Memorandum by the Oxfordshire PFI Alert
Group (PS 20)
1. Background: In March 2000, the then Chairman
of Oxfordshire CHC drew together a committee of representatives
of diverse health and community organisations, including the local
branches of the BMA, the RCN, the NHS Consultants' Association,
the CHC and health trade unions, to organise a conference to debate
the use of PFI in the provision of new hospitals and facilities
in the NHS. The Treasury replied to 23 questions raised at the
conference. That document (Appendix 2) was studied.
The group of organisations, joined by the Oxfordshire
Pensioners' Action Group, now formed themselves into the Oxfordshire
PFI Alert Group. A questionnaire on PFI issues was sent to Oxford
candidates in the General Election (Appendix 1).
2. Our response to the Government's defence
of PFI: Some aspects of the use of PFI we find most trouble members
of our organisations, and the public, are dealt with in section
2 of our submissionthe government case for "value
for money", annual repayment to the Consortia as first charge
on a Trust's expenditure, and the right of the private firms to
sell out to others, including overseas interests.
3. The transfer of staff from the NHS to
employment and control by the private firms in the Consortia is
discussed, including the difficulties and objections to change
of employer and the conflict of objectives between the public
and private sector. (see Appendices 3 and 4 for examples).
4. Problems encountered in the Public Consultation
process: inadequate information provided for the public, the restrictions
of commercial confidentiality, how public views and input are
ignored, are presented in this section. The possible effects on
the huge voluntary contribution to our hospitals, and the threatened
abolition of Community Health Councils, with their important role
in monitoring changes in health provision, are regretted.
After lengthy study, the Oxfordshire PFI Alert
Group considers that the Government should return to direct public
funding for the construction of new NHS hospitals and other capital
projects, ending use of PFI.
OXFORDSHIRE PFI ALERT
1.1 During the year 2000 representatives
of seven mostly health related organisationsthe Oxfordshire
branches of the British Medical Association, the Royal College
of Nursing, the Community Health Council, the NHS Consultants'
Association, UNISON (health), the Manufacturing, Science and Finance
Union and the Oxford and District Trades Union Councilcame
together to organise a debate on the use of the Private Finance
Initiative (PFI) for the provision of new NHS hospitals and other
facilities. The conference was held in September 2000 and attended
by NHS staff and the public. Unfortunately the Rt. Hon Andrew
Smith, Chief Secretary to the Treasury, who is also MP for Oxford
East, had to cancel his attendance. Four months later he sent
us a document from the Treasury responding to 23 questions about
PFI raised at the Oxford meeting.
1.2 The conference organising committee
studied the Treasury document and other relevant papers and reports
about PFI. They drafted a questionnaire covering aspects of PFI
which they found greatly troubled the public and NHS staff. Some
of these issues are discussed below.
1.3 The committee of seven organisations,
now joined by an eighth, the Oxfordshire Pensioners' Action Group,
established the OXFORDSHIRE PFI ALERT GROUP. It sent the questionnaire
(see Appendix 1) to all the candidates in the Oxford East and
Oxford West & Abingdon Parliamentary constituencies as the
General Election approached. Of the candidates who replied, seven
were wholly opposed to PFI or (in two cases) opposed to the transfer
of any NHS staff to PFI controlled employment. Andrew Smith (Labour)
simply replied by once more sending the Treasury document with
its 23 replies to our committee, while the other Labour candidate
claimed PFI would only be used "where it delivers better
value than direct public funding" and "Labour has removed
the automatic transfer of hospital staff to the private sector".
2. OUR RESPONSE
PFI IN THE
2.1 "PFI is only used where it is
better value for money". Those defending PFI never explained
how this is measured, nor is it illustrated by comparisons. We
have learned that Trusts have been given the message by the Secretary
of State, Alan Milburn, that it is "PFI or bust". This
was clearly stated to the Chairman of our committee at a Board
meeting of a local Trust. It appears the public sector bid has
to be "reworked" and presented so that the private sector
bid is favoured. (see also Birmingham letter 1 (i) attached).
2.2 "PFI commitments are a first
charge on revenue income". (Quote from para. 7 Treasury
document see Appendix 2). People are very shocked to learn that,
for at least 30 years, the first financial responsibility of a
Trust will be the annual "mortgage" repayment to the
consortium. Patient needs will be lower down the list of priorities
for the Trust's revenue expenditure. Traditionally in the NHS
Capital and Revenue have been separated, but under PFI, the annual
mortgage or rent causes what were formerly "capital costs"
to become "revenue" (running costs). With PFI payments
the priority, grave shortages will occur. In the years when Britain's
NHS funding should be catching up with other European countries,
advances in technology and treatments, and increases in the elderly
population will all add greatly to NHS expenditure.
2.3 Transfer of ownership or control.
After 12 months original consortium partners may change and
overseas firms take over. This raises additional problems of accountability
to staff, patients and the local community. The Treasury document
says:- "General restrictions on the transfer of ownership
or control to overseas interests would be contrary to our international
obligations (including EU and domestic law) on the freedom of
investment and free movement of capital" (Appendix 2: Para
2.3.1 "Private enterprise is more efficient
than the Public Sector." Andrew Smith tells us this is so.
However the recent history of firms such as Marconi, Vauxhall,
Marks & Spencer shows that the private sector can falter,
reduce capacity, and may merge, collapse, sell out or move overseas.
(See Appendix 3 for an account of the privatising of the Oxford
Regional Health Authority Payroll Offices).
2.3.2 The market introduces instability
to our most vital public services. This leads to Government paying
huge subsidies as in the case of Railtrack, which , in the end,
will have to be recovered from future taxpayersour children
3. "NO AUTOMATIC
3.1 Our observation is that it is still
the practice to transfer support staff (non-clinical employees)
to the private consortium employer when the project becomes operational.
