What was Jeremy Corbyn’s alternative to PFI initiatives?
Edmund Stubbs, 27 August 2015
Yesterday, an opinion piece by Jeremy Corbyn appeared in the Guardian. It concerned the Private Finance Initiatives (PFIs) employed before, during and after the last Labour administration to circumvent limits set on public healthcare spending. PFIs worked by using the private sector to deliver public sector infrastructure, employing private capital but ultimately underwritten by the British taxpayer.
Having not held ministerial office (as have Andy Burnham and Yvette Cooper) Mr. Corbyn admits no responsibility for the utilisation of such schemes and the consequent high levels of interest now being paid by NHS Trusts, a significant number of which are now requiring bail out rescue packages as a result. Thus, one of the objectives of his Guardian piece may be to publicly disassociate himself from PFIs, maintaining that the Labour leadership of the time ignored his and others’ concerns.
Indeed, the degree of separation between the type of party that Mr. Corbyn now wishes to represent as opposed to New Labour is evident in this critique of their decision to continue the implementation of the schemes. Nevertheless, at the same time, it is refreshing and encouraging to see a member of any party acknowledging the shortcomings of past policies, no matter how grudgingly.
It is easy to be wise after the event, however. When assessing the merits or otherwise of PFIs it ought to be considered how our health system would have fared without them. On the positive side, PFI initiatives have in fact added a substantial number of new NHS hospitals and helped the service to respond adequately to the ever increasing demands made upon it, maintaining standards on a comparative level with that of our peers in Europe and beyond.
On the negative side however, PFI projects are only realised with a commitment to high expenditure in the form of repayments over many years, tending to complicate efforts to reduce NHS expenditure or make it more efficient. The continuing implementation of PFIs might therefore be criticised as representing the irresponsible action of administrations only concerned with reelection.
However, even within the Labour Party, authoritative figures such as Alan Milburn have stated that the then Labour government had no real alternative other than to continue to engage with PFI initiatives when faced with rising national demands for healthcare and very limited financial resources.
In his piece Mr. Corbyn states that ‘every penny paid to a PFI company is money withdrawn from those waiting for an operation, money moved from training clinicians and money denied for life saving treatments’; emotive words, but without these PFI schemes the levels of service provision that we currently have would probably not exist.
What is absent from Mr. Corbyn’s piece is any indication of what would have been his preferred course of action at the time; whether he would have been content to make do with fewer new hospitals given the then constraints ? The only clue given to a possible alternative strategy on Mr. Corbyn’s part is that of engaging in ‘conventional borrowing’, which sounds very much like the commonest charge levelled against Labour administrations, that of reckless borrowing. Whether or not such borrowing might have been cheaper for the NHS in the long run is open to question.
Nevertheless, the Labour leadership frontrunner is surely right to criticise the over reliance on PFI schemes in the past and should be particularly commended for highlighting the fact that PFI companies’ profits are often located overseas to avoid UK tax. Also, his demand for a moratorium on PFIs to see if the repayments now being made are fair in relation to what they have achieved seems valid. He also recommends setting up a fund to bail NHS Trusts out of past PFI schemes which would be expensive in the short term but cost saving in the long run. This seems a wise move if immediate funds can be found.
All in all, it is easy to be wise in hindsight but when no detailed alternative course of action is proposed in the leadership candidate’s article it is hard to imagine what his preferred course of action would have been.
Edmund Stubbs is Healthcare Researcher at Civitas @edmundstubbs1