The first victim of PFI?
Discussion
http://www.bbc.co.uk/news/health-18584968
Interesting I think, are we starting to reap the "rewards" of that oh so wonderful idea?
Interesting I think, are we starting to reap the "rewards" of that oh so wonderful idea?
WhoseGeneration said:
Steffan said:
This will be another disaster for the taxpayer. Our politicians are absolutely useless.
They still do the politics though, constantly being elected, whichever Party.Perhaps you are starting to appreciate that we do not live in a Democracy.
Only here could a government financed project go bust through crass mismanagement. And no prosecutions just for a change Jesus!! Or indeed any effective penalties against the miscreants. We get worse.
Well our idiotic self serving politicians do!!
Steffan said:
WhoseGeneration said:
Steffan said:
This will be another disaster for the taxpayer. Our politicians are absolutely useless.
They still do the politics though, constantly being elected, whichever Party.Perhaps you are starting to appreciate that we do not live in a Democracy.
Only here could a government financed project go bust through crass mismanagement. And no prosecutions just for a change Jesus!! Or indeed any effective penalties against the miscreants. We get worse.
Well our idiotic self serving politicians do!!
One wodners if this could happen to police forces.
My old force was forced to go along the PFI route, essentially privatising process work. The contract was all but written for the force and off we went, knowing full well the debt would be crippling but unable to do anything about it.
Then along come the swingeing cuts, 20%+, and the PFI still has to be serviced. So the cuts are, in effect, greater than 20% given the massive debts at high rates.
There are considerably less police officers - a reduction of much more than 20% by the end of the 5 years of course - supplying much less process to a department that costs a fortune. Hardly poor management.
Other forces have been sent down the PFI route further than my old one and one wonders how they will be able to cope with the massive debt repayments.
My old force was forced to go along the PFI route, essentially privatising process work. The contract was all but written for the force and off we went, knowing full well the debt would be crippling but unable to do anything about it.
Then along come the swingeing cuts, 20%+, and the PFI still has to be serviced. So the cuts are, in effect, greater than 20% given the massive debts at high rates.
There are considerably less police officers - a reduction of much more than 20% by the end of the 5 years of course - supplying much less process to a department that costs a fortune. Hardly poor management.
Other forces have been sent down the PFI route further than my old one and one wonders how they will be able to cope with the massive debt repayments.
Please understand what PFI does.
It provides new infrastructure for the SAME build cost as it would cost using other funding routes
It provides senior debt and equity at rates below the market rate because the government covenant adds security. Eg Market yields are circa 8% PFI and PPP yields on entry are down at 5%.
It looks more expensive than other funding because it usually wraps a whole host of extras like lifetime FM.
The NHS has built many buildings outside of PFI where the Trusts say how cheap it was. With out exception each of them has millions of ££'s back log maintenance, whereas a PFI is usually maintained as its part of the contract.
The media never compare apples with apples. The get non PFI stock to PFI standards would cost the HNS billions. I have seen one tiny small health centre that needs £9m spending because it hasn't been maintained. The building is only worth £3m and I could replace it will a new all singing all dancing modern building that meets infection control standards for £6m.
Problem is that the building is listed. If it had been maintained it wouldn't now be costing NHS £9m
PFI and any other type of contract should not be entered into if you cannot afford it thats simple business sense but something that is lacking from many public sector bodies.
Yes my business is a PFI and PPP investor developer so I have a vested interest, but I also see the whole cost picture. The only way that such infrastructure can be built more cheaply is to use government cash at prudential rates. But that sill doesn't deal with maintenance etc.
It provides new infrastructure for the SAME build cost as it would cost using other funding routes
It provides senior debt and equity at rates below the market rate because the government covenant adds security. Eg Market yields are circa 8% PFI and PPP yields on entry are down at 5%.
It looks more expensive than other funding because it usually wraps a whole host of extras like lifetime FM.
The NHS has built many buildings outside of PFI where the Trusts say how cheap it was. With out exception each of them has millions of ££'s back log maintenance, whereas a PFI is usually maintained as its part of the contract.
The media never compare apples with apples. The get non PFI stock to PFI standards would cost the HNS billions. I have seen one tiny small health centre that needs £9m spending because it hasn't been maintained. The building is only worth £3m and I could replace it will a new all singing all dancing modern building that meets infection control standards for £6m.
Problem is that the building is listed. If it had been maintained it wouldn't now be costing NHS £9m
PFI and any other type of contract should not be entered into if you cannot afford it thats simple business sense but something that is lacking from many public sector bodies.
Yes my business is a PFI and PPP investor developer so I have a vested interest, but I also see the whole cost picture. The only way that such infrastructure can be built more cheaply is to use government cash at prudential rates. But that sill doesn't deal with maintenance etc.
Edited by blueg33 on Tuesday 26th June 08:47
powerstroke said:
What happens to the hospital and other asetts??? if a company leases a lorry building ect and then goes bust its repossesed and sold off!! just curious how does it work with PFI??
Depends on the type of PFI and who owns that land etc.Most PFI's are underwritten by Govt Guarantee so the rent will still be paid.
anonymous said:
[redacted]
TBH the deals would have been cheaper if the NHS employed specialists on their payroll and fewer lawyers (sorry) and accountants etc.
The landlord wont negotiate if he has Govt guarantee. The damage to the asset value would really hurt.
I expect PFI entities to be branded as very evil
Steffan said:
Perhaps I am.
Only here could a government financed project go bust through crass mismanagement. And no prosecutions just for a change Jesus!! Or indeed any effective penalties against the miscreants. We get worse.
Well our idiotic self serving politicians do!!
