Labor MPs urge Reeves to abandon plans for private funding for NHS buildings | Private financing initiative
Rachel Reeves has been urged by 40 Labor MPs to abandon plans to fund NHS buildings with private finance initiatives (PFIs) that would put the health service in debt.
Labor MPs including Cat Eccles, Clive Lewis and Rebecca Long-Bailey pressed the Chancellor to commit to investing in the NHS without relying on private capital and warned that a return to the New Labor era of private funding of public projects would damage confidence in government.
“We ask you to learn from the mistakes of the past. We must reject the idea that private financing can be used to build public services in a way that can benefit the public in the long term,” they said in their letter. “We ask that you please abandon any plans for new private funding in the NHS from the autumn budget and any future policies.”
Although it was originally conceived under the Conservatives, Tony Blair’s Labor government made significant use of PFI, a form of public-private partnership used to build schools, hospitals and other public infrastructure, without adding to the national debt.
In their joint letter, dozens of Labor MPs said the use of private partnerships was more costly than publicly funded projects and had helped to drive up NHS debts since 1997, with 80 trusts still paying back a total of £44 billion while services suffer.
“As you probably know, relying on private finance to build new health facilities does not bring new money to the NHS – it is simply an expensive way of borrowing money that future generations of taxpayers will have to repay,” MPs said.
“Relying on private finance is also unlikely to allow you to meet your current investment and borrowing rules, even if they are classified off the public sector balance sheet.
“The Office for Budget Responsibility advised in 2017 that the use of ‘off balance sheet’ financing of public infrastructure to circumvent borrowing rules amounts to a ‘fiscal illusion’ and should only be used if there is a clear value for money rationale.
“However, as the National Audit Office found in 2017, there is no evidence that these schemes are cost-effective, with PFI hospitals being 70% more expensive than the state-funded option.”
The UK’s Infrastructure Strategy and 10 Year Health Plan mention exploring the use of private capital to fund the construction of NHS facilities, including Neighborhood Health Centers (NHCs).
MEPs highlighted analysis suggesting that using private finance for small-scale projects was of even worse value to taxpayers than using it for larger projects. NHCs will likely be closer in character to these small-scale projects than to large hospitals.
More than 50 academics, including Labor colleague and accountant Prem Sikka, have already written to the Chancellor asking her to “abandon this dangerous and damaging proposal and fund public services through direct taxation or borrowing”.
Labour’s general election manifesto stated that the NHS with Labor “will always be publicly owned and funded”.
Wes Streeting, the Health Secretary, has already sought to reassure MPs that any new use of private funding in the NHS would be limited and targeted, and would aim to avoid the mistakes of the PFI.
A government spokesperson said: “This government is committed to moving health from hospitals to the community, as set out in the 10-year health plan.
“As outlined in our 10-year infrastructure strategy, we are investigating the feasibility of using new public-private partnership (PPP) models for taxpayer-funded projects in very limited circumstances where they could represent good value for money, such as in certain types of primary and community health infrastructure or to decarbonize the wider public realm.
“The design and development of any future PPP models will draw on lessons learned from past and current models. »
