades.
‘Private companies may have done very well out of them but the NHS and therefore patients have not.’
Introducing their latest report, PAC Committee Chairman Edward Leigh MP said: ‘Proceeds gained by the public sector from PFI debt refinancing under the voluntary code for the sharing of gains are currently well short of expectations.’
He added: ‘There is no requirement for the gains made by investors through selling on their shares in PFI projects to be shared with the government.’
The MPs say in their report that in 2003 the government predicted the public sector would receive £175–£200 million ‘from the voluntary sharing arrangements on early PFI deals’.
But ‘up to December 2006 the government had secured the right to gains of only £93 million.’
The committee added: ‘Some of these early refinancings which had taken place had generated very high rates of return to the private sector investors and additional risks to the public sector in the form of higher termination liabilities and extended contract periods.
‘In the PFI equity market there is a developing secondary market which enables investors to acquire shares in PFI projects which are already in progress and some investors are building up portfolios of PFI investments.
‘There is no requirement for the gains on selling shares in PFI projects to be shared with the government.’