PFI Contracts 'costing departments 12 times more than they raise'

[green]

http://www.telegraph.co.uk/news/politics/9270816/PFI-contracts-costing-departments-12-times-more-than-they-raise.html

 

The Association for Consultancy and Engineering found the Ministry of Justice paid out £12 for every £1 of private sector investment raised through PFI deals. This was nearly four times the rate of the some departments.

PFI schemes, which were introduced by the Tories in the 1990s and expanded under Labour, are seen as a cheaper way to build schools, roads and hospitals.

 

Private contractors meet the costs of building and running hospitals, schools and roads by recouping the money from the taxpayer over many years. Taxpayers are committed to pay £229billion for new hospitals, schools and other projects with a capital value of just £56billion.

The Association examined PFI deals, signed between 1996 and 2010 and found that the deals done in the first five years were the worst value for money, costing the Government £7.45 for every pound of private investment raised.

 

The ratio then fell to £4.03 for every pound raised between 2001 and 2005 and then rose again to £5.43 in the last five years to 2010, possibly because the financial crisis increased the cost of capital for private firms.

 

The Ministry of Justice was the worst offender, facing a cost to the taxpayer of £11.53p for every pound of private investment raised through PFI. That compared with the Department for Communities and Local Government, which had to pay £2.69p for every pound raised from the private sector.

Generally departments which were able to make better and more frequent use of PFI paid the lower costs than other departments.

 

Nelson Ogunshakin, the association’s chief executive, said: “There was clearly a divergence between departments that shows the need to review and learn lessons.Those that had built up a greater deal of experience in running PFI deals appeared to procure them more effectively.”

 

The Coalition has agreed 71 new PFI deals since coming to power. George Osborne, the Chancellor of the Exchequer, is currently working on an overhaul of PFI by finding for a cheaper way of harnessing private sector money to fund public projects.

 

Last night Jesse Norman, the Conservative MP who has been campaigning to reform the system of PFI, said the study showed why this reform was so important.

He said: “This report perfectly illustrates why it is so important to have a really effective central unit procuring infrastructure across the whole of Government.

“The last Government shoe-horned a huge range of public projects into the PFI, from prisons and refuelling aircraft to motorways, hospitals and schools - this report perfectly illustrates the folly of that approach.”

Earlier this month the influential Public Accounts Committee suggested that companies should be force to share excessive profits from PFI deals with councils and local health authorities.

Much of the additional spending under PFI goes on expensive maintenance contracts to private sector PFI companies.

A series of Freedom of Information requests last December disclosed how hospitals and NHS Trusts locked into long term PFI deals were being forced to pay “hyper-inflated” charges for basic services.

They included £242 to put a padlock on a garden gate at a trust in North Staffordshire, £466 to replace a light fitting and £75 for an air freshener in Cumbria and £15,000 to “install a laundry door following feasibility study” at a trust in Salisbury.

 

Other charges include £8,450 to install an “additional dishwasher” for a NHS trust in Hull, £962 to “supply and fix notice-board” at a trust in Leeds and £26,614 for the “replacement of shower room doors” at the Sussex Partnership Trust.

 

Last night a Treasury spokesman said: “The Government has already taken action to drive savings in privately financed projects.

"We aim to deliver a new model, which is cheaper, accesses a wider range of financing sources and strikes a better balance of risk between the private and the public sectors. This will ensure a fair deal for the taxpayer now and in the longer term."

 

All the main stream parties now have a hand in this. Either they have presided over PFI contracts or they are allowing them to continue.

 

As tax payers we should be screaming that this madness needs to stop!!!!

[alchresearch]

As tax payers we should be screaming that this madness needs to stop!!!!

 

I have been on here for the last three years. Sadly I've been shot down by those who don't see the actual costs involved.

 

Luckily the Tories did listen and put a stop to BSF. Part of their NHS reforms also include looking at this but again, this is ignored by those who just assume it's about getting rid of doctors and nurses.

 

NHS and schools have been targets for the PFI for a while and I've seen a shocking amount of wasted money.

