Contributoria

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The human impact of UK’s PFI scandal

Private finance initiative has been characterised as the UK's odious debts. That the £300-billion scheme is costly to the taxpayer is well known, but what are the human experiences behind the figures? Fanny Malinen speaks to residents, teachers and doctors

“They were celebrating 10 years of PFI contacts in a lovely function room at the top of the gorgeous Victorian street where I live”, Thomas Cooper, a housing campaigner in the London borough of Islington describes a Saturday in September 2013. Seeing little reason to celebrate, he invited the Mayor and the managing director of the PFI company for a 5-minute tour of the council properties on the street: they were in dire state despite having been renovated only three years earlier.

“Managing director said there’s clearly a problem with the subcontractor on this street. I said ‘On this street? Lots of people that I’ve taken for a tour on this road while you’ve been celebrating say their houses look exactly the same’“, Cooper recalls.

He has taken on the task of fighting the scheme under which the borough pays private contractors to maintain properties for an annual cost of over £40 million. The resident and campaigner shows me numerous photos from houses where the quality of the works is sub-standard: leaking roofs, locks and doors fitted upside down, power tools left unattended by builders, despite children being at home. When he goes around with a camera and a clipboard documenting the disasters, residents often approach him.

“I tell them look at a list of houses where the council has paid the contractor a lot of money, and I’m looking at whether they have got value for money from Partners. After that it just comes back to you: oh that lot, I can’t believe it, I call them so many times… You don’t need to ask what people think of Partners, they’re universally hated, feared - feared is the word, it’s ‘I don’t want to have to deal with them’”, he says, referring to the PFI company Partners for Improvement in Islington.

When I point out that London is full of landlords that neglect their properties, Cooper quickly responds: “Landlords aren’t paying a huge amount of money for the homes to remain rotten! The reason those homes are run down is that the landlords don’t want to spend money, but it appears here the landlord [council] is only too happy to be spending money but doesn’t care whether the work is being done or to what standard.”

From the over £40 million the council pays the contractor, roughly £30 million comes from the central government as subsidies loan because Islington was one of the very first housing PFI schemes in the country. “It’s not costing the politicians anything, it’s costing the taxpayer”, the campaigner says.

“My life was turned upside down for 10 years”

The man who made Cooper embark on his mission is an Islington resident who prefers not to be named.

“The water regulator recorded 33 breaches and when I called the gas safety in, they disconnected my cooker and banned me from using it”, he describes the state of his house when he was ordered to move back after six months in temporary accommodation while works were carried out. He shows me footage of his kitchen where the floor wobbles so much that a saucepan cannot be safely boiled on the hub.

Nearly ten years later, the last of defects have been fixed but only after the resident had been taken to court and banned from speaking to most council officials due to his various complaints. At times the situation has been so tense that he has installed a CCTV system in his kitchen to protect himself from allegations by workers.

“My life was turned upside down for 10 years. It felt like I was a refugee in what was once a happy family home. Just prior to these ‘decent home’ works my adult son suffered from severe mental illness and a care and community regime was in place. This here was his sanctuary. So whenever he had crisis, this was where he would be.”

But with the constant influx of workers and repair works incomplete, his key worker stated the house was no longer fit to provide care and community.

“I got the letter just after moving in, and the reason I moved in was that I thought if I don’t move in I’ll never get the house back. I was feeling devastated: the agony, the tears, and the anguish when as a parent you’re denied looking after your child.”

PFI in schools: poor buildings and wasted money

The problems in PFI housing are mirrored by those in public infrastructure. But there is little awareness of PFI in schools, laments Victoria Jaquiss, a Leeds music teacher I speak to, possibly due to the many other pressures teachers face in their work.

“I teach mostly in a building that was built before PFI and I wouldn’t say it is brilliant, but at least it is watertight and that is a good thing in a building”, she says. In PFI new builds, on the other hand, leaking roofs are common. The teacher tells me that in one school, South Leeds, a leak flooded the music room which was full of electric equipment - luckily, it was the weekend, and no one was in. In Primrose, another school in Leeds, it was the world instruments that were damaged in their deluge.

There are many faults due to poor design and poor construction: disabled, visitor and staff toilets with doors opening out onto public corridors; staff toilets that are too small “for anyone over size 18″; sockets in the floor with lids that soon become loose and create a trip hazard. The music department at Primrose was cut in half by a passageway, with the main teaching room on one side and the practice rooms on the other. “So you could not easily keep an eye on the students if they were practising in separate rooms - which is the whole purpose of practice rooms!”

