Tuesday’s must read stories and biggest talking points

The politics of PFI

There are many sides to PFI. 

Obviously, the NHS got some really bad deals in some places. But there are shiny hospitals with contracts for their maintenance where otherwise there might not be.

Jim Mackey bought out his trust’s PFI, and rightly says it is ridiculous not to do it more widely now interest rates are low.

However, HSJ’s story presents some reasons why it would be the contractual/litigation equivalent of invading Russia – not to say it wouldn’t be worth it but it would take a very long time and be hard-fought. (We are of course using this metaphor because interest rates are at their lowest level since the Napoleonic wars.)

A good point made by one expert is that as shoddy as some of those deals are, they guarantee the maintenance of the hospital, sometimes at too high a spec, but a guarantee nonetheless.

Looking at the backlog maintenance rates across the NHS, it is clear trusts will cut back on this under pressure.

And let’s not ignore the larger political context of PFI, after the shadow chancellor said a Labour government would bring PFI contracts “back in house”.

One of the big PFI trusts was handed from one chair to another, with the former incumbent telling the newcomer that the deal had secured a first class hospital for a deprived community for the next 30 years – not something that was guaranteed before. In some cases people rushed into PFI as a guarantee there would be a hospital in their community for at least another generation.

Whenever a consultation exercise looks at which site should get downgraded in a region, determining the winner is usually just a case of looking at which one the Treasury is on the hook for over the next 20 years. If they are committed to paying for one anyway, why downgrade it?

The scenario was looking like: we have loads of hospitals we’ll still have to pay for despite having moved care into the community. But the service has got around that by not really moving care into the community. And the projections are going the other way on bed needs anyway.

People like a grand gesture at a conference, so you can see why John McDonnell said what he did, rather than just announcing a taskforce to make sure all the existing contracts are overseen properly.

In short, they’re not currently monitored properly. This means trusts don’t take easy opportunities to reduce costs.

These are large-scale contracts with special purpose companies set up by PFI firms, employing dozens of people. Trusts often employ less than one full-time person to monitor these contracts.

KPMG’s Matt Custance points out that there are a number of PFI contracts that have no exit clause set out. This could be a door worth pushing for a savings-hungry NHS.

Midlands merger pushed back

A merger between three West Midlands trusts to create one of the biggest community and mental health providers in the county has been delayed.

Birmingham Community Healthcare FT, Black Country Partnership FT and Dudley and Walsall Mental Health Trust have delayed their integration, admitting their original deadline was too “ambitious”.

In the summer, HSJ revealed the trusts intended to merge by October. However, the trusts have now confirmed they will not be merging until 1 December.

A spokesman for the three trusts told us: “The date we were working to was always an ambitious target and, due to the scale of work required, we agreed together with NHS Improvement to give ourselves a little more time. All our preparatory work continues and we are making good progress.”