At Dudley, NHS workers resisted this transfer for over ten months
and received support from organisations worldwide. Pay and conditions
are still not adequately protected even where "Transfer of
Undertakings: Protection of Employment" (TUPE) legislation
is applicableand which in any case only applies to existing
staff. The recruitment and retention of hospital staff is already
a problem. Insecure employment conditions can only make this worse.
Repeated changes of ownership will exacerbate this situation.
For example salvage collectors in Brighton have seen their private
employment change hands several times and pensions have not been
safeguarded. During 30 years most staff will have changed in PFI
hospitals or community premises with a PFI consortium in charge
and TUPE conditions will not be applicable to new staff.
3.2 Threat to Clinical Staff. Government
spokespeople have admitted that clinical staff (doctors and nurses)
could be employed by private firms, particularly in the new units
planned for elective (non-emergency) surgery). The MSF union is
strongly resisting Pathology Laboratory staff, who are employed
in all health authorities, being transferred to the private sector.
3.3 Secondment of non-clinical staff
to the private sector? Andrew Smith MP reports a proposal
that non-clinical staff could remain NHS employees but be seconded
to the private sector (presumably to be managed by consortia firms).
How such a complex scheme would work out is perplexing. Private
employers are opposing the idea. Since wages are the biggest cost
to the companies in running a PFI hospital, the control of wages
and conditions is of prime importance to these employers. Reducing
these costs has a direct bearing on the maintenance of profit
for shareholdersthe priority of PFI companies.
3.4 Conflict between public and private
companies. The experiences of a mature student employed as
a cleaner in an Oxford hospital (Appendix 4) highlights other
ways in which economies are madein this case she was instructed
by a ward sister to sterilise water jugs. But this was countermanded
by her private sector supervisor. She was told that if she wished
to sterilise the jugs this would have to be done in her own time.
This is an example of the tension that undermines the smooth running
of a ward and can lead to the unnecessary endangering of life.
4. PUBLIC CONSULTATIONA
4.1 Almost a complete lack of financial
analysis and reporting has frequently been noticed at the "public
consultation" stagewhich is early in the planning
process. "Commercial Confidentiality" is often the reason
given. This is an even greater problem as PFI schemes are being
4.1.1 "Commercial confidentiality hides
the truth from the public" Alistair Darling, MP, said in
the mid 90s when Shadow Chief Secretary to the Treasury. Now his
Government uses "commercial confidentiality" to keep
vital information from the public and NHS staff.
4.2 Consultation is inadequate both within
the NHS and also at the level of the Local Authority Planning
Committee. In recent experience in Oxford, viewing was invited
at the "outline planning" stage of the development of
new buildings and facilities on the Nuffield Orthopaedic Centre.
Plans changed in the course of the following months. The consortium
chosen to construct the new hospital changed the architects; designs
changed, heights increased in both the PFI and the non-PFI developments.
The local community was not consulted again and much discontent
has arisen. At a recent public meeting, Board members gave an
apology (and apologies were given by the Chair of the Planning
committee at local authority level)but consultation as
such has been lacking and people are assembled merely to hear
reports of a fait accompli.
4.3 Difficulties in obtaining the Outline
Business Case. In the current preparation for transferring
services of the Radcliffe Infirmary to the John Radcliffe Hospital
site at Headington, Oxford public consultation seems to have been
lost in a fog of referring back for revision of plans, financial
calculations and patient statistics. Extreme persistence was needed
to track the OBC despite it having been issued more than a year
ago. No one, including staff at the Radcliffe Infirmary, could
inform our Secretary whether comments had been invited or whether
the OBC was a fait accompli. Our Secretary traced a copy
to the Oxford Central Library for viewing but was told the library
would close in three weeks time.
4.3.1 If a dedicated group like the PFI
Alert Group experienced such difficulties, what of the general
public? Behind this smoke screen, the cost has risen in a couple
of years from £71 million to over £100 million using
PFI. Questions need to be asked of the external advisors to the
relocation scheme. They include KPMG, De Vere Healthcare, Sir
Frederick Snow and Partners and the architects and surveyors.
4.4 Public input ignored. Where the
people persist in being involved in the planning process they
are still ignored. The most striking example is that of Kidderminster.
Because Worcester Infirmary had run into serious debt, plans were
made to economise by running down the Kidderminster District General
Hospital and the Worcester Infirmary and replacing both with one
PFI built hospital. Local people felt great pride and loyalty
in the Kidderminster DGH and the League of Friends had raised
£400,000 for its Cancer Resource Centre. The closure of Kidderminster
A&E Department caused a wave of protest which swept Dr Richard
Taylor, retired medical consultant, into Parliament as an Independent
MP for Wyre Forest. The closure was a particular rejection for
the League of Friends of Kidderminster DGH. It raises the whole
question of how volunteers should relate to PFI hospitals. The
value of volunteers' contribution to the NHS nationally amounts
to several billion pounds a year. For this spirit of altruism
to continue the NHS needs to remain a public service. The introduction
of the profit motive, via PFI and similar schemes, will extinguish
this huge contribution by volunteers. This will be a major loss
which has not yet been considered.
4.5 Abolition of the Community Health
Councils. These have been valuable watchdogs monitoring changes
in the use and management of hospitals and other health facilities.
In Oxford the CHC led the public in a battle to retain our excellent
blood transfusion laboratory. More recently the Oxford CHC also
led the struggle to retain the small community hospitals. VOICE
is too complex a replacement and too weak and fragmented to challenge
the sophisticated companies responsible for PFI hospitals.
6 Appendices not printed. Back