The end of NHS PFI | Again.

This is Matt Hancock proudly announcing that the Government is ending the use of PFI to fund NHS hospital construction. And tweeting about:

You made have spotted that one of my recent themes is the same policy being announced over and over again.

Ending the use of PFI in the NHS is a good idea. Such a good idea that Phillip Hammond also made this announcement, in the 2018 budget. In fact he went further an announced an end to PFI for all infrastructure spending.

The Labour Party announced in 2017 that it would stop the use of PFI to fund NHS hospital building, although the policy didn’t make it into their manifesto that year.

There is an obvious and massive problem with these announcements:

There are no NHS PFI project currently planned, and there haven’t been for years.

PFI in the NHS pretty much died out over a decade ago:

This is the same graph but looking at the capital cost of projects, rather than number:

This isn’t a surprise. PFI is a capital sourcing route, a way of raising private finance to fund public infrastructure. The alternative to PFI is Treasury capital – the Treasury borrows the money from the private sector and gives it to the NHS rather than NHS organisations raising the funds themselves

When Treasury borrowing costs are high PFI is an attractive option. When Treasury borrowing costs are low PFI doesn’t make sense. What killed PFI was the cuts in interest rates after the credit crunch.

Which doesn’t change the fact that both political parties are committed to abolishing something that was abolished 10 years ago. It’s been killed more times than Godzilla.

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