“The feeling I get is that PFI design is there to impress. The buildings often look grand and imposing; they are not at all the welcoming homely places that children would feel comfortable coming into”, Jaquiss reflects.

She continues: “When they design new school buildings they say that they are taking advice, but they don’t really listen to the professionals who teach there. You would think rebuilding is a good thing, but not if it’s badly done - it just seems to be jobs for demolition and construction companies.”

In PFI contracts, the companies not only build the buildings. Staff like cleaners and caretakers that previously used to be employed by the school are now employed by the PFI firm. This means that these ancillary staff are answerable to the company and not to the educational institution.

But Jaquiss emphasises that poor buildings are not the only thing that is wrong with PFI in schools; as with all other private finance initiatives, they are left saddled with expensive loans, which take money away from education.

‘UK’s odious debts’

Private finance initative has come under heavy criticism since the 1990s. Initiated by the Major government in 1992, PFI became the procurement method of choice of the Blair government and was rolled out across the country by the end of that decade. As a Treasury Select Committee report from 2011 concludes: “Private Finance Initiative (PFI) funding for new infrastructure, such as schools and hospitals, does not provide taxpayers with good value for money and stricter criteria should be introduced to govern its use.”

The report “raises concerns that the current Value for Money appraisal system is biased to favour PFIs”, “identifies a number of problems with the way costs and benefits for such projects are currently calculated” and “has not seen any convincing evidence that savings and efficiencies during the lifetime of PFI projects offset the significantly higher cost of finance”. It suggests that paying off a PFI debt of £1bn may cost taxpayers the same as paying off a direct government debt of £1.7bn.

In 2010, journalist George Monbiot called PFI ‘the UK’s odious debts’, calling for the then £267 billion owed to banks and companies that built PFI infrastructure not to be paid.

Total PFI debt has since risen to over £305 billion, according to the campaign group People vs PFI.

But the payments for the companies are legally guaranteed, and for government departments PFI appears lucrative because it counts as additional investment, not part of their capital budgets - and can often be used to hide debts by shifting them to the future. This makes PFI into a time bomb that threatens even the most vital of public services.

The NHS time bomb

Probably the most well-known PFI scandals are from the health sector: NHS campaigner and academic Allyson Pollock has described PFI schemes as “get one hospital, pay for three”. Many doctors and nurses I contact are appalled by the lack of resources paying PFI debts causes, but no one seems to be willing to speak out due to fear of repercussions to their work.

A young doctor who worked at Central Middlesex hospital until a few months ago tells me that working in a PFI hospital was a “bizarre experience”.

“It is beautiful, it looks like an art gallery, or an airport. It is quite new, but only 5 of the wards and the intense care unit are operating”, she describes the hospital that was re-built completely in 2006 with a PFI scheme. Since then A&E, as well as the cardiac intensive care unit, have been closed due to funding issues. When I ask if that was definitely because of PFI, the doctor says that the reason given was lack of funding, but she has not seen the contracts. Secrecy and lack of transparency are common features of PFI - not many staff or campaigners have seen a contract although they can feel the squeeze.

Last year, a local newspaper reported that the Central Middlesex is paying £11m a year for PFI despite only being 38 per cent in use - and this was before the closure of the A&E.

She says that generally things go well and the wards that are open are overstaffed, which contrasts her experiences from other hospitals. “But the downside of having all these wards closed is that is that important services are not there. We had a patient who had a heart attack, and rather than having them monitored in the hospital, we had to transfer them to another hospital. The closure of services is really taking away from patient care.”

The irony of PFI is that even with the wards closed, the NHS Trust is still paying the company that built them.

“It is so wasteful that money is still being spent - the way PFI deals go, rents are very expensive. We are losing money for no reason, when the premises are not being used.”

She adds: “It is also dangerous for local residents. Since the A&E was closed, they have the longest waiting times in London and pressure on the nearby Northwick Park A&E has increased. But there is another A&E department laying empty. There is absolutely no doubt in my mind that it is going to lead to damage and, at some point, to preventable death.”

With A&E waiting times hitting the headlines again last winter, the doctor wonders why the connection between closures and pressure on remaining departments is not made.

I suggest it is the strength of the austerity narrative - we are told there is no money. That the problem is instead that money is being spent on PFI companies’ profits, and the banks’ that made those deals, is outrageous. But it also gives hope for a solution: rather than taking the crisis of public services for granted, we should talk about these odious debts.

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