[green]

Every fortnight Private Eye reports of more wasted millions in PFI contracts.

 

Its an abuse of tax payers monies, and should be illegal. Any politician or civil servant signing these contracts should be named and shamed at the very least.

[alchresearch]

My current bugbear is that new HP computers and printers are purchased for the NHS.

 

They're bought with a 3 year warranty.

 

After about a year, they're "refreshed" - i.e. replaced.

 

They're sold for a fraction of their cost to "IT refurbishers" who then sell them on, for about £125 - £175 + VAT each.

 

I personally know of one toner supplier who can afford to give away ex-NHS HP printers on condition you buy at least three toners a year from him.

 

The NHS printers also "have" to have genuine HP toners in them, which is rubbish. We run all our HPs on compats which don't leak and last longer than the genuine supplies, despite costing only a third. They're so good we have to lower the colour density on the printer.

[green]

My current bugbear is that new HP computers and printers are purchased for the NHS.

 

They're bought with a 3 year warranty.

 

After about a year, they're "refreshed" - i.e. replaced.

 

They're sold for a fraction of their cost to "IT refurbishers" who then sell them on, for about £125 - £175 + VAT each.

 

I personally know of one toner supplier who can afford to give away ex-NHS HP printers on condition you buy at least three toners a year from him.

 

The NHS printers also "have" to have genuine HP toners in them, which is rubbish. We run all our HPs on compats which don't leak and last longer than the genuine supplies, despite costing only a third. They're so good we have to lower the colour density on the printer.

 

Its just insanity.... The procurement depts of the NHS need a complete over-haul. Id seriously contemplate privatising that part of the NHS.

[quisquose]

My current bugbear is that new HP computers and printers are purchased for the NHS.

 

They're bought with a 3 year warranty.

 

After about a year, they're "refreshed" - i.e. replaced.

 

They're sold for a fraction of their cost to "IT refurbishers" who then sell them on, for about £125 - £175 + VAT each.

 

I personally know of one toner supplier who can afford to give away ex-NHS HP printers on condition you buy at least three toners a year from him.

 

The NHS printers also "have" to have genuine HP toners in them, which is rubbish. We run all our HPs on compats which don't leak and last longer than the genuine supplies, despite costing only a third. They're so good we have to lower the colour density on the printer.

 

Funny you should mention this. I was out with a family member who is a NHS Consultant the other day who was telling me about a GP they know who has just retired. He has a share in the practice premises and has been receiving rent from the new GPs in residence, and the shareholders are now selling to them.

 

Bought about 15 years ago using PCT finance where they (the taxpayer) actually pay the interest. When the mortgage was paid off the GP's get all the profit, which is the rent plus the £250,000 capital gain. The GPs in residence are now buying the premises with, yes you've guessed it, PCT funding.

 

[I1L2T3]

Every fortnight Private Eye reports of more wasted millions in PFI contracts.

 

It also reported recently that the Tories are lining up new PFI deals.

 

They don't have much choice really. Having banged on about Labour's profligacy it's going to look bad if they actually start putting project spend on the books.

[alchresearch]

Schools were no better. In 2009 I was involvend in the "BSF" scheme and working with a consultant.

 

He wanted to give every pupil in school an iPad. He knew nothing about the associated costs, the fact warranty wouldn't apply if they were lost or dropped (a neighbouring school did something similar by providing Netbooks for their new intake and really got their fingers burnt with costs), nor if ipads provided any enhancement in Teaching and Learning.

 

The teaching staff didn't care either as they'd be getting them free of charge and it "made the school look good".

 

Other schools which had already been built were suffering from bad design - air con on all summer, heating all winter because of all the open spaces and glass. Annual heating bills for one school soared from £200,000 to over £1 million.

[Jim Graham]

PFI projects for schools and the NHS only waste money. PFI deals for the MoD cost lives.

[quisquose]

Oh well, buy now let our children and grandchildren pay later was nice whilst it lasted, but it was bound to end sooner or later.

 

I need to cheer myself up now so I think I'll go and watch Robert Peston's new programme on BBC2.