The private finance initiative: the gift that goes on taking

Perfidious financial idiocy was how the BMJ’s editor described the private finance initiative (PFI) in 1999.1 Under the policy, NHS hospitals and land are sold off and new hospitals built using private loans instead of public loans or grants. We argued at the time that this would result in bed closures because hospitals had not been funded to pay the full costs of the loans, which are paid back over the 30-60 year contract period.2 3 And that’s what happened: English NHS hospital capacity fell by 73 882 beds (almost a third) between 1992-3 and 2009-10, and occupancy rates rose to unsafe levels of more than 85% during the period when the PFI system of loan financing was introduced.4 5 In 2000, as controversy grew over PFI related bed reductions, the government’s National Bed Inquiry found that further acute sector closures were unlikely to be safely attainable without more intermediate and community service beds, and it recommended reversal of bed closures.6 The wasteful £4bn (€4.8bn; $6.3bn) independent sector treatment centre programme was introduced as a stop gap,7 and hospital reconfiguration continued⇓.

Last week the Public Accounts Committee revealed that PFI is even less affordable.8 …