The only thing missing is the inevitable calls for a "full public enquiry" which should just take long enough and cost enough to ensure that those who made the original decisions have got their knighthoods and/or retired. Only here could a government financed project go bust through crass mismanagement. And no prosecutions just for a change Jesus!! Or indeed any effective penalties against the miscreants. We get worse.
Well our idiotic self serving politicians do!!
After 20 years in the UK, I think I am starting to see how things work!
blueg33 said:
Please understand what PFI does.
Yes my business is a PFI and PPP investor developer so I have a vested interest, but I also see the whole cost picture. The only way that such infrastructure can be built more cheaply is to use government cash at prudential rates. But that sill doesn't deal with maintenance etc.
I understand where you are coming from but last week our A&E got charged £90+ quid to change a lightbulb in one of the scopes that took all of 30 seconds to do and no, the lightbulb does not cost the earth either. Yes my business is a PFI and PPP investor developer so I have a vested interest, but I also see the whole cost picture. The only way that such infrastructure can be built more cheaply is to use government cash at prudential rates. But that sill doesn't deal with maintenance etc.
On a more serious note, what is the typical profit margin for these PFI projects for the private providers? Mate of mine is involved and says it is money for (lots of) jam
Edited by arguti on Tuesday 26th June 10:33
arguti said:
Steffan said:
Perhaps I am.
Only here could a government financed project go bust through crass mismanagement. And no prosecutions just for a change Jesus!! Or indeed any effective penalties against the miscreants. We get worse.
Well our idiotic self serving politicians do!!
The only thing missing is the inevitable calls for a "full public enquiry" which should just take long enough and cost enough to ensure that those who made the original decisions have got their knighthoods and/or retired. Only here could a government financed project go bust through crass mismanagement. And no prosecutions just for a change Jesus!! Or indeed any effective penalties against the miscreants. We get worse.
Well our idiotic self serving politicians do!!
After 20 years in the UK, I think I am starting to see how things work!
blueg33 said:
Please understand what PFI does.
Yes my business is a PFI and PPP investor developer so I have a vested interest, but I also see the whole cost picture. The only way that such infrastructure can be built more cheaply is to use government cash at prudential rates. But that sill doesn't deal with maintenance etc.
I understand where you are coming from but last week our A&E got charged £90+ quid to change a lightbulb in one of the scopes that took all of 30 seconds to do and no, the lightbulb does not cost the earth either. Yes my business is a PFI and PPP investor developer so I have a vested interest, but I also see the whole cost picture. The only way that such infrastructure can be built more cheaply is to use government cash at prudential rates. But that sill doesn't deal with maintenance etc.
On a more serious note, what is the typical profit margin for these PFI projects for the private providers? Mate of mine is involved and says it is money for (lots of) jam
Edited by arguti on Tuesday 26th June 10:33
But as I say its probably modern myth as FM is usually wrapped in the deal of the PFI entity is carrying the cost. Non PFI, it would probably cost the same with any contractor who is insured to work in a building with public access and infection control rules
Profit is the yield I referred to up the page. Most contractors involved in PFI make profit from the construction element, which is pretty standard levels as its all benchmarked. Return on equity is circa 9% gross compared to other development equity investments which can return up to 20%
Overall blended yield is circa 5% gross
I going to be very interested to see the outcome of this. So what we have effectively got is a public funded NHS trust that is bankrupt and is now going to have private sector administrative cost controls put on it. I wonder how much of the overspend is due to lack of funding and how much is due to poor cost control...
Derek Smith said:
One wodners if this could happen to police forces.
My old force was forced to go along the PFI route, essentially privatising process work. The contract was all but written for the force and off we went, knowing full well the debt would be crippling but unable to do anything about it.
Then along come the swingeing cuts, 20%+, and the PFI still has to be serviced. So the cuts are, in effect, greater than 20% given the massive debts at high rates.
There are considerably less police officers - a reduction of much more than 20% by the end of the 5 years of course - supplying much less process to a department that costs a fortune. Hardly poor management.
Other forces have been sent down the PFI route further than my old one and one wonders how they will be able to cope with the massive debt repayments.
My understanding with the NHS case, is that the main burden relates to debt concerned with the building of massive infrastructure projects. If you accept that the projects would still have gone ahead without PFI, and that the tax payer would in that case have paid for it more directly, I can't see that 'we' are any worse off as tax payers than we would have been. If anything, the burden of that cost is still being held by the private builder and it is the NHS trust who is having difficulty in servicing the repayments so, from a cashflow point of view, potentially less harmful to the tax payer than the government holding the burden.My old force was forced to go along the PFI route, essentially privatising process work. The contract was all but written for the force and off we went, knowing full well the debt would be crippling but unable to do anything about it.
Then along come the swingeing cuts, 20%+, and the PFI still has to be serviced. So the cuts are, in effect, greater than 20% given the massive debts at high rates.
There are considerably less police officers - a reduction of much more than 20% by the end of the 5 years of course - supplying much less process to a department that costs a fortune. Hardly poor management.
Other forces have been sent down the PFI route further than my old one and one wonders how they will be able to cope with the massive debt repayments.
What I would agree with, is that PFI is still in its relative infancy and no government has managed to structure the reporting of each attempt properly to give an accurate assessment of value. Whilst there are examples on both sides, where PFIs have failed and succeeded, the information gathering has been inadequate in confirming one way or another whether the concept can and should work. In theory, it should work (though not everything in life works in practice as it does theory).
As it stands, it would be misconceived to say all PFI is doomed to failure and equally misconceived to say all PFI will be a success. What we do know, is that where people approach tasks with a negative prejudice, they are likely to invoke the laws of self fulfilling prophecy.
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