PFIs that haemorrhage cash

[MrJuice]

I work in healthcare and was shown an interesting website recently. NHS digital

It breaks down the different income streams for any NHS GP practice. (might possibly be limited to England only, I haven't checked)

So I looked up the rent received by a practice I worked at. Circa 36k. It's a high street shop and the partners own the building. Three floors. List size about 5200

Then looked up another practice I worked at. List size 6500. Rent 140k. PFI project.

Another was 403k. List size 20,000. Not sure who owns it but whoever does is doing very well indeed

Why in God's name did the labour govt of the noughties, and the Tories tbf, enter into these crazy contracts. They haemorrhage cash like little else.

Website: https://files.digital.nhs.uk/51/AB86B7/nhspayments...

Note this data is quite old now (2019/20)

This is all before I even get started on partners owing buildings. It's like MPs second homes but without the uproar from public

No better pension IMO

[BikeBikeBIke]

The Major govt was broke and had little choice. Subsequent governments picked it up and ran with it because it got spending off the immediate books.

A mate did his Dissertation on PFI had had to swap because there was no economic case for it at all and a dissertation without a good list of pros and cons was unlikely to be marked well.

Edited by BikeBikeBIke on Tuesday 4th July 09:13

[MrJuice]

Even better is the 140k practice is in a health centre. There's another GP practice there and various other community services

And a load of empty space as well which is being paid for by the NHS. Absolutely mental

[Jasandjules]

Because it was off balance sheet borrowing. It was Labour that did the most deals IIRC and many of them were 30 year deals too.

[pavarotti1980]

MrJuice said:

I work in healthcare and was shown an interesting website recently. NHS digital

It breaks down the different income streams for any NHS GP practice. (might possibly be limited to England only, I haven't checked)

So I looked up the rent received by a practice I worked at. Circa 36k. It's a high street shop and the partners own the building. Three floors. List size about 5200

Then looked up another practice I worked at. List size 6500. Rent 140k. PFI project.

Another was 403k. List size 20,000. Not sure who owns it but whoever does is doing very well indeed

Why in God's name did the labour govt of the noughties, and the Tories tbf, enter into these crazy contracts. They haemorrhage cash like little else.

Website: https://files.digital.nhs.uk/51/AB86B7/nhspayments...

Note this data is quite old now (2019/20)

This is all before I even get started on partners owing buildings. It's like MPs second homes but without the uproar from public

No better pension IMO

Payments to GP practices in line with their CCG (now ICB) contracts is not PFI.

Here is the statutory guidance in relation to premises costs https://assets.publishing.service.gov.uk/governmen...General_Medical_Services_-_Premises_CostsDirections_2013.pdf

There is generally a misunderstanding as to what PFI is with the NHS

Edited by pavarotti1980 on Tuesday 4th July 09:38

[Ziplobb]

PFI contract on the Isle of Wight to maintain roads

Its really hard to get a true picture of what is going on but even after outsourcing the council is still chucking around £1 million a month ish for 'extras' & they dont have a highways departement anylonger to question it.

as an example: the small 'extras' that might not be covered ALL require traffic management - this is where the profit on the job is. The taffic management is provided by another company owned by the PFI contractor. Same job with a local contractor would just be a couple of blokes, bollards and maybe stop/go boards for the short duration of the work. You see small jobs being done just before a bank holiday and the traffic management staying in over the holiday. Its endless. The PFI contractor owns nothing, no trucks, no equipment, zero its all rented. Local hire firms are doing realy well out of it as some of the equipment is on permanent hire.

[oddman]

Our Mental Health Trust has some in patient facilities and outpatient facilities but not particularly big or high tech.

PFI got the Trust out of the asylums and into modern buildings with single rooms. Huge improvement in many ways. Down side - loss of acres of grounds for solitude and recreation. Link between ward managers and cleaners broken so the threat of the wrath of the ward sister with consequent poor standards of maintenance and cleanliness on a day to day basis. Stupid little thinks like minor repairs and light bulbs can be a right PIA. More positively contract includes routine decorating so buildings look nicer than many legacy NHS buildings and the place always smells of paint.

Trust pays 30% of income to PFI before a single penny spent on staff/patient care.

By the end of the term I naively assumed with such exorbitant PFI costs, the Trust would own the buildings. Not the case.

Trust will either have to renew PFI deal or find somewhere else to put patients. This isn't the end of the world as the Trust is looking for opportunities for a once in a generation improvement (at a superficial level en suite for every in patient). It's been a cash cow for the several entities that owned the PFI but might be quite a high risk for those that own it when the music stops.

