All hospitals are now failing. Just because we hear about some (Like Bury St Edmunds) does not mean the rest are clean. The endemic failure to provide sufficient people is compounded by insufficient new builds, old plant needing replacement and inadequate imaging facilities, and of course the professional radiologists to read these images. Wales has avoided PFI but all its buildings and equipment, with a few exceptions, is stone age. Its people will be asked to travel further than ever to get help, and choice is absent. The complaints alone are epidemic, and the costs set aside for future litigation are enormous. The costs of hospital failures extend to morale in all areas of the 4 health services.
evolutionary zeal is not a trait typically associated with the Conservative Party. But at least Boris Johnson is promising an “infrastructure revolution”. What it entails is anyone’s guess, apart from spending £100 billion over five years. So, it’s lucky that the National Audit Office has popped up with a handy guide — on how not to do it.
It’s had a poke around the Midland Metropolitan and Royal Liverpool University hospital projects: a duo as sick as you might expect given they were being built by the now bust Carillion under the similarly kaput private finance initiative. Naturally, the patients are still waiting to see either hospital.
The 646-bed Liverpool scheme, due to open in 2017, is now running at least five years late, costing £1.06 billion to build and run: not the budgeted £746 million. Meantime, the 669-bed Midland Met, due to start operations in October 2018, will cost at least £988 million, up from the initial £686 million. It opens in July 2022.
Not the finest advert, then, for injecting private capital and expertise into the delivery of public projects. Except for one thing: the NAO reckons the taxpayer is barely out of pocket — because “the private sector has borne most of the cost increase”. It’s lost £603 million, shared between investors in the PFI companies, Carillion and insurers. Indeed the NAO believes that the taxpayer will be 3 per cent worse off with Midland Met and 1 per cent better off with Liverpool. And that includes the 30-year running costs.
It seems barely credible, given what’s gone on. After Carillion keeled over in January 2018, the health trusts and government wrongly assumed that “the PFI companies would complete the hospitals, as contractually required, by replacing Carillion”. Instead they had to terminate the PFI schemes and “use public finance to complete the hospitals with new contractors”. Consulting engineer Arup then found that the Liverpool work was so shoddy that the new contractor “had to strip out three floors of the building” to reinforce its structure.
So, how come the taxpayer’s no worse off? Simple, really. Because the government held the PFI investors to their contract — not paying for hospitals they’d failed to deliver. It then inherited two half-built hospitals that taxpayer funds are finishing off. True, the health department coughed up £42 million to avoid a “lengthy contractual termination process” in Liverpool: a sum it could have dodged given its rocketing costs. But that’s hindsight.
Does it all prove, then, that PFI works? Well, not really. The real cost is that both hospitals are years late. And there’s still a risk that the final price will exceed NAO estimates. Moreover, the affair says much about the government’s addiction to picking the lowest cost contractor. As the NAO notes over Liverpool: Carillion’s pricing may have been “too low to meet the required specification”.
Still, at least there’s a lesson here for BoJo: infrastructure revolutions are harder than they look.