Sunday, 3 March 2013

The great PFI rip off.


I’m coming back to the economics of the brand new London Hospital, which isn’t a Hospital for London, just an East End Hospital.

If we had merely borrowed £1 Billion to build it, we would own the new Hospital outright from the beginning and the interest payments would be 2% a year at current Government rates.

Assume another 3% for capital repayments, that’s 5% or £50 million a year.

The PFI agreement costs £100 million a year, so we would have saved £50 million a year or £1500 million over the 30 year life of the PFI agreement. But then there wouldn’t be some fat, juicy profits for the guys in the City of London. That’s another one and a half London Hospitals.

It’s not as though the £100 million a year pays for anything except the building; there are wages for Doctors, Nurses and Care assistants, electric, gas and water, pathology/tests, medication, equipment and materials and a lot more I can’t even think of. It’s all got to be paid for.

Meanwhile, there are a lot of London trusts who must be getting worried that the London Hospital is now going to steal revenue from them, as an underhanded way of closing down rival hospitals.

And if the new hospital goes bust? Then those same trusts get to swallow the bill at the expense of their hospitals.

That’s the great PFI rip-off.

Neil Harris

(a don’t stop till you drop production)

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