PFI Legacy Debt – The Elephant in the Room
It was good to see the launch of the King’s Fund new paper on reconfiguring hospital services – the lessons from South East London by Keith Palmer http://www.kingsfund.org.uk/publications/reconfiguring.html
The Exec Summary notes “Palmer contends that the government will need to find a way of dealing with legacy debt and the costs of PFI commitments to support the acquisition of financially challenged trusts. Neither high-performing foundation trusts nor private sector providersare likely to be willing to take on challenged trusts without such support, and competitionlaw requires that all parties should be treated equally if a market in acquisitions opens up. At a time of public spending constraint it will not be easy to identify additional resources but failure to do so may simply increase the financial and service challenges facing the NHS and store up even greater problems in future.”
The jury is certainly still out about whether or not GP Commissioners will be able to transform care models but it is clear that PFI legacy debt is a massive barrier to creative commissioning representing fixed costs and fixed contractually arrangements that cannot easily be avoided.
The recent decision of Tees, Esk and Wear Valleys Mental Health Foundation Trust to spend £18m to buy out its PFI contract for the adult mental health hospital in Darlington 23 years early to save £2m per annum could well point the way. Wouldn’t this be a better use of all the quantitative easing monies – to buy out the nation’s PFI debts?