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New Communist Party of Britain

adopted December 2015

Private Finance Initiative

Since the mid‑1990s the British ruling class's preferred mechanism of privatisation has been the Private Finance Initiative (PFI) and is used in public services across the National Health Service (NHS) and in all government departments including education, defence and transport. Over £300 billion in PFI repayments are being made to private owners across more than 700 projects with owners expecting 10‑13 per cent return on their capital every year.

In addition to the repayments it has been estimated that more than £4 billion has been paid in arrangement fees to financial consultants, lawyers and other hangers on.

To justify PFI the Government explained that it would reduce its borrowing costs. In fact it has been found that the borrowing costs for the initial capital outlay have been an extra £25 billion over and above what it would have cost had the Government borrowed the capital directly. This extra cost has been distributed as extra profits to the banks that loaned the capital and the companies that run the PFI schemes.

At the beginning of 2015 the healthcare company Circle gave notice that it may end its contract to run Hinchingbrooke Health Care NHS Trust the company said it had "reluctantly concluded that operating the franchise is no longer viable under current terms".

Hospitals were built, by private contractors, on the assumption of rising health spending, but with cuts in health spending at least 22 PFI hospitals no longer look financially viable. In 2012, the Department of Health gave a £1.5 billion bailout to seven trusts, but many are still struggling, with the South London Healthcare NHS Trust put into administration partly because of its PFI obligations.

To stave off or delay bankruptcy, attempts are made to increase productivity. As the work in hospitals is labour intensive the only way they can increase productivity is by reducing the workforce and by making those who remain work faster by using bullying, discrimination, harassment and other sharp practices.

Even if the hospitals are declared bankrupt or whether the clinical services they provide are cut back, the payments to the PFI owners are guaranteed. Increasingly ownership is being packaged up into financial instruments like stocks, shares and bonds and then sold on; by 2012 over 200 PFI companies were partly owned offshore resulting in reduced tax revenue to the government. Amazingly, 600 HMRC offices are owned by a PFI company based in Bermuda, so on the one hand the British state says it wants to crack down on tax avoidance but on the other if facilitates tax avoidance through PFI.

To show that it can be done differently: In October 2014, Northumbria Healthcare Foundation Trust turned their back on an existing PFI contract by borrowing £114m from the local council to pay off private owners who built and ran Hexham General Hospital. The deal — the first of its kind will save the trust £3.5m a year over the next 19 years.