A2 Micro: From PFI to PF2

The government's method of financing expensive infrastructure projects is coming under fire once again (in this Guardian article), this time due to the fact that an unknown number of projects were signed on the basis of manipulated interest rates (LIBOR explained) and indexation causing debt repayments made for one London hospital to increase by about £1m a year. While the private sector firms involved in PFI are making huge profits from their contracts, the NHS hospitals are finding themselves crippled with debt. The idea is that the private sector will carry out the building projects much more efficiently than the government. However critics argue that the contracts are very generous in favour of the private investors. The National Audit Office commenting on Peterborough hospital's £411m PFI deal, "concluded in November that it was not affordable from the word go and should never have been signed". In addition when you hear about quality problems the NHS is having, perhaps the idea of putting hospitals in the position where their debt repayments are prioritised above all else is not such a positive move forward.

"Forty-three hospital patients starved to death last year and 111 died of thirst while being treated on wards". Article found here.