The PFI is not responsible for the NHS' headline-grabbing deficits - the NHS is
Six months ago, escalating deficits at NHS trusts provoked a flurry of newspaper articles. Since then, PFI hospitals have been anecdotally linked to a number of the more extreme apparent deficits and several commentators have attempted to link the two as cause and effect.
They are, however, mistaken.
It is worth remembering that many National Audit Office reports have concluded that, over the long term, PFI offers a way of providing new and refurbished hospitals with better value for taxpayers' money than conventional alternatives. It is also important to remember that a business case has to be offered by the hospital management and their bosses that must justify the investment case for the hospital. Approval of that business case by the NHS is a necessary condition for it being built.
So what went wrong? The business cases turned out in many cases not to be remotely realistic. Put simply, the NHS has over-extended itself and, for the first time, the costs of doing so cannot be fudged. In reality, since (according to the Treasury and the NAO) PFI is cheaper in the long run than traditional forms of procuring the hospital, the NHS deficits will be lower overall than they would have been.
The real issue is that whenever the NHS - or, for that matter, any part of government and public services - decides to build a facility, they commit themselves, along with citizens and taxpayers, to obligations and consequences that stretch out over generations. Future healthcare planning and delivery is, and always has been, inevitably constrained by these decisions. With luck, the newly formed strategic health authorities will be both strategic and authoritative in their operation and plan not just for one financial year but for generations to come.
The public fuss over the approval (or not) of Bart's hospital last December provoked a telling remark: "Hospitals are for life, not just for Christmas."
Tim Stone is chairman, global infrastructure and projects group at KPMG