Joined: 13 Jan 2007
Location: Westminster, LONDON, SW1A 2HB.
|Posted: Mon Aug 20, 2012 1:51 pm Post subject: Massive PFI fraud - all off national debt books
|Cancel these crippling PFI hospital contracts and put the ministers who signed them in the dock
By Henry Deedes - Daily Mail - PUBLISHED: 16:19, 26 June 2012 | UPDATED: 20:32, 28 June 2012
It is hard to know what is more terrifying about this morning’s news that South London Healthcare Trust has been placed into administration: That Britain’s hospitals are, effectively, on the brink of bankruptcy or that the news has been greeted with such little surprise.
As anyone who has followed the previous government’s plans to provide public services through Private Finance Initiatives (PFIs) - in which private contractors pay for the building and running hospitals, schools and other services in return for being repaid by the taxpayer over a number of years – will testify that the system was entirely unsustainable.
For those unfamiliar with absurdity of the deals struck with private contractors, let me put them in layman’s terms. More than 900 or so of these schemes have been completed at cost of around £56 bn. However, the amount that we – the taxpayer - will have to repay currently stands at £229 bn.
If there was ever a more flagrant example of the previous government’s determination to saddle future generations with unrealistic levels of debt in a cynical attempt to shore up its short term popularity, this was it.
Thanks to the stupidity of the ministers who signed off these arrangements, some hospitals are now paying £60m simply to service the interest charges on their debts, money which could be spent on treating patients. In other words, they are operating under the sort of business model that would make even the most egotistical Premiership Football Chairman blush.
On top of these payments, it was revealed last year that hospitals locked into long term PFI deals were also being forced to pay absurd charges for basic services.
They include: £8,450 to install a dishwasher; £13,704 to install three lights in a garden; £242 to change a padlock on a garden gate; £75 to install an air freshener; £676 to put up four ‘fire assembly signs’ and – best of all - £525 to move three beds.
No doubt people will complain that the private sector was immediately at advantage when negotiations took place, as companies employ streams of legal advisers and financial experts capable of running rings around the government. Maybe so. In which case it is vital that the coalition does everything it can to get these contracts cancelled.
But isn’t it yet more proof that we are governed by a political class whose life experience extends little beyond a University degree in PPE and yet five years later somehow find themselves in charge of the nation’s book keeping?
PFIs are undoubtedly one of the greatest fiascos of our age. It is scandalous that those responsible for them will never live long enough to see the damage it inflicts on the future generations. It jars even further that many of them now currently enjoy lucrative directorships in the private sector.
A better place for them would be in the dock.
Joined: 25 Jul 2005
Location: St. Pauls, Bristol, England
|Posted: Mon Aug 20, 2012 8:50 pm Post subject:
|Developers net millions from hospital ‘lab’ project
Monday 20 August 2012
Published on Thursday 16 August 2012 11:56
A CONSORTIUM of property developers, investors and health insurers are set to net at least £59m after providing just £15m upfront for a pharmacy lab at Altnagelvin which opened back in 2007, the Sentinel can reveal.
The Sentinel has learned that the cost of the project to the Western Trust has been revised upwards due to the rising Retail Price Index (RPI).
Recently, the paper reported how the United Healthcare Land Company Ltd. was set to earn £40m for its help in financing the new lab.
The Stormont Public Accounts Committee (PAC) were advised that the company would get £1.6m every year from the Western Trust until 2032 when the 25 year Private finance Initaitve (PFI) contract ends.
However, it’s now been revealed that the annual repayment for 2012 was over £300k more than the £1.6m agreed in 2005. That’s because prices have been rising, according to the Western Trust.
But that means the United Healthcare Land Company Ltd. will now be paid at least £58.9m over the next two decades from the public purse.
That’s a profit of £43.7m after its initial investment of £15.2m and maintenance costs at the lab for which it is repsonsible.
In a statement released to the Sentinel a spokesperson for the Western Trust said: “The Northern Ireland Audit Office issued a report in September 2008 on the PFI Laboratory and Pharmacy Centre at Altnagelvin which reflected a positive outcome for the PFI scheme.
“The report was presented to the Public Accounts Committee in October 2008 and the Trust was commended by the Committee on the management of the project.”
The spokesperson continued: “In relation to the Trust repayment of £1.981m in 2012, this was the unitary payment for that year. I would refer you to note 1.16 of the accounts for a full explanation of accounting for PFI transactions.
“In particular please note that the annual payment is separated into the following component parts: payment for the fair value of services received; payment for the PFI asset, including replacement of component parts; and payment for finance (interest costs).
“The amount of £1.6m relates to the agreed amount at the start of the contract in 2005 which increased due to Retail Price Index (RPI) adjustments by 2012.
“The figure of £1.981m is modelled on RPI as at that date and future unitary payments will increase or decrease dependent upon movements in RPI.
“Based on the current level of RPI it is expected that total unitary payments over the lifetime of the contract are envisaged at an amount of £58.9m.
“Please note this is the total unitary payments and includes over and above the repayment of the capital costs amounts to cover lifecycle and full maintenance costs as well as inflationary adjustments in line with the agreed contract.
“The amount of £15.225m included in the accounts is the amount of commitment under PFI for this scheme, and will reduce annually as the contract proceeds and repayments are made.”
Compare this with what a sitting of the PAC was told back in 2007: “The construction of the Centre, which cost £15.2 million, was funded through a PFI.
“This will be repaid by the Trust over the 25 year term of the partnership Agreement through annual payments of £1.6 million; these payments will also cover the operation and maintenance of the building over the term of the Agreement. A further £3.1 million was also invested by the public sector in providing a range of specialised equipment for the Centre.”
"The maintenance of secrets acts like a psychic poison which alienates the possessor from the community" Carl Jung