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"It's PFI or bust": a hospital drama of ironic twists and turns

Patrick Burns | 12:25 UK time, Friday, 10 December 2010


Queen Elizabeth in Birmingham

'Super hospital' - the Queen Elizabeth in Birmingham

"If it's new hospitals you want, it's PFI or bust."

So said Alan Milburn MP on his appointment as a Health Minister immediately after the New Labour landslide thirteen and a half years ago.

It's always struck me as one of those political statements which reveal far more than they're meant to. This sound-bite conveys something of the tortured politics behind the Private Finance Initiative and explains why he and his then ministerial colleagues went on to embrace it so enthusiastically.

It was the previous Conservative Government which cautiously dipped its toes into the water of PFI: bringing private investment into the development, management and, yes, the ownership for anything up to 30 years of some of the prize assets always considered an integral part of our great public services.

Tories never tire of pointing out the irony that their comparatively modest early PFI projects were opposed tooth and nail by Labour as 'the privatisation of the National Health Service'. But once in office, Labour adopted the idea with a will, pressing ahead with Britain's first PFI Toll Motorway parallel to the M6 in the West Midlands as well as a new generation of 'super hospitals' including the £0.5bn Queen Elizabeth in Birmingham.

One explanation for Labour's rapid conversion is that the use of private funds meant the vast sums required for these enormous capital projects did not show up in the public finances in general or the Public Sector Borrowing Requirement in particular. No wonder PFI was such a hit with the then Chancellor, Gordon Brown.

Now consider possibly the biggest irony of all: Birmingham's new 'QE', one gigantic gleaming symbol of the Labour Years was chosen by Gordon Brown for the launch of his 2010 election manifesto. It went on to receive its first patients just a month after his election defeat.

There's another irony, though, which works the other way round. The QE was commissioned while the local MP Gisela Stuart MP (Labour, Birmingham Edgbaston) was herself a Health Minister. While over 100 of her party colleagues were being driven from their seats last May, she somehow managed to cling-on in what had been one of the Conservatives' top targets.

And our saga of ironies doesn't end there. It comes to something when one of the first acts of a newly-elected Conservative MP is to urge private investors to pay significantly sums of money back to the government!

That's exactly what Jesse Norman MP (Conservative, Herefordshire and South Herefordshire) is doing. He reckons Labour were so eager (desperate, even) to have their new hospitals that the terms written into the deals were unduly advantageous to the private consortiums who will continue to maintain and own these precious assets for years to come. Critics say, "it's like mortgaging the future of the NHS".

(Mr Norman quotes an example from his own PFI hospital in Hereford, where he says the replacement of a television aerial by an approved contractor cost more than £900. In the days of the old NHS trust they'd have found a local handyman for £50!).

So now Mr Norman is proposing that the PFI companies should pay what amounts to a rebate to the Government. This, he says, would compensate the hard-pressed taxpayer for those excessively generous PFI contracts negotiatiable under Labour when the economy appeared to be in so much better shape than it is now.

Mr Norman is clearly hoping ministers will take the hint and introduce measures to encourage the private financiers to go with the grain of the Government's efforts to drive-down costs in the public sector as a whole.

There is another to this debate of course. I recall a sunny summer morning six months ago when the Queen Elizabeth Hospital's Chief Executive, Julie Moore, was celebrating the remarkably smooth transfer of patients from the old buildings to her shiny new complex.

Far from accepting that dig about the NHS being expensively mortgaged, she asked what kind of a mortgage which guaranteed the buildings would be maintained, the equipment would be kept working and even the lawns would be mown. She also warned any down-grading of the PFI process would risk Britain losing the expertise that had developed these top-class hospitals in the first place.

This is the debate which we'll be taking up on this week's BBC Politics Show (12 noon, BBC One, Sunday 12 December 2010). I'll be joined in the studio by another of our Conservative MPs with a PFI acute hospital in his constituency, Robin Walker MP, Worcester.

We'd like to know what you think about all this. Email us at:

And of course I hope you'll be watching on Sunday.

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