http://www.bbc.co.uk/news/health-10882522


These were never going to provide value for money. I said three years ago at the Bank of England that these would be a problem, and now they are. These were a scam by Gordon to get the NHS new hospitals built off the government balance sheet. Only problem was that private companies pay high loan payments than governments and so the government committed the taxpayers to a far more expensive deal. The problem for the Conservatives was that this was a continuation of one of their policies so they do not have a leg to stand on when it comes to criticising these deals.

Those numbers are stupid.

How can you compare the cost of construction (£11.3bn) vs the cost of construction plus maintenance, catering, and cleaning over 30 years (£65.1bn)?

Well say £18 billion will be interest on that original loan. Then cleaning might take another £1 or £2 billion, Catering could be £5 billion leaving a mere £27.8 profit for the risk. That is how PFI/PPP work. It is a scam of monumental proportions. The contracts are so tightly written in the companies interest that it could cosy £5000 to put in a plug socket after all the consultation.

There are quite a few in the NHS who would agree with you Amnesia. The only ones getting a good deal out of this are the private companies.

The reasons for the government doing it were that originally it kept the debts off the governments balance sheet. Though they banned it for private companies because of Enron. Though why anyone thought that government or state enterprises would be any better is beyond me. Though they now have to be brought back on to the nations balance sheet because of problems of accountability. Greece hiding masses of debt offshore did not help the case.

The other reason that such deals went ahead was that the right wing have had a mantra for the last few decades of anything state run was bad. That the private sector was crowded out by a large public sector. The coalitions assumption that the private sector will absorb all these soon to be fired private sector workers is a demonstration that they believe it as well. The Daily Mail and Torygraph were prime cheerleaders for such ideas. So public sector bids were penalised with a 25% loading in their bids so that all private bids were more cost effective. Even if that loading was fictitious. The cheapest option would have been for the NHS to have bought the hospital to build the hospital outright and then have contractors bid on the cleaning and catering annually. Though the way that the PFI contract are written it is like accepting an open bid for thirty years. There is no way that will be cost effective for the NHS.

And the government - PFI & PPP schemes allow them to keep the borrowing costs off the balance books, giving the illusion that the government owes less than it does.

Add in costs for schools and other government buildings then it will look like folly soon enough. Then the selling off of government buildings to speculators who have immediately moved offshore to tax havens and you have a problem going forward indefinitely.