Britain: The coalition gets shakier
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continue to extract blood money from the veins of the public finances for years to come, long beyond the time when repayment of the original balance of the investment has been fulfilled. Figures recently published in the Guardian suggest that total current PFI debt could top £300 billion, with annual repayments reaching £10bn by 2017. In the NHS alone there are currently 118 PFI projects with a capital value of £11.6bn, but total repayments over the life of the PFI are estimated to total £79.2bn. In some cases the total paid back by NHS trusts will be 12 times the actual cost of the Public sector net investment as % of GDP decreased from just over 6% in 1970-71 to around 0.5% in 2000-01. This increased to around 3.5% in 2008-09, but projected figures predict a drop back to 1% by 2014-15. A fall of more than 50% from £49.5bn in 2010-11 to £24.2bn by 2014-15 is the fastest rate of reduction in investment in recent history. Alongside this, public sector net debt as a % of GDP increased by around 10% to 37% between 1991-92 and 2007-08. This rose sharply to over 60% in 2010-11 and is projected to rise to 70% over the next 4-5 It should be reiterated at this point that in the post-war social democratic compromise the gains of the Welfare State and the NHS were made, the national debt as a proportion of GDP was just shy of 240%, far greater than that of the here and now. Which just goes to show what can be achieved if the political will exists. The neoliberal ideology propelling the current austerity agenda attempts to justify reduction in public sector spending, alongside tax cuts for the rich (those who actually pay their tax) and bailouts for the banks, purportedly to reduce the national debt. In such a political climate, with very little programmatic difference between the Coalition and the Official Opposition, the lure of PFI to maintain off-balance sheet spending is one they cannot resist So despite the protestations of the Tories whilst in opposition to Labour's reckless use of PFI, overlooking that this was introduced as policy by the Tories in 1992, the current Coalition administration has carried on regardless with increasing the PFI portfolio. Six current NHS projects are in procurement totalling £1.01bn. Furthermore, whereas traditionally PFI projects were directly funded by private equity and private loans, with banks currently lending at less favourable rates it
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has been reported that the latest wheeze will be to directly lend public sector money instead. Not only will public sector money be syringed out by these privateers in interest but the initial fix may well come from the public purse aswell. With so much public money winding its way into private pockets and effectively private property this begins to feel like the blueprint for another series of a certain TV documentary. The tragedy is that although this farcical situation should only be stuff of fantasy, the truth is that PFI contracts are unravelling and PFI debt is leading to bankruptcy of public sector institutions. It is not as if the warning signs were there and despite evidence to show that the supposed FM of PFI is an illusion and these projects are more efficiently and effectively accomplished with direct public funding without the middleman. With the advent of the Health and Social Care Act the NHS is already in a desperately precarious position. With the floodgates opened to increasing private competition for NHS contracts, combined with effective cuts in funding, even NHS Trusts without the millstone of current PFI debt are struggling to meet fiscal targets and are having to implement cuts. This is leading to job losses and potentially harmful impacts on quality of care. It can be of little surprise then that the prospect emerges of NHS Trusts being effectively bankrupted by an ever increasing PFI debt, many years before the repayments could be fulfilled on the contract. The South London Healthcare Trust has already been placed in administration with debts of over £150m. Repayments on an outstanding £2.5bn PFI deal alone cost the Trust £61m per year, or 14.4% of its income. It is unlikely to be the last Trust to undergo administration. With NHS hospitals and services already being privatised in the post-Lansley landscape it seems that the weakening of Trusts within the marketplace can only accelerate the predatory advances of the privateer health corporations. In whose hands then will this PFl-built NHS property fall? Could this now be a key element in the relentless privatisation We need an alternative but outside of campaigning groups such as Keep Our NHS Public it is difficult to see where the real pressure for this is coming from. Unison is the largest union representing NHS workers, General Secretary Dave Prentis has said that "We're sitting on a PFI debt time bomb, and the sheer scale of the burden paints a seriously grim picture for the future of our public services." This may be so but sadly the union continues to back the Labour non-alternative, both financially and with critical support. Whilst shadow health secretary Andy Burnham was lauded for addressing Unison Conference with a pledge to repeal
11 the Lansley Act, the Unison leadership conveniently overlooks Labour's contribution to the situation we now face. Credibility has been further diminished by the capitulation in the pensions dispute despite the celebrated strike action taken last November. It is unsurprising that turnout was low in the ballot which, reading between the lines, the Unison leadership would have hoped would have rubberstamped the deal. Instead there seems to be a lack of morale, purpose and direction. Any further action by the unions to tackle this emerging NHS crisis beyond publishing critical reports and agitating for a Labour election victory seem a distant prospect. Plans for further strike action seem to have been boxed, so in the short term we must at least work within the union to build the campaigns and the TUC march on 20 October. Ultimately our demand should be for a PFI amnesty. At the very least we should demand a banker-style bailout of the PFI with a payoff of contracts to no more than the value of the original cost with a cancellation of accrued interest. For a reversal of privatisation and a return to an NHS funded directly through progressive taxation. Whilst Labour remains on its neoliberal trajectory and the unions unable to face the question of disaffiliation, the need for organisations which can effectively articulate such demands remains an urgent necessity.