It does nothing of the sort. Under the private finance initiative, the private sector buys in, providing capital which the public sector must repay. The businessmen taking up a profitable franchise get control over operation, management and running of key elements of public services for 30 years, over which period the government repays the borrowings. Money intended for services will now go into the pockets of shareholders. Despite a 23 billion surplus in 2001, the Treasury is forcing public bodies to seek private-sector alternatives rather than fund new investment out of central taxation.
Private finance is the only game in town.
But the Treasury did not predict the extra cost to the public purse. Incidentally, cost overruns in conventionally funded NHS hospitals are now less than eight per cent, compared with more than double for many PFI schemes. But the real problem concerns how PFI hospitals are paid for. When the new PFI hospitals open, as much as 25 per cent of the clinical care budgets will be diverted to meet the annual payments of the PFI consortium, along with the proceeds from land sales and hospital closures. That is why the axe fell on Kidderminster hospital.