27.06.12
PFI deals ‘indefensible’ as trust faces administration
Hospital loans through PFI deals have come under attack following the announcement that South London Healthcare Trust could be placed into administration. The trust is losing £1m every week and spending 14% of its income on PFI repayments.
The former Conservative health secretary Stephen Dorrell has labelled the use of the schemes as “indefensible”.
Health secretary Andrew Lansley could appoint an administrator for the trust within weeks, which raises the prospect of a similar fate for other trusts in financial difficulty. Another 20 trusts have declared themselves financially unsustainable in their current form, the Government has announced.
When South London Healthcare Trust amalgamated three hospitals, it inherited a large debt from PFI used for buildings at two of the sites; Orpington and Woolwich.
Dorrell told BBC Radio 4’s Today programme, “agreements were signed which effectively paid private sector cost when the public sector took the risk. That is indefensible.”
A Department of Health source blamed Labour for the situation at the trust: “It is losing £1m a week, money which could be spent on 1,200 extra nurses for local people. Labour turned a blind eye to these problems for years, they burdened it with two unaffordable PFI contracts worth £61m a year and they crippled the organisation with debt from the beginning.
“We will not duck the difficult decisions if they are what is needed.”
Shadow chancellor Ed Balls recognised the problems that PFI deals could bring but defended their use under Labour: “The big picture is up till 1997 we had no new hospitals being built at all and in constituencies across the country people were crying out for decent healthcare. We built tens and tens of new hospitals.”
Reform’s Andrew Haldenby told the BBC: “One in five hospitals are in real financial difficulty. Every hospital – even if it is in the black right now – needs to be looking really hard at this. Although we are talking aboutSouth Londontoday, every NHS Chief Exec needs to be looking at this today.”
Mike Farrar, head of the NHS Confederation, welcomed the move to place South London Healthcare Trust into administration and added: “The NHS can’t go on with short-term fixes to financial problems. That might mean some tough decisions, but hopefully will deliver financial sustainability in the long term.”
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