[MrJuice]

oddman said:

Our Mental Health Trust has some in patient facilities and outpatient facilities but not particularly big or high tech.

PFI got the Trust out of the asylums and into modern buildings with single rooms. Huge improvement in many ways. Down side - loss of acres of grounds for solitude and recreation. Link between ward managers and cleaners broken so the threat of the wrath of the ward sister with consequent poor standards of maintenance and cleanliness on a day to day basis. Stupid little thinks like minor repairs and light bulbs can be a right PIA. More positively contract includes routine decorating so buildings look nicer than many legacy NHS buildings and the place always smells of paint.

Trust pays 30% of income to PFI before a single penny spent on staff/patient care.

By the end of the term I naively assumed with such exorbitant PFI costs, the Trust would own the buildings. Not the case.

Trust will either have to renew PFI deal or find somewhere else to put patients. This isn't the end of the world as the Trust is looking for opportunities for a once in a generation improvement (at a superficial level en suite for every in patient). It's been a cash cow for the several entities that owned the PFI but might be quite a high risk for those that own it when the music stops.

As you say, when the music stops (ie contract ends) what option does the NHS have?

A new build PFI contract? The existing building will just undercut any new build and count the money for the next 30y

[MrJuice]

pavarotti1980 said:

Payments to GP practices in line with their CCG (now ICB) contracts is not PFI.

Here is the statutory guidance in relation to premises costs https://assets.publishing.service.gov.uk/governmen...General_Medical_Services_-_Premises_CostsDirections_2013.pdf

There is generally a misunderstanding as to what PFI is with the NHS

Edited by pavarotti1980 on Tuesday 4th July 09:38

Yep

Some surveyor comes round and values the rentable value of a building and the practice is reimbursed for that amount. If you own the building as is the case in the 36k rent, there may be an opportunity to make a margin in between whilst paying off your mortgage. Nice if you can get the work. There is no risk at all. Lovely.

If the local CCG/ICB has entered into a contract for a health centre then that is absolutely is paying for PFI. How is it not?

[allegro]

I work alot in healthcare and you should see some of the crazy quotes estates come up with for simple things like changing a light bulb. no one questions the quote so the work goes ahead, usually with the very lowest quality of finish.

[Derek Smith]

I was involved in the forced PFI of the processing units in my dual county force. A colleague took the figures and came back with the evidenced, and obvious, conclusion that it would cost twice as much in the medium term. In 'my' unit, identification parades, new Codes of Practice would make ID procedures much cheaper, probably by a factor of two, and that included staffing. However, the figures used in estimating (generously) the charges for PFI ran with the old style. My protests were ignored, not by the police but by the Home Office directives. They were throwing money away. As procedures changed in more general work, the police had to pay extra even if they saved money.

It put me against Major as it showed a weakness in him. It was nothing more than putting off debt onto future generations, and at phenomenally high interest rates. My old force is still paying the price today. The swingeing cuts forced on the service by Cameron and May meant a significant reduction in process demand. The PFI sacked staff. The force continued to pay at the same old rate.

And before anyone says we should have taken such matters into account, my force was restricted, by the Home Office, as to what they could include.

One of the civilians on the negotiating team, senior level, just walked out of one meeting saying that there was no point in negotiating as the force was just told. She left the force for pastures new and better paid.

Everyone knew it was a bad deal for the police. That's from PM, Home Office, MPs, Civil Service, police and, most obviously, the PFI contractors. There were other reasons, particularly manning strategy, that was badly affected by PFI.

[pavarotti1980]

MrJuice said:

Yep

Some surveyor comes round and values the rentable value of a building and the practice is reimbursed for that amount. If you own the building as is the case in the 36k rent, there may be an opportunity to make a margin in between whilst paying off your mortgage. Nice if you can get the work. There is no risk at all. Lovely.

If the local CCG/ICB has entered into a contract for a health centre then that is absolutely is paying for PFI. How is it not?

Because PFI is a mechanism of funding large scale capital works (i.e. building a new hospital), not paying rent to a GP practice as part of their primary care contract

allegro said:

I work alot in healthcare and you should see some of the crazy quotes estates come up with for simple things like changing a light bulb. no one questions the quote so the work goes ahead, usually with the very lowest quality of finish.

Yes they do. it has to be approved before work commences. In our trust they have a weekly minor works approval meeting. FM contracts are and have approved prices built into their contract.

