IF YOUR local shop had an offer, “one for the price of three”, they would not get much trade. Yet that’s the kind of deal offered to health trusts by Private Finance Initiative (PFI) consortia on building hospitals. If you include rent, fees and additional interest charges, the costs of PFI deals in Britain’s hospitals can be two and sometimes three times as great as publicly financed agreements.
PFI firms build hospitals and lease them back over 30-60 year commercial contracts. In Scotland’s first PFI hospital, Hairmyres in East Kilbride, for instance, construction firm Keir and finance firm Innisfree originally put in £8.4 million of ‘their own money.’
Using Freedom of Information laws, two Scottish economists found that over 30 years they will recoup an estimated £145 million. That is double the cost of building the hospital through public finance through the National Loan Scheme, even though the contractors put their cash at very little risk.
With extra profits from operating and maintenance costs, the ratio may be as high as three to one. PFI is a very expensive way of transferring money from the health service to the bank accounts of building and financial capitalism. PFI must go.
