Intended for healthcare professionals

Education And Debate

The private finance initiative: spinning out the defence

BMJ 2000; 320 doi: (Published 27 May 2000) Cite this as: BMJ 2000;320:1460
  1. Judy Jones, freelance journalist for the BMJ (judyjones{at}

    See also pp 1457, 1480, 1483

    Advocates of the private finance initiative have consistently portrayed the policy as the engine driving the “biggest ever hospital building programme in the history of the NHS.” When he was health minister, Alan Milburn, now secretary of state, dubbed it “the only game in town.” As criticisms from independent bodies and individuals have mounted, however, the government's rhetoric has since become rather more equivocal and restrained. At times, it has disappeared altogether.

    Summary points

    The use of the private finance initiative for procuring new buildings for the NHS has come under mounting criticism from independent bodies

    Colin Reeves, finance director of the NHS, promised last July to write a rejoinder to a series of articles published in the BMJ on flaws in the initiative

    Mr Reeves changed his mind at least twice about whether to fulfil that commitment, but the BMJ finally received an article from him on 12 May this year

    The Department of Health denies that it had problems rebutting the BMJ's criticisms and attributes the delay to waiting for the dissemination of new guidelines on the private finance initiative in February

    Critical analysis

    The private finance initiative has been used to procure 32 NHS hospital building projects across Britain since the Conservative government introduced the policy in the early 1990s. Last July, the BMJ published a series of four articles challenging the rationale underpinning the initiative, which the incoming Labour administration inherited from the Tories and pursued with apparent alacrity, at least in its early months.14

    Professor Allyson Pollock and colleagues at University College London suggested in their articles that the case for the private finance initiative was fatally flawed in several major respects. In essence, they argued that under the initiative taxpayers would pay more for shrinking provision at a time of rising demand for health services. Inefficiencies in public sector procurement had been overestimated, they argued, and the extent of risk transfer from public to private sector was often either unproved or unclear. Given all the evidence provided by the authors, the private finance initiative seemed at best an exercise in wishful thinking and at worst fraught with potentially irreconcilable difficulties.

    The official response, or lack of it

    Colin Reeves, director of finance and performance at the NHS Executive, promised to write an article by way of response to the BMJ critiques. In it he planned to address issues such as the “openness and accountability of the process, and the system of capital charges in the NHS,” he wrote in a letter to the BMJ.5 Reeves repeated this promise in oral evidence to the Commons Health Select Committee's inquiry into Department of Health expenditure. “I am doing a rejoinder article for the BMJ, so in the next few weeks I will be putting this in writing,” he told a questioner.6

    Summer, autumn, and winter passed, a new millennium dawned, and no article was received, nor any explanation for Reeves' evident change of heart. Having banged the drum loyally for the private finance initiative since the election, was the Department of Health now about to spirit it off the stage quietly and sneak on a replacement? Rumours began to circulate of difficulties within the department in dredging forth suitable evidence to rebut the critics. It was first whispered that the NHS Executive had hired management consultants to help produce a response to the BMJ articles, then that a paper was written but deemed unacceptable within the department on the grounds that it was less a detailed rebuttal of Pollock's case and more a series of personal attacks on the authors.

    But what was really going on behind the scenes? An informed source has since told the BMJ that a draft was indeed prepared last summer. While it was “a little anti-author,” it did address the issues raised, but the tone and style rendered it unsuitable for publication, the source said. The draft remained just that. No article emerged.

    The BMJ was not alone in its sense of unfulfilled anticipation. David Pitt, a retired principal in further education, wrote to this journal earlier this year to report that he had tried, as a member of the Labour party, to obtain details of the party's arguments in favour of the private finance initiative “but in vain; my letters have gone unanswered.” 7

    Curiouser and curiouser

    The plot thickens at this point and begins to drift into Alice in Wonderland territory. Pitt eventually received a letter from Reeves telling him that “it was decided not to publish an article in the BMJ, but rather to await the publication of the guidance which is now circulating in the NHS.” Reeves helpfully enclosed with his letter a copy of an article that he had forwarded to another publication, the Health Service Journal, on these very issues. This article, he added, “gives some indication of the approach being taken in respect of PFI throughout the NHS.”

    The document, titled “Building the New NHS—The Private Finance Initiative,” stated: “The PFI has been a steep learning curve for all those involved in projects whether at the NHS Executive, individual Trust level or the private sector. Nobody would deny that private finance initiative is an extremely complex and evolving area requiring comprehensive guidance.” Few would disagree with that sentiment, but later Reeves makes an assertion that is harder to sustain: “The criticisms of the PFI have been comprehensively rebutted elsewhere.” Quite where exactly, he fails to specify.

    What about the specific criticisms, drawn from referenced academic and public policy research, that Pollock and colleagues had highlighted? I turned, for lack of evident alternatives, to the Department of Health's own website for enlightenment. But again the effect was mystifying rather than edifying. Here we find a distinct change in the rhetoric surrounding the private finance initiative, if not yet in the policy itself. “The Government is not driven by dogma,” the site informs readers. “The PFI is only a procurement tool—not an end in itself—and it will only be used in cases where it offers value for money to the taxpayer and the NHS. It will continue to be used alongside public capital to meet health service needs.” 8 Was “the only game in town” about to be downgraded to just another new kid on the procurement block?

    Embedded Image

    Edinburgh Royal Infirmary: one of 32 PFI projects. But is PFI still “the only game in town?”

    (Credit: THE SCOTSMAN)

    Allyson Pollock, for one, does not buy the “no dogma” assertion. She believes that the government's case for pursuing the private finance initiative in health care is now so threadbare that there can be only one possible justification. “It must be ideological. There is clearly a schism in the NHS over PFI, and I think they have been having major problems rebutting our evidence.”

    The Department of Health enjoins us to believe otherwise. On the morning of 9 May, I telephoned the department's chief press officer to ask whether Colin Reeves still intended to write the article he promised to write for the BMJ last July and, if so, when. The chief press officer telephoned me back in the afternoon and told me that Reeves' article had been despatched to the BMJ that very morning. (The BMJ has since received the article and is considering it for publication.)

    Was this not an extraordinary coincidence after 10 months, I asked. “It was sent prior to your phone call,” the press officer said. “Pure coincidence. Colin's surprise was as genuine as your sense of mystery.” But what about the inordinately long delay? “The [NHS] Executive wanted to respond more fully in the light of the guidance issued to the service in February,” he said.

    This raised further questions, which I emailed to the department. Why had Reeves decided against publishing in the BMJ, as he told David Pitt, even after the guidance had been circulated? And why had he changed his mind again by now sending an article to the BMJ? The department was unable to explain.

    In the article he had written for the Health Service Journal and which he forwarded to Mr Pitt, Reeves wrote that criticisms of the private finance initiative had been comprehensively rebutted elsewhere. But where exactly? “We are always rebutting,” said another press officer later. “We don't have a comprehensive record of all the articles that contain rebuttals of criticisms of PFI.” Were consultants used to help prepare a draft? “No consultants were used.” What difference would waiting for the guidance to be circulated make to Reeves' rejoinder article? “It was felt that it was more sensible to wait until the guidance was out, and that this was the best way to proceed. There's nothing sinister about this.”

    Maybe, but it's undeniably odd. The Department of Health did add that Colin Reeves had yet to receive a response from the Health Service Journal about whether his article had been accepted for publication. We can only hope that he doesn't have to wait as long as the BMJ has to receive his promised response to the articles of Pollock and colleagues.


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