Jim Eadie: PFI dangerous waste of money

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I have been a vocal critic of the Private Finance Initiative (PFI) contract at the Edinburgh Royal Infirmary (ERI) since I was first elected in 2011. Thanks to the investigative journalism of the 
Evening News, we learned of the horrors that can arise from inviting private companies into the running and maintenance of our hospitals.

It was the News which first exposed the appalling breaches of contract such as flies being found in operating theatres leading to operations being cancelled, surgery being carried out by torchlight, incomplete checks on staff and Healthcare Environment Inspectorate criticism of poor hygiene in wards and toilets. Despite the risk posed to patients, Consort Healthcare still makes an annual profit of 
£12-16 million.

Fundamentally, PFI represents bad value for money. Since the ERI’s PFI contract was signed in 1998, Consort Healthcare has been sucking NHS Lothian’s purse dry.

Following my parliamentary question in June, the Scottish Government revealed that the taxpayer will have to pay out an eye-watering £1.44 billion to Consort Healthcare in building and maintenance costs by 2034. For a hospital that cost £180m to build, this is nothing short of a scandal.

The stark reality is that the government is forced to pay higher interest rates to a private company than it would have paid to borrow on the open market. Put simply, this is the equivalent of the government taking 
out a “payday loan” with their massively-inflated interest charges. These service charges (known as Unitary Charge Payments) will cost NHS Lothian £47.8m in the current financial year.

These millions should be spent on frontline patient care, employing nurses and doctors to treat and look after patients; however, instead of recruiting and retaining hard-working NHS staff to provide high-quality care we are lining the pockets of company shareholders. Indeed, Balfour Beatty – which previously owned Consort Healthcare – paid more than £11m in dividends to shareholders in 2013.

Shamefully, this contract completely fails the public interest test. The penalties that NHS Lothian can impose for serious breaches of contract are limited to a paltry £28.24 a day. Perhaps more shockingly, however, is that these penalties (known as “deficiency points”) are now suspended for five years since the no-penalty clause was effectively imposed by Consort Healthcare in return for an agreement to build and service an additional 31 beds to deal with winter pressures. Once again we have the Evening News to thank for exposing this unacceptable behaviour, which I condemned at the time as “financial blackmail”.

I know the Scottish Government is committed to tighter management of the contract in order to release savings, which is on course to save £20m over the lifetime of the contract; however. it is surely not enough to improve the cost-effectiveness and transparency of existing PFI contracts, welcome though that undoubtedly is.

I believe we have to start looking at the necessary steps of buying out this contract, either in part or in full, as some health authorities in England have begun to do. Moreover, given there is clear justifiable anger at what is rightly seen as a major public scandal, I am – once again – calling on every Lothians MSP to back my call for a full-scale parliamentary debate to allow each and every one of these issues to be fully discussed.

Jim Eadie is SNP MSP for Edinburgh Southern