NHS PFI - Report Claims Excessive Profits Are The Norm

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29 August 2017 | Updated 01 January 1970

A Centre for Health and the Public Interest (a supposedly independent body) report out this week ending Sept 1 looks at the profits made by PFI companies from NHS contracts over the last six years - and they're not entirely impressed.

The report says analysis of accounting data from the Treasury and Companies House for the period 2010 to 2015 finds:

• Over the past 6 years, companies which run PFI contracts to build and run NHS hospitals and other facilities have made pre-tax profits of £831 million.
• If the NHS had not been paying profits on PFI schemes, deficits in NHS hospitals would have been reduced by a quarter over this 6 year period.
• Over the next five years, almost £1 billion of taxpayer funds (£973 million) will go to PFI companies in the form of pre-tax profits – equivalent to a quarter (22%) of the additional amount of money (£4.5 billion) that the government has promised the NHS over this period.
• A number of PFI schemes are generating particularly high pre-tax profits for their operators. The company which holds the contract for the hospital at University College London has made pre-tax profits of £190 million over the past 11 years. This is out of £527 million paid to the company by the NHS. The total value of the hospital is £292 million.

Just 8 companies own or have equity stakes in 92% of all the companies holding PFI contracts with the NHS – meaning that there is very little competition between the companies bidding to build and run NHS PFI hospitals, it is said.

The report makes a number of recommendations to curtail excess profits, including:

• Using public sector loans to buy-out PFI contracts.
• Taxing PFI companies to recoup some of the profits which have been made.
• Capping the amount of profit which can be made by a private company which has an exclusive public sector contract with the NHS.
• Sharing out the profits made from sales of equity stakes in PFI contracts.
• Mandating greater transparency of equity sales to prevent the unnoticed consolidation of market power by a small number of investors.
• Re-negotiating contracts with the private companies to reduce the amounts the NHS has to pay.

Picture: Main - the hospital at University College London. Below - the cover of the report

Article written by Cathryn Ellis | Published 29 August 2017

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