PFI ‘drives cuts and closures’ says BMA

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Marchers in London in April demanding an end to privatisation in the NHS
Marchers in London in April demanding an end to privatisation in the NHS

The Private Finance Initiative ‘will burden local health economies for decades’ and drive forward cuts and closures, the British Medical Association (BMA) warned this morning.

It was responding to a National Audit Office report published today which reports that most PFI hospital contracts are well managed, but questions their long-term value for money and states that they make it difficult for trusts ‘to make savings without cutting back on services.’

The BMA has long expressed concerns that PFI has left many NHS trusts facing decades of debt.

Commenting on the report, Dr Mark Porter, Chairman of the BMA’s Consultants Committee, said: ‘The debts attached to PFI schemes and the lack of flexibility in repaying them, hugely increase the financial pressures on NHS trusts.

‘While future funding for the NHS is uncertain, payments to private companies under PFI will burden local health economies for decades.

‘This inflexibility has created financial instability in the NHS and ultimately makes cuts and closures more likely.’

The National Audit Office said in a statement: ‘The National Audit Office reports today that most PFI hospital contracts are well-managed and the evidence indicates that they are currently achieving the value for money expected when the contracts were signed.

‘There continue to be risks, however, to the long-term value for money of these contracts.’

It added: ‘Today’s report emphasises the challenge involved in managing PFI contracts.

‘Most Trusts are managing their contracts well day-to-day and understand the risks to value for money.

‘However, risks remain and, while many Trusts have recently increased the resources they dedicate to managing PFI contracts, some Trusts are not devoting enough resources.

‘Twelve per cent (nine of the 76) operational PFI contracts have no-one from the public sector assigned to contract management.

‘It is likely that Trusts will be expected to make efficiency savings over the next few years, but their ability to make savings from their PFI contracts is very limited.

‘Because Trusts pay an index-linked fixed sum, it is difficult for them to make savings without cutting back on services.

‘Contractors who secure economies of scale through managing multiple PFI contracts are rarely required to share these efficiency gains with Trusts.’

The NAO noted that there are currently over 70 operational PFI hospitals in England, costing around £900 million a year and with a capital value of over £6 billion.