08/120/2012 - Private Finance disaster

A rip-off private finance initiative (PFI) has pushed a number of NHS Trusts to the "brink of bankruptcy".
The schemes saw private firms building hospitals, leaving the NHS with an annual fee to pay over around 30 years.
The total value of the NHS buildings built by Labour under the scheme is £11.4bn. But the bill, which will also include fees for maintenance, cleaning and portering, will come to more than £70bn on current projections and will not be paid off until 2049.
Up to six NHS trusts face joining Peterborough and Stamford NHS Foundation Trust in "administration" as they have taken on projects viewed by ministers as "unsustainable", it has emerged.
The National Audit Office revealed as an example that the PFI-built £411 million Peterborough City Hospital brought with it crippling repayments that totalled a huge £41.6m last year, and had in turn placed "considerable strain" on the Trust's finances as it seeks to make £64m of spending cuts by 2017
Doubts over the trust's ability to meet repayments without services suffering had been raised but ignored before construction began in 2007 and NAO head Amyas Morse has demanded "urgent action" from the trust, the Department of Health and regulators.
He added: "The trust board's poor financial management and procurement of an unaffordable PFI scheme have left it in a critical financial position."
And the trust has admitted the cost of PFI - at more than 20 per cent of its declining budget - is unaffordable.
Campaigners are demanding a full inquiry into these "disastrous" contracts as some trusts are spending up to a fifth of their budget servicing the mortgages.
Across the public sector, taxpayers are committed to paying £229bn for hospitals, schools, roads and other projects with a capital value of £56bn.
But former Prime Minister, and champion of PFI, Tony Blair said on the contribution PFI had made to rebuilding the country's infrastructure was "immense".
"PFI has been copied around the world," he said. "I am sure, as with any system, you will get a situation when sometimes it doesn't work or people will get into difficulty as they do in the non PFI situations, but if you look at PFI overall and what it delivered in terms of hospitals, schools and renovations to the infrastructure of the country it has been immense."
Now it has emerged that up to 22 NHS trusts are facing serious financial difficulties because of expensive PFI schemes, with six thought to have taken on projects viewed by ministers as "unsustainable".
They all face taking urgent steps to turn around their fortunes.
As well as Peterborough and Stamford NHS Foundation Trust among others in jeopardy are Ealing Hospitals Trust, North Cumbria University Hospital Trust, Surrey and Sussex Healthcare Trust, and South London Healthcare NHS Trust.
Health union Unison eastern region is calling for a full inquiry into the decision which has brought Peterborough and Stamford to the "brink of bankruptcy."
Unison pointed out that the trust only has cash to pay its bills until the end of November.
Unison eastern region's head of health Tracey Lambert said: "Jobs and patient care are being sacrificed to keep PFI projects afloat and keep profits flowing to bankers and private equity investors - that can't be right."
A Department of Health spokesman admitted: "Peterborough and Stamford is another example where PFI policy went badly wrong."
Labour turned a blind eye to these problems for years. They burdened several Trusts with unaffordable PFIs worth millions a year and they crippled them with debt from the beginning.
The standard of care that patients receive at the hospital trusts is not good enough, and it is crucial that improvements are not put at risk by the challenge of finding the huge savings that the trusts need to make.
Report from Ian Bell