NHS bonds could be alternative to private finance initiative for NHS
BMJ 1997; 315 doi: https://doi.org/10.1136/bmj.315.7122.1620 (Published 13 December 1997) Cite this as: BMJ 1997;315:1620- Harry Keen, President, NHS Support Federationa,
- Peter Fisher, Chairman, NHS Consultants' Associationb,
- Peter Draper, Secretary, Health Policy Networkc
- a Apartment 12, Provost Court, 3–6 Eton Road, London NW3 4SR,
- b Hill House Great Bourton, Banbury, Oxfordshire OX17 1QH,
- c 45 Fortis Green Road, London N10 3HP
Editor—Concern is growing as more detail is revealed about the private finance initiative in the NHS.1Negotiations over the initiative are conducted under terms of commercial confidentiality. Health professionals and the public are effectively shut out as commercial imperative takes precedence over social purpose.
The private finance initiative is a costly option. Participating consortiums expect an annual return on investment of 15% or more, to be met by taxpayers (or charges on patients) locked in for 30–60 years. Many schemes for which the private finance initiative will be used require large reductions in hospital beds to make them commercially viable, when existing bed supply in the NHS is supersaturated. Recent legislation could permit extension of the initiative to the provision of bedside services. Will “hard choices” drive us down that road, however unwillingly? Acquisitive buyouts of consortiums participating in the initiative could even see the NHS providing income for foreign speculators. No longer standing for “private finance initiative,” PFI comes to stand for “profiting from illness.”
Many health professionals mistrust the private finance initiative in the NHS but see no other way to raise capital for hospital or other schemes. We propose a better and less costly alternative. The issue of government backed NHS bonds would present an ethically highly acceptable opportunity to large institutional investors such as pension funds and insurance companies with a stake in sound social infrastructure and would attract private individuals seeking safe and worthwhile investment. NHS bonds would command a much lower rate of return for shorter periods than would the private finance initiative—a far better bargain for the taxpayer. Of no less importance, healthcare policy would remain firmly in public hands.
Objections that NHS bonds would contribute to the public sector borrowing requirement and offend against the “Maastricht criteria” for a single European currency are questionable. Borrowing for social investment can be excluded from the ratio of general government debt to gross domestic product (the Maastricht indicator of the sustainability of government debt2), and the public acquires a capital asset. Alternatively, NHS bonds could be issued locally, regionally, or through a public corporation.
The drawbacks and dangers of the private finance initiative to the NHS are only too clear. Until the Treasury finds more money, NHS bonds are surely a more prudent alternative if we wish to retain the NHS safely in our hands.