Companies holding Private Finance Initiative contracts to build and run NHS hospitals have made £831 million in pre-tax profits over the past six years, money which could have reduced the deficit in NHS hospitals by a quarter over the period, finds a new report by The Centre for Health and the Public Interest.
Over the timeframe, around 8 percent of all the money which the NHS has paid to PFI companies “has left the NHS in the form of pre-tax profit and is not available for patient care,” according to the think tank.
The report also highlights that there are currently 125 PFI contracts with private companies overseen by the Department of Health. The capital value of the assets which have been built is £12.4 billion but, over the lifespan of the contracts, the NHS will pay in the region of £80.8 billion for use of these assets.
Over the next five years, almost £1 billion of taxpayer funds will go to PFI companies in the form of pre-tax profits, which is equivalent to 22 percent of the additional amount of money – £4.5 billion – that the government has promised the NHS over this period, it says.
During the current era of extreme austerity the government should look at how excessive profit-making from PFI companies can be curtailed, the group argues, and suggests a number of measures that could be put in place to help ensure that the best use is made of scarce public funds to care for patients.
Recommendations include using public sector loans to buy-out PFI contracts, taxing PFI companies to recoup some of the profits which have been made, sharing out the profits made from sales of equity stakes in PFI contracts, and re-negotiating contracts with the private companies to reduce the amounts the NHS has to pay.
The government should also consider using public borrowing to fund new capital investment in hospitals rather than continued use of the PFI, which is “likely to be much cheaper and will mean that less money for patient care will be wasted in payments to shareholders, which is particularly important when the NHS is going through the most austere decade in its history”.
“NHS providers and commissioners are being pushed to breaking point because of unprecedented financial pressures so it is outrageous to see over £800m of much needed money being leaked out to private companies for profit alone,” said Dr Chaand Nagpaul, BMA council chair, commenting on the report.
“Private Finance Initiatives are an extortionate drain on the public purse, with private companies scandalously gaining at the expense of taxpayers and patients,” he added. “Ideally the government would either renegotiate lucrative PFI contracts or enable existing PFI schemes to be bought out by the NHS so that vital resources are available for frontline patient care.”