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PFI and it's replacement by the Scottish Government are draining tens of millions from the NHS every year.

Edinburgh Sick Kids scandal exposes SNP failure to tackle PFI rip-off

By a Scottish Unison member and health care worker 

Edinburgh was due to have a new state of the art hospital to look after sick children and young people in 2013. It was going to cost around £250m and be publicly funded.

NHS Lothian has now postponed the opening of its new Edinburgh Sick Kids Hospital, indefinitely. The hospital, which has now cost upwards of £520m, cannot receive any patients into its 233 beds because of systemic problems with ventilation and drainage which risk patients and public safety.

There is no sign of these issues being fixed anytime soon. One leading Lothian NHS trade unionist has stated it would be better to tear the building down and start again!

private finance

At the heart of this crisis is the use of private investment to fund public projects. Having been told by the Scottish government in 2010 that they had to find different funding arrangements to build the new hospital, NHS Lothian turned to the Scottish Futures Trust (SFT), a £2.5bn fund set up by the SNP as an alternative to the Private Finance Initiative (PFI), which New Labour had used to build a range of public facilities across the UK.

Under PFI, private companies built facilities, provided services and then leased them back to the public sector, who then paid over the odds for these contracts on deals stretching into the millennium.

NHS Tayside alone sits on contracts worth £14m a year until 2043. In Lanarkshire, Hairmyres hospital, built with private investment in 2001, has cost twice as much as it would’ve done using public money. Investment of £8m gave the private consortium a return of £145m in 2008.

The Scottish Futures Trust has proved to be, at best, a pale imitation of PFI. Profit returns under PFI stood at 16% per annum. SFT would peg them at 12%, with “surpluses” being recycled into the public finances.

Projects would still rely on private investment under so called Non Profit Distributing models. It wasn’t PFI so the perception grew that the SNP had abolished private involvement in Scotland’s NHS. However, existing PFI contracts were left untouched when this new model was introduced.

Yet PFI’s have became central to the indebtedness of Scottish health authorities. Hundreds of millions are being re-diverted from patient care to private profits.

The scandal of Edinburgh’s new hospital highlights how the SNP have kept to finding market solutions for deficits in public funding instead of fighting austerity and the cuts.

As it stands, the financial crisis in NHS Lothian because of this dreadful deal that they have with IHSL (Integrated Health Solutions Limited) will impact patient care across the region. £1.4m per month is being paid for a hospital that they cannot open.

The necessary work to get the facility open has added at least £80m to a project that will cost £432m over the next 25 years.

Socialist Party Scotland calls for the nationalisation of all PFI/SFT contracts with no compensation for the profiteers who have been allowed into our NHS. A full democratic trade union-led inquiry into this scandal is needed.