Edited by pavarotti1980 on Tuesday 4th July 11:48

[2xChevrons]

oddman said:

By the end of the term I naively assumed with such exorbitant PFI costs, the Trust would own the buildings. Not the case.

Trust will either have to renew PFI deal or find somewhere else to put patients. This isn't the end of the world as the Trust is looking for opportunities for a once in a generation improvement (at a superficial level en suite for every in patient). It's been a cash cow for the several entities that owned the PFI but might be quite a high risk for those that own it when the music stops.

These paragraphs are the real kick in the nuts where PFI is concerned. If political or economic circumstances meant that it was not possible (or desirable) to put the much-needed investment in bricks and mortar straight on the public books, then getting the private sector to take the big hit of providing the buildings in return for 'rent' over several decades until the cost is repaid, plus profit, is not the worst idea in the world (again, resting on the assumptions).

But the fact that the state/service doesn't get the facility at the end of the contract period is just daft. It shouldn't really be surprising from an idea that stemmed from the Major government and was gleefully seized on and expanded by New Labour, but it's essentially replicating the rental housing sector but for public services, where the tenant can occupy a property for decades and pay off the owner's mortgage in full (and beyond) but still not have any stake in the property at the end. The tenant benefits by having somewhere to live that they may not be able to afford on their own resources (just as the state gets a shiny new hospital that it was 'unable' to afford) but at the end of the tenancy (PFI deal) the only one to actually be better off is the landlord (PFI contractor).

[oddman]

2xChevrons said:

oddman said:

By the end of the term I naively assumed with such exorbitant PFI costs, the Trust would own the buildings. Not the case.

Trust will either have to renew PFI deal or find somewhere else to put patients. This isn't the end of the world as the Trust is looking for opportunities for a once in a generation improvement (at a superficial level en suite for every in patient). It's been a cash cow for the several entities that owned the PFI but might be quite a high risk for those that own it when the music stops.

These paragraphs are the real kick in the nuts where PFI is concerned. If political or economic circumstances meant that it was not possible (or desirable) to put the much-needed investment in bricks and mortar straight on the public books, then getting the private sector to take the big hit of providing the buildings in return for 'rent' over several decades until the cost is repaid, plus profit, is not the worst idea in the world (again, resting on the assumptions).

But the fact that the state/service doesn't get the facility at the end of the contract period is just daft. It shouldn't really be surprising from an idea that stemmed from the Major government and was gleefully seized on and expanded by New Labour, but it's essentially replicating the rental housing sector but for public services, where the tenant can occupy a property for decades and pay off the owner's mortgage in full (and beyond) but still not have any stake in the property at the end. The tenant benefits by having somewhere to live that they may not be able to afford on their own resources (just as the state gets a shiny new hospital that it was 'unable' to afford) but at the end of the tenancy (PFI deal) the only one to actually be better off is the landlord (PFI contractor).

It's terrible value for money from the a tax payer point of view. It's taken COVID to wise some people up to parasite no lose capitalism but its been around for decades. The NHS negotiators were the sort of people who faff about for half an hour ordering at Pizza Express so, of course had their trousers taken down.

From a Trust point of view as it gets towards the end, the tenant does begin to have options. The Trust I was working for was 'horizon scanning' from about 10 years out, has some interesting options and managed to exercise some break clauses on redundant buildings thanks to the vigilance of one of the bean counters.

I see it as a bit like a PCP deal. Would you really like to roll on a contract for a 25 year old car or look elsewhere for a new one. In big cities there are sites that are under used and still in NHS ownership so there are options for imaginative and enterprising cooperation.

[anonymous-user]

PFI contracts have kept me in a lot of work over the last 13 years or so as I have written the abatement calculation software for numerous PFI contracts in the UK and Australia.

I don't want to say too much, but as you say the sums of money involved in the monthly service payments are eye watering. Also although the contracts and the abatement calculations are black and white as far as I am concerned, it seems that a lot of mitigation and discussions goes on each month to negotiate the actual monthly abatements.

Put it this way, the FM service providers go out of their way to ensure their monthly deductions are as minimal as possible.

[hidetheelephants]

MrJuice said:

As you say, when the music stops (ie contract ends) what option does the NHS have?

A new build PFI contract? The existing building will just undercut any new build and count the money for the next 30y

Will it? A 30yr old building will likely need upgrades for thermal efficiency, heating, lighting, etc. On an anecdotal level public works built in the 90s are st and want pulling down, if only on aesthetic grounds.