Friday, 25 June 2010

PFI schemes will escape public sector cuts

The National Audit Office (i.e. for England) has warned that PFI schemes in the public sector will be ring-fenced, meaning that other public services will be hit all the harder by the ConDem cuts.
This story warns that some English NHS hospitals may have to cut patient care to ensure that companies running their hospitals get their contracts paid.
Patient services may have to be cut at hospitals run under controversial private finance initiatives, the National Audit Office has warned.
Dozens of NHS hospitals are run under PFI projects meaning a private company has built the hospital and may run some of its functions such as laundry, catering and maintenance. Local primary care trusts pay a fixed annual fee for their use.
However, even though health trusts are coming under increasing pressure to cut costs, they cannot reduce these payments to their private partners.
Instead, the National Audit Office has warned that they may be forced to cut patient services at PFI hospitals in order to try to save money.
Dr Mark Porter, Chairman of the British Medical Association’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.”

Fortunately in Wales, the One Wales Government took a decision not to opt for PFI in the health service and has generally avoided the route taken by Westminster governments of all colours with this ruinous private sector involvement in the public sector.
But even so there are some clouds on the horizon - including the costly PFI project for the A55 on Ynys Mon and a small number of schools in Wales.
Wrecsam Council also signed up for a PFI scheme to deal with its waste disposal with WRG. The 25-year contract commits the council to a set amount of money being paid each year and this sum is ring-fenced. So while the council's income from the UK Treasury (via the Assembly block grant) is expected to be cut by up to 25% over the coming year, we will still be forced to pay the private company operating this PFI scheme.
This can't be right. Given the unprecedented assault on public services, Wrecsam Council should be able to renegotiate its PFI contract. If not, we could see vital services come under threat because we have committed to a costly long-term contract.

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