Wednesday, 1 September 2010

PFI Timebomb

It has recently emerged that the NHS in England faces a total bill of £65 billion for Private Finance Initiative (PFI) hospitals. PFI was invented by the Tories and promoted by New Labour as a means of pumping private money into public institutions. PFI is not dissimilar to borrowing huge sums of money over 25 or 30 years on a credit card with a punitive APR.

For some English NHS Trusts, repayments on these debts amounted to 10% of turnover. When the NHS is being squeezed and pressured into making savings, inevitably at the expense of jobs and services, paying back the the PFI debt will be prioritised. The GMB union have warned this is just the tip of the iceberg with the total cost of all PFI projects - around 650 in number - coming to an astonishing £230 billion. They said this equated to £9,300 per taxpayer and predicted it would not be paid off until 2048.

In Wales, because we have an Assembly, we've been able to do things differently. Welsh NHS Trusts do not have the same PFI debt as some of their English counterparts. PFI may have been attractive financially in the early days, it has been largely shunned here in Wales, in recognition of the long term problems it can cause for the public sector. When Plaid entered into coalition government in 2007, the rejection of PFI in the NHS was a crucial component of the One Wales agreement.

Now it has emerged that the cost of the MOD-promoted, PFI-funded, Armed Forces Training college planned for St Athan, has increased by £3 billion since 2008 to £14 billion. Doesn't this show that schemes like this are unaffordable in the long term and serve only to risk mortgaging the future of our children?

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