PFI And Hospitals

The Tories are warning that "up to a dozen major projects worth more £2 billion" in the NHS building programme could be halted, due to the credit crunch and Private Finance Initiative schemes.

This is due to a number of reasons.

PFI has been built around 30-year loan agreements, and fewer banks are willing to agree to those. They may have to be switched to 7-year loans. Finance bonds, often a component of PFI deals, are now harder to obtain, as insurance to boost the credit rating of schemes is virtually non-existent.

PFI projects that might have included 3 banks in the past (e.g a £4.5 billion project to widen the M25) now involve 14.

Labour has viewed PFI as the "Plan A" for building, well, everything -- schools, hospitals, street lighting and incinerators here in Coventry, road building. They don't have a Plan B. And the NHS could now end up paying back more than £50 billion over the next 30 years for hospitals worth a fifth of that amount.